WHO IS RESPONSIBLE FOR OUR HOUSING PROVISION?

Housing or Shelter is a basic human need as enshrined in the constitution of the Republic of Uganda in the Social and Economic objectives XIV (b). 

Government has a constitutional responsibility of providing infrastructure like transport, schools, hospitals, clean and safe water, electricity and shelter for its citizens. Government has been able to provide all the other infrastructure apart from housing or shelter. Previously the government used to provide housing for its citizens but with the coming of liberalizing and privatisation all houses that it owned were sold and others given away.
Infrastructure being a massive investment cannot be done by individuals as we are currently carrying the housing load a responsibility government has left to its citizens. When the government found that Ugandans loved to build houses it excused itself of its responsibility and now the citizens are paying a high price to meet their other needs. The citizens wouldn't mind if the government provided affordable mortgage facilities to finance housing development since they are trying to carry out government responsibility.

HOUSING FINANCING

Housing financing like other infrastructure financing is managed by long term low-interest funds. In Uganda, we are using commercial banks to finance housing with high-interest rates and yet return on investment in housing never exceeds 4% per annum. So if you got a mortgage from a commercial bank it is impossible to pay the mortgage from the proceeds of the house.The government always borrows money to develop infrastructure from development partners at about 0.4% per annum for a period of about 50years. It comfortably repays the loan and we also enjoy the facility. The government can borrow money to develop the housing sector and lend it to commercial banks at say 2% and the banks can get us mortgages at 4%. The citizens will then use their savings to pay the mortgage and the balance for the improvement of their livelihoods. This will keep money in circulation and the economy will grow since the money used for the housing is cheap.

CONCLUSION
The housing development is one sector that can stimulate the economy given that its massive with a lot of direct and indirect beneficiaries. The building materials manufacturers, stockists and contractors are some of the direct beneficiaries and also they create jobs and pay government taxes. The loan repayment is by the homeowner's mortgage repayment and so the other citizens not in need of houses are not affected.

RESIDENTIAL HOUSES OUT NUMBER BUSINESSES IN UGANDA

Uganda housing backlog in the low-income bracket is alarming and needs government intervention since the numbers are big and the repayment can become tricky based on the earning of the occupants.
On the other hand, there is a housing surplus demand in the middle and high-income earners bracket and this has caused an investment imbalance in the economy. Many people have invested heavily in the real estate sector with the hope of either selling or renting out the houses and returns have failed to come out. The monthly rent is stagnant and house prices are dropping every year if you compare it on the dollar. One other serious problem we have to solve is the building technology we are using here in Uganda. We are using the permanent construction for residential houses meant to last a maximum of 30years. Wh
y this short a time is your active, adult lifetime and house design. Permanent construction is meant for institutional construction like schools, churches, hospitals, government offices etc which in many times the design is simple without any fancy appearance. So we need to get a construction technology for residential houses that makes house affordable. We shall discuss this in another blog.
But today I want us to discuss the issue of having more luxurious residential houses than businesses yet the houses have very little return on investment.
This morning as I was moving through Ntinda and Naguru I saw a number of magnificent residential houses valued in hundreds of millions but can only earn the owner about 5m/= per month. Am on a number of real estate brokers social media platforms advertising houses for sale. I see a building being sold at about 2bn/= and earning only 17m/= per month and wonder how and when the owner will be able to recover the investment given that he may have to repay the mortgage, maintain the building, pay rental tax etc. These are all costs on the investment before making any net earning. I've come to see why some property owners abandon their properties in banks after getting a loan.

INVESTMENT SUBSTITUTION
Instead of the construction of more luxurious residential houses, I suggest we invest more in businesses and industries. Residential houses will not develop our country without industrialization and business development.
A residential house costing about 400m/= in say, Kira, Naalya, Kiwatule, Ntinda, Kisasi etc will at most earn 2m/= per month. A business valued at 400m/= weather trading or manufacturing will earn not less than 30m/= net after making all deductions. This is why all Indians, Chinese, Kenyans, South Africans are not in the real estate. They don't see how money can come out of the real estate to build their capital.
This real estate development has managed to make some financial improvement to the following;
1. Building materials manufacturers
2. Building materials stockist
3. Land dealers and condominium developers and
4. Building contractors

CONCLUSION
Real estate in Uganda is not regulated and it's not an area for everyone to go in especially development.

