Skip to main content

REAL ESTATE DEVELOPMENT CAN BE KEY IN OUR TRANSFORMATION


I have been around long enough to see real estate development, or maldevelopment, lead to the sprawl that is Kampala today.

From atop the Skyz Hotel in Naguru, one can see as far as Mukono to the east, Entebbe to the South and Bombo to the north. At night the lights from traffic, streetlights and from residences makes it a sight to behold.

But we were here in 1986 when Kampala’s outer limits were Kibuye roundabout, Rubaga, Wandegeya, Ntinda and Nakawa.

The NRM did the smart thing and removed restrictions – rent controls, on real estate and spawned a real estate boom that has led to the dramatic expansion of the capital city’s boundaries to what they are today.

During the same period the government’s National Housing & Construction Company (NHCC) has not kept pace with private developers, be they individuals or companies developing a few dozen units.

"Official statistics suggest that there is a 550,000 deficit of acceptable quality housing in Uganda of which 160,000 is in urban areas. This last figure is the equivalent of almost 160 Bugolobi Flats estates!...

Clearly our small individual efforts are not keeping up with demand and there is no sign that demand will stop growing soon.

Is it possible that the private sector is fast reaching the end of road in how far they can meet the housing demand in Uganda?

I don’t think so, but I think more proactive involvement by government is required to not only bridge the housing deficit but also to scale up the real estate sector and drive the transformation of the economy.

Across the border from us in Kenya, as part of President Uhuru Kenyatta’s ambitious Big 4 plan is the intention to build 500,000 affordable housing units for Kenyans.

A promise from the last election in 2017, it’s been in design since. It will be a massive collaboration between the government and the private sector.

The government among other things will create the legal and tax framework under which it will operate, develop supporting infrastructure and create wholesale financial and mortgage institutions, while the private sector will execute the development and market it.

A rough calculation, using the cheapest unit of Ksh800,000 (sh32m) means this is at least a sh16 trillion project.

It’s a bit hard to wrap one’s mind around the numbers but even if it’s still in its conception stage, it could serve as a useful model that we in Uganda can adopt to bridge our own housing deficits.

Even assuming we just start by attempting to bridge the urban housing gap of 160,000 units the impact on our lives can be significant.

For the benefits we have to look beyond the provision of housing, which while it is the end goal is only part of the potential benefits from such a project.

"The beauty of real estate development is that, most of the inputs will come from within our borders – the labour, the cement, the paint, the tiles and even the steel. The transportation industry would also get a boost, as would many catering businesses. The ripple effect such a project would have on this economy would be huge....

In terms of jobs, workers can be skilled and retooled in a relatively short time, with skills they will use long after the initial projects have been done.

And if executed properly, may very well seed other major real estate investments around the country and accelerate the move to a middle income status country.

But clearly like in Kenya our government has got to take the lead and carry the private sector along.
The Private Sector Foundation of Uganda (PSFU) would be interested in such an initiative and be willing to help formulate the strategy and coordinate the various stakeholders required to make a success of the initiative.

The naysayers may be against government involvement warning that it may cause them to contract more debt or worse divert much needed resources from priority areas like infrastructure, education and health, but that need not be the case.

The Kenyans are pushing for a developer led financing, with government undertaking to buy all the houses once completed and will be paid by eventual owners of the houses.

Seen against the larger goal of transforming the economy a more deliberate and systematic focus on the real estate sector by government can aid in efforts to transform the economy. See housing as a catalyst and it will give the economy the Big Push.

Labels:

Comments

Post a Comment

Popular posts from this blog

OUR WOMEN AMONG THE BEST ENTREPRENEURS BUT…

A study carried out in 57 countries around the world established that Ugandan women are among the most entrepreneurial in the world. The 2018 Mastercard Index of Women’s Entrepreneurship released last week showed that one in three businesses or 33.8 percent of businesses in this country belong to women. Our women were third behind their counterparts in Ghana, 44.4 percent and Russia, 34.6 percent. Survey after survey has shown that Uganda is one of the most entrepreneurial counties in the world, so it should come as little surprise that our women are among the most entrepreneurial in the world.  This does not in any way take away from their own initiative and resilience in surviving our competitive business environment. Our entrepreneurialism was forced upon us by the hard times we faced as a nation in the 1970s and 1980s, when few if any salaries could carry families through the month. For the majority of us who did not have the option of leaving the country...
Post a Comment
Read more

