Guest Post

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Before building a home or commercial property there are some important things you need to take note of. Here they are:

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  1. Land title: Before you start building on land, make sure you have the land title. Failure to acquire a land title means you do not get any monetary compensation when you have to forfeit the land. Make sure before you buy land you research to ensure that the land is not part of a communal trust. In other cases, the land belongs to another, so make sure to cover all grounds before making a purchase.
  2. Financing: If you will be seeking a loan from a financial institution to begin construction works, note that they may require the following from you:
    1. A clear land title
    2. A valid life insurance
    3. A clear business and payment plan
    4. Good credit history
  3. Building permit: It is a legal requirement to have a building permit before you begin building. The consequence of putting up a structure without a permit range from monetary fines to the demolition of the property.
  4. Emergency precautions: Every home design, by law is to to have emergency exits in the event of fire or flood. Your builder is to include in the design, structural means to prevent fire.
  5. Completion: According to our research, builders by law are to certain timelines. The foundation and walls must be completed within two years from the date of getting the permit to build.

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Guest Post: Ohui Kwao

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Most species of spiders are harmless, but that does not stop them from being unwelcome in our homes. If neglected, these little guys can build mansions in hidden areas around the house, which can go undetected for months. It gets worse if you have a baby in the house and have to resort to cleaning all the time. If that is the case or you simply want to get rid of them and keep them from your home, here are a few items around the house you can use.

  1. Garlic: Vampires are not the only ones who hate garlic. Spiders do too. It contains a natural sulfur compound called allicin which is very irritating to spiders. Put a clove of garlic whole or crushed into a spray bottle filled with water and spray around corners, under tables, dark areas and every other place where a spider might be.
  2. Citrus: Citrus is a great repellant, be it orange, grape, lime, or lemon especially lemon. You can rub lemon peels on door posts, windowsills or any surface where the spiders hang out. You can also use lemon juice and water as spider-repellent.
  3. Vinegar: Repelling spiders is one of the many uses of vinegar. Fill a spray bottle with vinegar and water and spray on areas where spiders are most likely to be.
  4. Peppermint oil: Though you may be fond of peppermint, the smell of mint drives spiders crazy. Simply put a few drops in a spray bottle of water and spray on areas where you know they gather.
  5. Tobacco: You may not be a smoker but it is worth knowing that the pungent smell of tobacco wards off your uninvited little guests. Boil some tobacco in water and when cool, spray around dark corners and places you suspect they may be hiding.

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Guest Post By: Nancy Ewurum (Jumia House Ghana)

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Selecting a right real estate agent to sell your property can be one of the toughest processes that you can go through. While selecting the real estate agent, you should never forget that you are the boss and the agents are going to work for your profitability. The real estate agents should be put through several important questions for a better understanding of their abilities. Every agent wearing a costly suit and travelling in a big car cannot be the perfect solution. The final selection should be based on the replies received from the agents. Communicating with several agents can be the best option for selecting the right agent.

A trustworthy agent can be a big asset for a person wanting to list his or her property for sale, as the agent can bring in numerous buyers and convince them for the expected price. The agent can not only bring in more buyers but also show the house to the potential buyers, as well as check their credit background. Loans in Uganda are pretty common and agents help in guiding buyers when getting these loans. The questions that can separate the best among the good real estate agents are:

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With the new year running again, we have started the series Profile Check to let you know about some of our trusted agents, developers and brokers. This profile check will give you more insight on what they have to offer and their history.

This week we carry out a profile check on REGUS:

Brief background on Regus when it started in Uganda.

Regus is the world’s largest provider of flexible work space solutions, with customers including some of the most successful entrepreneurs, individuals and multi-billion dollar corporations.

Founded in Brussels, Belgium, in 1989, Regus is based in Luxembourg and started operations in Uganda in 2011.

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What exactly does REGUS do.

 Regus offers comprehensive work solutions for all business needs such as fully furnished/ serviced offices, meeting rooms, virtual office, and work space recovery businesses to enable businesses to work where they want, when they want, how they want, and at a range of price points.

