The Backbone Of Real Estate In Kenya

| Mwenda Thuranira

Kenya has, in the past few decades, seen an exponential growth in the real estate sector. Years from now, this time will be recalled as the period of construction and reconstruction in Kenya. If you are an investor and are still alive in this era, then it would be a far too expensive opportunity-cost to forego the Real Estate option. Here are some of the key factors that have considerably led to Real Estate Growth in Kenya:

Improved purchasing power

The Kenyan economy, as per Kenya National Bureau of Statistics indicators, shows a steady growth of the Kenyan economy at rate of about 5% per annum. This therefore interprets to an annual increase in the per capita income (income per person) leading to an increase in the Kenyans’ purchasing ability of items including real estate. This growth is expected to continue into the future, which makes Kenya a reliable option for investors, particularly when it comes to the real estate market.

Growing middle class

The increased purchasing power has contributed to the growth of the number of middle-income earners in the nation as a result of job creation backed by good education and entry of improved technology in different sectors of the economy. Educated youth are able to find lucrative jobs that provide a steady income allowing them to afford adequate housing via loans and mortgages. The power to purchase their homes or pay a higher rent has created a demand in the property market which is a source of revenue and delight to property developers. The youth therefore add to the number of local investors in Kenya.

Foreign investment

A myriad of multinational firms are tapping into the Kenyan market as a gate-way to capture the East African market in the long run. The Kenyan government and her people have created incentives to foreign investors through attractive legislative and social frameworks that can accommodate them both in the present and future. Projections done by the World Bank reveal that the Kenyan economy is likely to experience an economic growth of approximately 5.7% for the year 2013 – this has served as an eye opener to foreign investors.

Investment in infrastructure

Both the central government and private investors have seen the value of investing in both transport and communication networks. Such infrastructure developments include the Thika Superhighway; the Lamu Port South Sudan Ethiopia Transport (LAPSSET) corridor; and the Dongo Kundu, Southern and Northern bypass. They are envisioned to: improve efficiency in economic relations with other countries and among the local business community; and to open up new real estate markets in different geographic locations.

This is the ideal moment to jump on the bandwagon and reap the foreseen returns from real estate.

Mwenda Thuranira is the CEO of Myspace Properties

 

| 30 Aug 2013

Keep Your Titles; Give Us Our Land

| Owen Yaa Baya

 

The Mau Mau in Kenya fought for land and they got it. Shujaa Mekatili wa Menza and her compatriots fought for land but they did not get it. When they thought they had it in their hands and it was time to rest, new Mr. Champions emerged, whose trickery was more dangerous because they held documents called title deeds that took away what the heroine and her people fought for.

Today, the daughters and sons of Mekatilili are settled on the land of their forefathers but have a new title: “squatters”. It is a title that can only change when someone in Nairobi says “yes, that is your land” and provides a title deed.

President Uhuru Kenyatta descends into Mombasa followed by a Kenya Police plane carrying 60,000 land titles to be issued to squatters. Mombasa Governor Hassan Joho and his men gather to decry the move to dish out titles, as one Dr. Muhamud Swazuri, the Chairman of the National Lands Commission says with certainty that his commission does not know anything about the business. He adds that some of those titles probably started being processed in the ‘80s.

Then the Lands Housing and Urban Development Principal Secretary enters the fray saying due diligence has been done with the full involvement of the local people. But wait a minute PS Mariamu, how was the consultation done with full involvement with the local people if their elected leaders know nothing about the exercise? Maybe it was done on Facebook, Whatsapp or Twitter? Or probably via personal calls to the beneficiaries and chiefs and assistant chiefs? Maybe county commissioners were consulted?

Integrity issues have repeatedly been raised about the goings on at Ardhi house. If the same Ardhi house processed these documents in just a few days, then chances are the information used to come up with the titles is highly suspect.

The owner of the land and the owner of the title deed must be the same person. Anything else is a clear recipe for chaos. A case in point is the Chembe, Kanani, Kibaba Muche area. If the government has now processed land titles for these areas then there is almost sure to be  trouble as what is on record is not what is on the ground.

What fuels the suspicion that the bulk of these titles are going to non-Coastals is the political angle to the whole matter. A title deed is a private matter. It actually is part of private property. Why would a whole head of state come to give local residents land titles? Whose benefit is it for in the long run? It must be for the president and therefore cannot be a sign of goodwill.