It is done by investors with cheap money and low or tax holidays. Let National Housing, Ruparelia Group, Amalgamated Properties, Property Services Ltd etc venture in it not any Tom Dick and Harry. Real estate is an investment and not a business which can multiply your capital.
We need to increase the number of businesses to surpass the luxurious residential houses we are acquiring. This will create more jobs, increase taxes and reduce unemployment in Uganda.

For God and my Country

BUSINESS SELLING VS BUSINESS WINDING UP

Business selling literally is the monitory exchange of the business with a buyer. A business is valued by professional business valuers in many times these are Chartered Accountants who value both the tangibles and intangible items in the business. The business is then put up for sale to a willing buyer.

Business winding up or liquidation is ending the business by selling its physical or tangible assets to pay off creditors, with remaining proceeds distributed to the business owners, and with no compensation received for the value of non-tangible assets such as business goodwill. This is always the worst-case scenario since this only attracts less than 15% of the business value for a goods business and about 10% for a service business.

Market your business at the point of sale to get maximum returns

Your Business can be Sold

The first issue anyone considers at business exit is if your business a good sale prospect.

In other words, will someone pay money to acquire my business or am I better off selling its physical assets and walking away? Too many owners assume they won’t find a buyer. Therefore, they automatically default to ending their businesses through a liquidation. But while liquidating allows you to recapture the value of the physical or tangible assets of your business – often at a giveaway – it gives you nothing for the value of your business as a going concern.

When you sell rather than liquidate your business, a buyer pays to acquire not only the physical assets of your business – the assets listed on your balance sheet, but also to acquire the goodwill of your business, including the worth of such intangible assets as your business name, reputation, clientele, systems, and marketplace advantage.

The only way to harvest the value of business goodwill is through a business sale. So, the decision to sell rather than to liquidate rests on a determination of whether the goodwill of your business – the value of your business beyond its physical assets – is of high enough value to attract the interest and prompt the purchase decision of a buyer.

A handshake is appropriate at the conclusion of a sale

Advantages of Business Selling

When the sale is made there is a win-win situation with the seller having 100% of the business value and the buyer having gotten an asset ready to start earning him returns on the investment and mainly:

1. Buying a going concern business with all physical assets of a business, as reflected on the balance sheet, plus the worth of the business as an ongoing entity, based on its recent past performance attracting and retaining customers and experiencing financial success.
2. Goodwill value of a business, reflecting the amount a buyer is willing to pay for the intangible assets of a business including the business name and reputation, clientele, operations and systems, and marketplace advantage.

CORPORATE MERGER AND ACQUISITION

Grocery and Supermarket Business

In Uganda, corporate takeover or acquisition has not taken root but it is one of the sure avenues for business sustenance and development. Many entrepreneurs start-up businesses and hold onto them for far too long with the hope of passing them over to their offsprings. This never happens and the business start to decline in production, sales and revenues and its then that they think of exiting through liquidation. The best alternative for such a scenario is to either merge if say you want corporate growth or sell if you are looking at exiting.

If a company decides to take over another one, it’s referred to as an acquisition. The acquiring company will do this by buying either the major shares or the entire ownership stake of the company being taken over. An acquisition is a situation where a larger company acquires another one outright. There are two types of acquisition: hostile and friendly.

A merger refers to a situation where two companies join forces. They can do this for a number of reasons, say a construction company in Uganda can merge with another one in Kenya. By so doing, the companies will be at a position to reach more customers.

Salon and Skin Parlour Business

Why Companies do M&A

Companies merge and acquire for a number of reasons but mainly for the following; they buy companies with the goal of acquiring a competitor and this is common with the technology companies, companies do M&A to create synergies if say one company has 20 clients and another has 30 client, this will give a combined volume of clients, workers and suppliers. The reason companies do M&A is to accelerate growth. Facebook realized that it's legacy platform will start seeing reduced growth. To accelerate its growth, it acquired Instagram and WhatsApp. It also sought to acquire Snapchat before it became a public company.

Other reasons for acquisition are for purely trading purpose. A company may be acquired at a premium price and just needs a little fixing in the HR, marketing and finance and then sold for a hefty margin. This is business trading. Like you can buy a property or car, make some repairs and modifications and sell it at a profit.

Start Acquiring Now

Bar and Restaurant Business

I know many of you are saying why do I have to acquire more businesses yet am failing on this one. My suggestion to you is that; you as an entrepreneur you have made yourself so busy running a business that is meant to be run by the professionals. Your job as an entrepreneur is to move your capital around your businesses. Look at Dr Sudhir Rupaleria he has more than 30 businesses in Uganda and he is just moving his capital never in the nitty-gritty of the businesses.

START ACQUIRING BUSINESSES