Where are your properties and what kind of properties do you have?

 Regus has three locations in Kampala- Acacia Mall in Kisimenti, Aha Towers and Course View Towers in Nakasero, where one can work for a day, week, month, or years.

 Who are your typical clients/target audience.

 Our typical clients are just about anyone. We have work spaces for everyone from start-ups & entrepreneurs up to the large multi-national corp-orates.

 How long are your typical lease agreements?

Our products and services are on-demand, available to use as and when needed, make a one-page lease agreement for an hour, day, week, month or years.

 How many months deposit do you need from a new tenant and do you charge a security deposit?

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 For agreements more than a month, security deposit of two months is levied.

 Conclusion: any other information the general public should know?

Regus provides you ready-to-use office space at cost-effective prices. No set-up costs to think about and zero maintenance fees to incur. You are in the right space at the right time. Plug in and get to work instantly with great benefits to help you do the best work of your life.

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Wikipedia defines “Yuppies” as young upwardly mobile professionals. They are earning good salaries/commissions and enjoying the social and cultural trappings of urban life and trends. They are dream chasers and some of them even lucky enough to be living the dream. In Uganda, these are the young professionals working in Banks, Accounting firms, telecoms etc and mostly living in rented properties in the upcoming suburbs of Naalya, Kiira, Buwate, Mpererwe, Zirobwe to mention but a few. You can tell them from a mile away, sometimes for the wrong reasons but many a time for the right ones.

I tick some of the boxes of the above description though I doubt my salary affords me many of the luxuries that go with it. I am yet to turn 30 so I am relatively young. I am a marketer and therefore somewhat professional. I also live in one of the said suburbs, Naalya to be exact. It was during one of my not so usual runs through the Kiwatule/Naalya area, that I was impressed by the sheer amount of construction going on. From apartment blocks with less than ample parking (why do people still build 8 apartments, with parking space for 4 cars and then charge rent that would only attract people that own cars?) to grand storeyed houses that to my glee, are taking on less conventional but more beautiful designs than what we had gotten accustomed to. And to imagine that on the other side of things, there is but a loud sound of mourning and groaning over the financial destitution that has been born of the current economic situation and further worsened by the January dynamics (yes, we all have to pay for the sins of December). Anyway not all animals are equal, are they?

The mushrooming residential projects sometimes get me asking myself what it would take to own one of my own. To join the elite group of landlords just before I am 30. Society tends to hold property ownership in high regard along with a couple of other things; finishing school, getting a good job, finding a nice girl, building/buying a house, getting married et cetera and not necessarily in that order. Therefore, it is no wonder that the thought of owning property tends to seduce me every once in awhile. Perhaps I could get a mortgage and buy a nice little flat from one of the endless developers on the market. Or I could buy a piece of land in an inexpensive up and coming neighbourhood just outside town and build a house that is to my plan, liking and desires, brick by brick, block by block, slowly but surely as my income trickles in and hope and pray that I am done with it by the time my first born gets to university.

And I often banish those thoughts to the recesses of my mind almost as quickly as they appear. You may ask why and I will be kind enough to answer. I am not a real estate expert but an ordinary, young, objective Ugandan with the same struggles, joys, fears and opportunities as most. My outlook on the subject is therefore as a result of my view on the environment in which I live and by extension also that to which I am exposed. Investing in property ownership at this stage in my life is simply not a viable option for me. I may earn a decent income but even that will not connect the dots. Someone I know, a young man also yet to turn 30, recently finished construction of a beautiful house just after Kyengera. It cost him UGX 150m for the project, not to mention the value of the land that he had also purchased for UGX 30m. This was a sizeable investment by any measure (sourced from his savings and the disposal of a few assets along the way) and it did deliver on what he wanted; he had his own place to stay. I however asked myself and him a question; what does he envisage his returns to be on that investment, save for the pride of owning the said property? He suddenly had a white elephant of sorts at his tender age. Taking and barely giving back. In retrospect, I personally thought that money could have been put to better use. A business perhaps, with healthy returns that would eventually allow you to invest in the said property with a lot less trouble. This line of thought deeply discourages me from using my own capital for purposes of property development.