If it truly was an olive branch, the national government should have allowed county governments to participate in vetting the lists through the ward representatives. The titles would then have been sent to the county governor’s office awaiting the arrival of the president to issue them.

Handling this matter in a proper way would have indeed helped the president come closer to endearing himself to the people of the coast who voted against him almost to a man. One of the reasons that the people of the coast did not vote for the president was land. There was suspicion that like his father he would not give issues of land at the Coast a meaningful hearing. And now when he looks like he would like to prove his critics wrong his handlers are now getting the whole thing wrong.

All said and done, let the coast people be assured of their land. Let each and every person feel and know that there is a genuine mechanism to ensure that they have land they can settle on, and that no one can come to unsettle them from their ancestral lands because of a piece of paper. The national government would rather keep their titles but ensure that people have land they can call their own to settle on. Titles can come thereafter.

 

| 30 Aug 2013

We May Not Need a Referendum, But…

| Owen Yaa Baya

Political temperatures in the country are on the rise with the self-righteous Jubilee government fighting to maintain the status quo as CORD tries to re-engineer itself into something relevant. In all this, two things are certain. One, our voting patterns this election exposed how the deep the rot of tribalism is in this country; and two, that the way the current government is handling devolution is indeed an assault at the very constitution they say they are protecting.

A keen analyst will note without prejudice that the future of this country in the next twenty years is likely to be determined by two tribes who have now known that if they came together at every election they can always win the presidency. But that is not the problem. The issue is that these two tribes use the presidency as a prize to reward their communities and keep material wealth in the hands of a few Kenyans concentrated in neighboring regions. The heavily skewed government appointments clearly show this.

So is the constitution the problem or the politics wrong?  To answer that kind of question is not easy. It is apparent that the constitution of a country affects its politics and influences its voting pattern. No one imagined that the “dynamic duo” would openly and without apology play the tribal trump card so openly that it would become a crime to be shameful of tribalism. This fact has changed the politics of the country. A candidate’s popularity, ability and charisma may not be important in Kenyan politics anymore. What matters is how you play the tribal arithmetic to your advantage. If your tribal mobilization happens to have the numbers, then you carry the day as majority have their way however wrong they may be. Does this system impact negatively on democracy? Yes. Does this require a referendum to fix the problem? No. But how do we make the nation more important than the tribe without opening up the constitution to amendments? How do you strengthen the election faculty to ensure that at every election, whoever is elected is seen to be chosen by the whole of Kenya? The answer may be both constitutional and moral.

Flash back to 2007. President Mwai Kibaki wins a heavily disputed election and violence breaks out. A national accord is crafted and the coalition government is established. Kenyans treat Kibaki as their president without prejudice to how he was elected. This was because he did not mobilize his politics around two tribes but threw his net wide while crafting PNU with an express purpose to reflect the face of Kenya. Likewise, in crafting the CORD alliance, Raila Odinga was bent on ensuring the face of Kenya was reflected to ensure acceptability across the board.

What is at stake is not the constitution but the moral principles behind our politics. National values must be upheld and chapter 10 and 13 of the constitution must be reflected in our political mobilization and public service to stem political mischief and protect the national fabric.

The referendum to determine the extent of devolution and sharing of revenue between the two levels of government as proposed by the governors and supported by senate may not be necessary if the current regime is true to the call of devolution as enshrined not only  in the constitution but also in their manifesto. A government that swore to protect the constitution must respect the spirit which informed the writing of that constitution without necessarily being forced by the people to respect it.

The dynamic duo can avoid the agitation for a referendum by realizing that the self-righteousness with which they are handling the whole issue will not wash because it will turn to nasty politics. How they react to the call will determine whether this nation will be in politics or development mode the next four years. Good politics has always been built around ensuring that the rights of those who did not vote for you are protected as much and as equally to those who voted for you. This is a sure way to legitimize an election win even when those who were defeated have doubts whether you actually beat them squarely.

GROWING YOUR MONEY – ABCs for stock market Investors

 

“If you’re learning to invest, but don’t take action, you’ve done nothing more than those who never bothered to learn in the first place.”  Robert T. Kiyosaki

 

|  John Macharia(Investment Planner)

Investing in the stock market is a rewarding experience for some and a disappointment for others. Many individuals aspire to own stocks. However, there’s a perception that the stock market is the province of high net-worth persons only.

