By Joachim Buwembo
It is hard to tell how many Ugandans realise the tough economic times facing us! Those of us who can read the times would be failing in our duty not to tell them. Let us particularly address those bazzukulu in their twenties to mid-thirties. Those beyond that age are likely to already have so much baggage and could easily dismiss us as people “who don’t realise how tough life already is”!
Let us face it: our economy with its perpetual negative balance of trade (of imports far outweighing exports) is not getting better in the short run. And in the long run, as Lord Maynard Keynes said, we are all dead. In the short run, we have to contend with traditional donors like World Bank and its allies squeezing Uganda over the AHA (Anti Homosexuality Act) and others who are fighting the country’s emerging petroleum industry to use (under-researched) environmental claims to block the Hoima-Tanga pipeline and sabotage the refinery project.
The saying that there are other ways to kill a cat than chocking it with butter applies to Uganda’s young adults today more than ever before. The quest for quick money seems to get more urgent by the day. ‘Popular’ options include going for kyeyo in the Middle East, online forex trade, sports betting, or even getting a sugar daddy. But few of these, if any, can guarantee financial freedom in a decade or less. So, why not turn to a time tested approach, which has been handed down to us over generations and is repeated in all cultural knowledge?
The English say, “One by one makes a bundle,” and there certainly is an equivalent in whatever your own language is. In all countries of the world, one of the most solid investments (literally solid) you can make is in owning a house. Even if you don’t live in it in case it is located far from your work station, someone will rent it and pay you.
Some countries have well developed property and mortgage markets, ours may not. But the good news is that there are now increasingly reliable ways to acquire your own house, without fear of being coned, as especially happens to our brothers and sisters in the Diaspora.
Although forming/ joining a housing cooperative society can present one of the cheapest ways to acquire/own a house, it requires bringing together at least 30 like-minded persons, by law. But there is good news around, for as we said, there are more than one ways to skin a cat.
Did you know for instance that some progressive banks now have special packages to support investment clubs? An investment club needs only five persons to be constituted. And what is more, some members need not be active.
So if you and your partner have three kids, a progressive bank can treat you as a constituted investment club. But let us focus on five like-minded (young) adults, each earning a modest ugx500,000 ($130) a month. Please note that the scenario we are building is of serious persons, not these who prefer to whine and blame anyone and anything else for their hardships, and giving excuses for not being able to save and invest. The scenario is practical and realistic.
The starting point is for the five of you to open an investment account in the bank, for example dfcu, where you will be given enough instruction on how to manage it. Call it a kalango but it is useful information which you are entitled to, and in any case you are all part owners of dfcu. And guess what, the bank can pay you 11% annual interest on it. So if you agree to each contribute 150k per month, you will have about ugx10million after one year.
Now, I can say with confidence that you can get an acre of land in a radius of 50 kilometres from Kampala city centre in any direction at ug10million. And with the way the government is building roads, living 50kms from the city centre is the right thing. Between five people, this will be a 65ft x 130ft plot for each. And at 50kms, it will be VERY prime space in five to ten years. And let’s face it, even if you earn five or ten million shillings a month, this is a smart way to spend the ‘negligible’ 150k/month which you can ‘eat’ or drink in one sitting. One by one makes a bundle.
But let us continue with our ‘poor’ group whose members earn 500k each a month. In the second year, you accumulate another ugx10 million. But in the meantime, you have been cultivating on the one acre, after contracting a neighbor to maintain it while keeping an eye on your crops.
At today’s prices, you can easily make a profit of ugx2million times three seasons per year on the acre (after paying the caretaker) by growing one of the common grains. But kindly do not get too ambitious like doing too many things like poultry or piggery in which you are not experts – remain focused on developing your mini estate, to avoid stress. The cultivation is basically to keep your land busy and show occupancy and hopefully, it can fetch you an extra 6m in the second year, but not much longer, as construction work once it starts, will not allow farming.
Armed with your ux16million or so, you can confidently kick off your building project, by doing the foundation and a central drainage/sewage infrastructure for the five units. You will then start injecting your 750k per month in the years 3, 4 and 5. I cannot speak for any bank but you should be in position to negotiate with them a facility to finance the project which will already have taken off, so that you can benefit from the economies of purchasing materials in bulk, as you continue depositing your monthly 750k to pay it off.
This way, however lowly your job maybe, you too will be a “my house” in five years. And the kind of house in this scenario, if you are the risk-taking type, is one that you will be able to sell at between 50 and100 million shilling at the time of completion. Remember it will be sitting on a 65 x 130 in what will then be a heavily populated neigbourhood.
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