 

There is the option of borrowed capital you may say; why not take out a Mortgage? Mortgages are overpriced, coming in at roughly 21% p.a. (Though some banks like Stanbic Bank offer 17% which is perhaps fairer than most.) This will leave you with a monthly pay out of anywhere between UGX 2,000,000 and UGX 4,000,000 for a decent house/apartment. This, in comparison to what could be a monthly rental payment in the region of UGX 1,000,000 give or take, if we are to go by the going rates for residential properties for rent in the more desirable areas in town.  In my perfect little world, a mortgage for a property should never exceed the rental value of the said property. If anything, it should come in a little lower to make for business sense if ever you decided to rent it out and pay off the mortgage from the rental income, keeping a little on the side to buy the madam a nice new gomesi every other month. The prudent person in me therefore simply fails to reconcile the motivation to spend the extra money on a mortgage.

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What then, you may ask, is my solution to this? Well I occasionally find myself dreaming about the possibility of being a beneficiary of a house bonanza or lottery. Maybe Sudhir will gift me one of his glamourous properties scattered over the city of Kampala? Who knows? But while I wait for that day (and it will come I tell you) I think the reasonable thing to do in regards to property is to speculate within good reason. We are young enough to have time on our side and we all know how valuable a resource this is. We also live in an age where information rules all and fortunately enough, this same information is readily available to us all. Put these two factors to work, of course with a little money and good judgement and you are in business. We are in position to know the government infrastructure plans 5 years ahead of implementation. Suddenly land in Katosi, Sonde and Nakapiripit will be accessible due to the great work that Allen Kagina and team at UNRA are up to. Also, through online real estate companies like Jumia House, we have access to well vetted genuine deals on properties in various locations, at different prices, tailored to different needs and therefore facilitating decision making through effective comparison. This means we can make an informed decision to buy land that is probably currently undervalued but may appreciate exponentially in value if we wait, and all for a nominal fee if you act expeditiously. We have all heard the stories about how an acre of land in Naalya, not so long ago was UGX 500,000. We have also heard that old adage that history repeats itself….so go figure.  

Another thing I intend to do is approach the issue of being a homeowner, as secondary to my priorities. Don’t get me wrong, I intend to own a home of my own, perhaps 2 even, and while at it, build a couple more for that residual rental income that we all wish to make while we sleep and our tenants toil. But this I intend to do with proceeds of viable sustainable investments in business, financial instruments, pyramid schemes et al, investments that will make me enough money to have some to spare and use to finance my other whims.

This is my take on the issue of property ownership for young upwardly mobile professionals in Uganda like myself and perhaps you too. I’m not saying it’s fully solid but it looks pretty good on paper. What’s your take on it all? Keen to hear from you too and perhaps make my plan even better.

 

                                                         ABOUT THE AUTHOR;

ROBERT _PROF PIC

 

 

 

 

Robert is a marketer by profession and a progressive Ugandan at heart. He is keen to make the most of what life has to offer in the moment while working towards offering the best version of himself for tomorrow. He is also an avid writer and you can follow some of his work at www.bobzwords.com

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Dear Mr President,

I write to you because all power in Uganda belongs to you. You are the appointing authority and

final decision maker. Please excuse me from thanking you and praising you for the good work

you have done like everyone who writes you starts off by doing. I would like this post to be short

and to the point. I am also not a sycophant but a patriot.

The Isimba and Karuma projects have hit a snag and are way behind schedule. This probably did

not surprise you if you read your Auditor General’s report, which highlighted massive

irregularities in the projects together with the massive corruption during the award of the

contracts. Given the in fighting within the different government bodies (UEGCL, Ministry of

Energy), this standstill was imminent. I will not go into the issue of how we need strong

institutions to function properly before we can begin to think of development. I will only say, in

my humble opinion, it was not right to hire Kiggundu to oversee Karuma yet the law provides for

the right institution mandated to handle these projects. I will also not mention that Kiggundu is

neither a project manager nor has he ever managed a project of such magnitude. His key

competencies are in other areas.