This is not the case. The market offers equal opportunity to all investors; financial capacity notwithstanding. Some investors start on a wrong footing and end up losing hard-earned cash. They burn their fingers in the first attempt, learn no lessons, and then quit the market with losses and frustration.  This can be avoided. Good knowledge of the basics help you understand how stock trading works.

The first lesson is that those with knowledge about stock trading stand a better chance of success. The second is that even the most refined investors have made losses along the way. Investors should set realistic expectations in terms of returns. Any worthwhile investment will at some point reflect a big profit, big loss, small profit, small loss or breakeven.

What investors seek to do is mitigate big losses and make reasonable returns. One needs to have clear objectives, outlining the amount of money available for investment, time frame to meet these objectives and the risk vis-à-vis expected returns. Once the decision to invest has been made, stock selection follows. This is an obvious but difficult step in stock trading.

With a wide variety of stocks available, one must first consider which sector one wishes to invest in and then start to research on stocks in those selected sectors.  An analysis of each stock to know its actual worth and future prospects is a must, as well as technical analysis to ensure you don’t buy it expensively. As some analysts say, the stock market is 85% psychology and 15% in economics; for one to be a successful investor, good technical analysis is indispensable.

Proper planning, prudence and patience are critical recipes for success.  These guide the decision making process when buying or selling and eschew dealings initiated out of emotion. The plan should include an exit strategy to allow the investor to jump out of the market with profit. For beginners it’s desirable to start small, invest wisely and stay a distance, as you build confidence.

Another aspect that investors tend to overlook is choosing the right stockbroker. A good stockbroker should offer advice, guidance and support to take you through the trading process. A seasoned stockbroker with a good track record can become a powerful partner in pursuit of wealth creation. However it is  important to remember that any investment decisions  you make will ultimately be your own.

The path to investment path can be bumpy. However, if you clearly identify your investment goals, learn investment basics, choose quality stocks and closely monitor and manage your portfolio, you enhance your chances of success.

 

The Jubilee Government and Sufuria Economics

| Dr. Oduwo Noah Akala

The three month old Jubilee Government a fortnight ago presented its first of five national budgets to the people of the Republic. The proposed budget amounts to massive 1.6 trillion shillings…More than the Ugandan and Tanzanian national budgets combined! This ambitious financial plan is on the back of exuberant electoral promises made by now President Uhuru Kenyatta and his Deputy William Ruto during the course of the campaign period. This also has to be the first time in modern Kenyan history that a Finance Minister, now referred to as the Treasury Cabinet Secretary, Mr Henry Rotich, has said in Parliament that “I do not know where the money will come from.”

Kenya is in a peculiar socio-economic and political conundrum. This is because in our country, the minority of the population is employed and earning an income. It thus follows that it is this minority that pays tax which funds Government and all of its activities. Yet, when it comes to choosing a Government, it’s the majority who are unemployed and do not pay tax that have the final say. The non-tax paying majority essentially decides how tax revenue generated from the taxpaying minority is going to be spent.

This imbalance in the system is an austerity ticking time bomb as the tax burden on the employed minority increases year after year to service impractical programs of which we have been presented with a host. It is important to note that the budgetary deficit amounts to roughly fifty percent. It is common knowledge that any budgetary deficit is a tax just waiting to happen; it’s not a question of if but when.

The idea behind applying a Value Added Tax on basic commodities was actually the International Monetary Fund’s. This is not a new concept. It was one of the recommended pre-conditions to the Kenyan Government prior to the release of donor funding. The idea being to tax consumption and allow relief on income tax so as to spread the tax net wider. However, the Jubilee Government has deemed it wise to hit the Kenyan people with both a relatively high Pay As You Earn tax as well as a Value Added Tax of 16% on consumption. The Kenyan worker is bound to groan under the weight of expectation from the tax man.

Even more difficult to fathom are moves such as taxing welding rods and applying VAT on sanitary towels. Welding rods are used by Jua Kali artisans working in small scale businesses across the country. Jua Kali artisans are the face of micro-enterprise in Kenya. A tax that burdens small business while big corporates are raking in profits of billions is not only immoral but inequitable as well. With regards to sanitary towels, we had made progress in the past five years by first making them tax free and following that up with a Programme to provide girls in public schools with sanitary towels for free. This basic intervention ensured no girl ever missed school for natural biological reason and girl child performance improved drastically. Why tax sanitary towels now? What will happen to the Sanitary Towels for Public Schools Programme?