THE MUKWANO I KNEW

We have lost the greatest Ugandan entrepreneur of our time, Mr Amirali Karmali, more popularly known as Mzee Mukwano. I have known Mzee Mukwano for more than 40 years and most of what I am today is due to him. And I am not alone. "He has helped countless people through school – as he did me. Helped countless more in business – as he did me. And he has been a steadfast friend and source of support to countless more – as he was to me.... I first met Mukwano around about 1977. My mother was the secretary for the chief of operations at Uganda Airlines, a man I knew only as Hamid. Mukwano had come to charter the Uganda Airlines’ Hercules plane and I happened to be around the office then. He was a short man, an unassuming man, but clearly a serious businessman who would charter the plane to bring in goods that were in high demand here. He run a popular whole sale shop in Nakasero – Egesa Commercial Agencies, a beehive of activity and the go-to place for anythin...
Post a Comment
Read more

LET THE UN BASE SAGA BE A LESSON TO US

I have watched with much interest as the issues of the UN base in Entebbe have played out in recent days. At the beginning of the month it was reported that the UN secretary general Antonio Guterres, had signed off on a new structure, The Global Services Delivery model, that it was suggested would see Uganda losing the Regional Service Center in Entebbe (RCSE) to Nairobi. Under the new model the UN would have three key centers in Hungary, Kenya and Mexico. In response to a letter by President Yoweri Museveni, Guterres assured him that the RCSE would remain in Entebbe. Though some functions will be relocated to Nairobi in the short term, in the middle to long term he sees the role of RCSE expanding and growing in importance. The new development takes effect from 1 st July this year. According to their website the RCSE serves more than 20,000 personnel on the continent, does administration and communications support for thousands more around the world and has an...
Post a Comment
Read more

UMEME A RECOGNISED SUCCESS BUT …

  Recently the World Bank did a survey of the power utilities on the continent. Of the 39 utilities surveyed only two, in Uganda – Umeme and in Seychelles, were able to cover their operating costs and capital expenditures – maintenance and expansion of the grid. The report went on to point out that only 19 or about half of the surveyed utilities were able to meet their everyday costs like salaries. Essentially most of our power utilities on the continent are technically bankrupt. This has far reaching ramifications for the industry as a whole. When you, the client, pays your bill, Umeme then passes money up the line to pay the transmission and generation companies. If Umeme does not collect the revenues due to it or does not price the power at an appropriate rate, the pain will be felt up and down the sector. The transmission company would not be able to maintain and extend its network and the generation company would not be able to generate efficiently or build ...
Post a Comment
Read more

OIL IS COMING BUT LET US NOT FORGET OUR GOLD

The country is operating on a time table that first oil will be seen in 2020. There is a lot of frenetic activity around building supporting infrastructure, getting investment approvals, ensuring local participation and any number of other things to ensure readiness the moment the oil starts gushing down the pipeline to the coast. And so we should. I was intrigued the other day to read in the Kenyan press how Kisumu County, just across Lake Victoria from us, has set upon an ambitious project to ensure egg and poultry meat self-sufficiency for the county within the next few years. Under the plan Kisumu County will train 100 farmers every month over the 12 month pilot period. The intended aim is to be able to satisfy the county’s demand for 25,000 broilers and 75,000 eggs daily. Whereas I would prefer that this was private sector driven deal, I like this plan for a number of reasons not least of all that it shows leadership by the county and secondly, it relies o...
Post a Comment
Read more

SPORTS AS AN ANALOGY FOR BUSINESS

Like everybody else I know, my spirit was lifted by the success of our athletes at the World Athletics Championships last week. The diminutive Halima Nakaayi showed the heart of a lion, sprinting over the last 100m of the women’s 800m event to snatch victory from a more favoured American runner. It was so uplifting to watch. Subsequent stories about the challenges she has had to overcome to get where she is now were testament to the determination of the woman. Joshua Cheptegei’s victory, while no less inspiring, had a different quality to it. Cheptegei was the man to watch going into the event. He won previously at the Commonwealth Games last year and the in the just concluded Golden League. He was a silver medalist in the 10,000m at the last World Championships in London, pipped to the tape by the now retired Mo Farah. Cheptgei still had to battle the Kenyans and the Ethiopians all the way. But as a favourite he lived up to expectations, which sometimes is more diffic...
Post a Comment
Read more

LOCAL CONTENT IS NOT A DONE DEAL, WE NEED TO DO MORE

This year’s “Oil & Gas Convention & Regional Logistics Expo2017” has just concluded after three days of discussion, exploration and soul searching. First oil in Uganda is expected by 2020 and this Expo among other efforts are targeted at getting our local businessmen ready to take advantage of this historical development. At the risk of sounding like a broken record, the discovery and eventual exploitation of our oil resource is one of those once in a generation events, that can transform this nation, not only on a macro level but also in our individual lives. For starters at least $20b will be spent over the next three years in infrastructure development and other things that will ensure we are ready to pipe and refine our oil. During the exploration phase about $3b was spent by the international oil companies, with on three in every ten dollars being retained here. That was an exploration phase and one hopes that we have learnt enough from that period to ...
Post a Comment
Read more