Mr President, I have the ability to manage this project without government sinking a single coin

in it. I will use only private capital and the project will be delivered on time. Government money

will then be freed up for investment in other areas like roads and education.

Firstly, I would require to be given the concession for Karuma. I would require a permit to

conduct feasibility studies from the Electricity Regulatory Authority (ERA). It will be a bonus if

the feasibility study has already been completed. This concession grants me the exclusive right to

develop the project. What this does is give me a seat at the table with the financiers. They will

not take me seriously unless I show that I own the project or I have the authority to discuss with

them.

Mr President, having money is not the most important factor in Project Finance. What matters

most is that you are organised and are able to assemble a project that will attract financing.

Projects are very risky ventures so you have to minimize the risk of losing money from the onset.

Capital fears risk. It is risk averse. It will only go where it is safe. Banks that fund such projects

never lose. They will need total cover before they invest.

I will require a comfort letter from either the Ministry of Energy or your good office. This letter

is addressed to whoever is concerned and shows that the Government is 100% behind the project.

An investor would not like to come to Kampala or invest in the project only for the Government

to tell them that they are not interested in the project because we have excess power or because

of other priorities like Standard Gauge Railway. This letter is not a binding document. It just

pledges government support for the project.

The next issue would be power evacuation. When power is produced, it must be used

somewhere. You cannot store electricity. It would be imprudent to generate 600MW when there

isn’t a transmission power line to evacuate the power onto the national grid. Thankfully, Uganda

Electricity Transmission Company Limited (UETCL), which is in mandated with transmission

line construction, is constructing a 400KV line from Karuma to South Sudan. I would require a

letter from UETCL stating that this line is a priority line for the Government and that there is

funding for it. UETCL will also guarantee that the line shall be completed as soon as the power

plant is complete so we don’t have idle power. This will also save the government from paying

for deemed energy. I will explain what deemed energy is: when you build a power plant,

Government must buy your power. It is Government’s role to take the power to the grid and use

it. If I am ready to produce power but Government stops me because they are not ready to absorb

it, they will have to pay me for the power I would have sold to them. I am deemed to have

produced and sold power to them. So I just switch my turbines off and get paid until Government

sorts itself out. I win. Government loses.

UETCL should also commit, in writing, to giving me a Power Purchase Agreement (PPA)

subject to conditions like raising all the money, completing a feasibility studies, getting a sound

technical team etc. This is also non-binding on Government but it gives the investors assurance

that getting a contract from Government is guaranteed, provided the conditions are met. A PPA

is an agreement for the purchase and sale of electricity. It will state that Government will buy the

power the project generates for 20 years or more at a given price (tariff). This agreement is

usually signed after a full feasibility study is complete. This is because the feasibility study will

determine whether your power plant will be affordable or not. UETCL does not usually issue

such letters but since they are non-binding and these are extenuating circumstances, this

commitment is a requirement.

We would also ask for a Sovereign Guarantee for this project. Getting this Guarantee may be

tricky because of the current high debt levels. It will probably have to be cleared by the IMF and

World Bank. A Sovereign Guarantee is a commitment by the Government to buy the electricity

at whatever cost. “If we fail to pay you, we will pay you.” This boosts investor confidence

further.

Mr. President, one of the biggest risks to a power project is political risk. Lenders (Banks) will

not invest in a country where there is even a remote possibility of instability. If there is a war, the

economy will shut down and the investors will not be able to recoup their investment. This is

why lenders will do business in a country with a strong military ruler who has control over his

country. Right now, you have absolute control over the country and there is no political risk. The

lenders will also look at the chances of a peaceful election / handover of power in 2021. They

don’t want to invest their money only for chaos to erupt 2021. Their investment will suffer. Also,

a new Government may come to power and say “James Orima supported the old regime so we

have to cancel his concession because he has been eating”. To mitigate this risk, I shall take out a

political risk insurance facility. This is insurance against political instability. In case there is

instability, the insurer shall pay the investors. There are organisations like the Multilateral

Investment Guarantee Agency, an arm of the World Bank that provides this kind of cover.