All these taxes would not be a problem if the people were receiving a commensurate level of service from their Government. Sweden has an income tax rate of fifty percent! But, the public transport is reliable and extensive, healthcare is catered to by the Government and so is education up to University level. The end result is that this Scandinavian nation has one of the highest standards of living in the world. We, as Kenya, are nearing this level of taxation yet we have forty percent of our population living on less than a dollar a day, the world accepted indicator for poverty!

This is what has informed the raft of industrial action that the Government is facing from public servants across the board. Teachers have issued an ultimatum to go on strike from midnight today on the back of the Government failing to honour a Collective Bargaining Agreement dating back to 1997 and yet this same Government presents an ambitious 54 billion shilling Laptop Programme. Nurses in the National Referral Hospital followed suit. Expect the same in the coming weeks from doctors.

I put it to you, that this Government is disconnected from the hopes and ambitions of the Kenyan people. Our leadership is not in tune with what we as Kenyans aspire to.

Security checks a ticking time-bomb

photo owen baya

| Owen Yaa Baya

 

As I jetted back into the country and checked into a hotel for a well-deserved rest I was welcomed by metal detectors at the gate, car peeping and mirroring of the underside of my car. I let the uniformed boys and girls of the local force do their job after all they have families to feed and needs that require money. I was carrying three suitcases and other paraphernalia. They only peeped in the car boot saw the luggage and paraphernalia but asked no questions

Then I visited the malls and found many more Askaris, passing their metal detectors over people entering and exiting; detecting nothing. People who wouldn’t stop to be frisked were still allowed to continue into the malls. In the parking lot, I asked them what it was they were looking for in passing the detectors and the mirrors underneath the cars and peeping through tinted car windows. None of them seemed really aware of what it was they were looking for, except for bombs and grenades.

Now looking for bombs and grenades is like going to the forest to hunt for snakes. It requires some technique and some snake handling skills. It also requires one to have protective clothing, anti-venom in case one is bitten, and the appropriate snake-catching equipment.

Looking at these Askaris – the equivalent of Kenya’s modern-day bomb, grenades and explosive experts – you imagine that our country’s security system is a joke. These Askaris are actually doing a very important and dangerous job of which they know nothing about. Important because the lives of the people in those buildings depends on them, and dangerous because hunting explosive and assault weapons on people puts these guards in the frontline in case of attack.

As you observe these guys do their jobs you realize that they do not have any form of communication equipment to alert law enforcement or call for back-up in case of emergency. So what would they do if they found a bomb or a grenade? The long winding answers they gave me means one thing: they do not know!  Worse still they did not have any equipment that could be used to disable a terrorist. Do they know the tactics of disabling someone carrying an assault weapon? Do they know the protocols of dealing with hazardous materials? The demeanor of the Askaris indicates they don’t.

More interesting is that these ladies and gentlemen only look for things which can be detected by metal detectors. To the best of my knowledge bomb-making material cannot be detected by metal detectors. A phone can be a gadget that can be used to make a bomb and detonate it. A Mobile phone itself can indeed be a bomb so why do they allow mobile phones into the buildings without screening them. They won’t touch your bag if you tell them that what is inside is a laptop. But we all know that laptop cases have been used to make highly explosive bombs!  In fact the practice is that when the touch your pockets and you say that’s a mobile phone they are okay with it and they do not need to see it. If you say those are car keys they do not screen them.

During a real security check anything in the pocket must be removed and passed through a screening machine to make sure that nothing is hidden in the phone, in the wallet, in the computer, the keys, or the materials of the belt and shoes. Our Askaris are only interested in the content of the pockets when in fact nothing should be in the pockets during security checks.

Metal detectors carried by clueless, untrained personnel will not in any way prevent terrorism. Methinks security checks in buildings exists to create employment and passing on money to security firms and passing on more money to foreign manufacturers of metal detectors. Unless checked this will eventually have catastrophic results. I keep wondering whether the security firms that have insured the Askaris against a real threat at these check points.