I would also require a commitment from the Government that a change in the tax laws will not

affect the project. This is because an increment in the taxes will directly affect the model of the

project thereby increasing the payback period and decreasing profitability. This is not good for

investors. The tax laws that are applicable to the project at commencement shall remain

applicable throughout the life of the project.

Once the risks are done, I will then take out an advert internationally to procure technical

advisors. These will include: technical designers, environmental specialists, lawyers, financial

advisors, insurance advisors, contractors, O&M, an owner’s engineer who will be in charge of

the project, and an experienced project manager. I would fire Kiggundu. They will express

interest in participating in the project. There will be a condition that they should have

participated in projects that have been approved and funded by the known lenders e.g KfW,

AfDB, World Bank etc. All these consultants should be World Bank approved consultants. You

run the risk of hiring a consultant who the lenders may not approve if you do not follow such

guidelines and they will make you re-do the studies. There will be no corruption because an

expert procurement firm will handle this process.

A mix of debt and equity funds a power project. The ratio will usually be 75% debt from the

banks (loan), and 25% equity (from the investor). If the project costs $100m, you are expected to

bring $25m and the banks will bring $75m. We do not know how much the project will cost until

the consultants complete feasibility study. Such a feasibility study will probably cost $3m. The

African Development Bank this past week gave Tanzania a grant of $2m to do a feasibility study

for a 300MW hydro plant http://allafrica.com/stories/201608041158.html.

I would approach investors to invest the 25% that is needed as equity. Alternatively, I would get

commitment letters from the investors, who will mostly be private equity firms, to commit to

invest the money after I have completed the feasibility studies and then I would raise money

locally to pay for the feasibility studies. This money is available. I know how to get it. The

investors I would approach will include: responsAbility from Nairobi, which has $2bn to invest

in renewable energy in Africa and is investing in hydro power plants in Uganda; Berkeley energy

which manages $200m from the African Development Bank and which has also invested in an

88MW power plant on River Acwa in Gulu; Industrial Promotion Services (Aga Khan) which

invested in Bujagali and is about to commence the largest solar plant in Uganda of 50MW; Actis

from UK, among others. These investors usually do not invest in projects from the scratch

because of the high risk. They already have the money and would not want to go into a fishing

expedition. They would rather someone else takes on the initial risks then they will deploy their

capital when the above boxes have been ticked. Since this project will have the support of the

government and I will have de-risked it greatly, it shall not have a problem attracting investment.

I would then commence feasibility studies. This will include a full design of the power plant,

conducting environmental and social impact assessment studies, grid connection studies to show

how the power will be evacuated into the grid, studies on the flow of the river – though this

information is already known. I understand the Egyptians have hundreds of years’ data on the

flow of the River Nile. These studies will also cost the power plant and tell me exactly how

much it will cost to build and the payback period. This will determine the tariff that I will get

from the Government. I will sign the PPA with Government once these studies are complete. I

will have shown that the project is both technically and financially feasible.

With this PPA, I will look for the cheapest debt. The only advantage of a Government doing this

project is that Government can get the cheapest loans from development banks. China gives us

loans at less than 2% per annum. We would get banks to provide the 75% debt component and

once we have zeroed in on the bank, we shall have reached financial close. At this point we

would commence construction of the plant under very strict supervision because investor’s

money is at stake. You will not hear stories of cracks in the dam or officials fighting each other

because the investors will have to be paid back their money. Construction will begin and will end

on time because of the penalties for failing to complete the power plant on time.

Mr. President, these are not mere theories. Allow us to assist you reach middle-income status.

Your politicians could do with some help.

Thank you.

James

 

Author: James Orima / Orima & Co Advocates

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