UGANDA, Kampala | Real Muloodi News | Uganda has been on the list of underdeveloped countries for decades, ranking among the first 15 countries with the most enormous financial gap between the rich and the poor.
Real estate is a powerful economic catalyst, and the majority of individuals use property to preserve and grow their wealth. In the recent atmosphere of rising home and land values, many property owners have benefited more from the capital growth of their real estate investments, than lower-income workers have via the fruits of their labour.
It is not surprising that a disproportionate number of people on the rich list are involved in the real estate industry or have substantial real estate holdings. Wealthy people spend their money to increase their income, leaving the poor struggling to make it.
Uganda hopes to address this economic disparity by moving up to the middle-income level by 2040. This will necessitate an increase in Uganda’s gross national income of at least 4,096 dollars per person. Uganda’s figure now is lower than 1,000 dollars.
The 10-point programme put in place when the National Resistance Movement took control is where the government’s attempts to eradicate poverty first began.
Five-year plans have been created by the National Planning Authority (NPA) since 2010 to synchronise and coordinate national development planning.
Producing detailed strategies for the nation’s economic development and achieving a national goal of a poverty-free nation are two of the NPA’s main responsibilities.
However, the wealth disparity has continued to widen over time and got even worse during the COVID-19 epidemic. As a result of the wealthy owning more land, it is now a highly sought-after asset and more expensive for the underprivileged to own.
David Ricardo realised that land is an “economic residue.” This was supposed to imply that the price of land does not depend on its intrinsic value but rather changes based on the use that is made of it.
Therefore, while the economy is doing well, neither the workforce nor even the capitalists benefit. The rich landlords benefit from economic activity because there is competition for limited land, leaving the poor out.
The profits shift from the shop to the landowner as a result of competition for the best location on the high street where the most money can be made.
Ricardo concluded that “the interest of the landlord is always opposed to the interest of every other class in the community.”
This provides context for what we observe now. The poor unlike the rich will suffer the most when the economy declines, as is typical. They are less empowered to deal with change and are more sensitive to it.
Home Ownership
Consider owning a home as an illustration. There is now a gap between renters and homeowners due to the increased cost of property in recent years. Housing expenditures now take up a larger portion of people’s overall income, whether they are renters or first-time homebuyers.
The working class has a far greater fixed monthly cost-to-income ratio than those who are wealthy. This not only makes it harder for poor people to deal with issues like changes in interest rates, but it also leads to wage slavery that doesn’t exist for the rich.
You lose the luxury of choice and the luxury of negotiating with your employer if you live in constant dread of losing your job and your house.
Meanwhile, those who are less sensitive to money might keep taking chances and looking for possibilities.
Low Demand for Office Space
The short-term outcomes of individuals who have a spare room and a yard differ significantly from those who only have a tiny flat share. This is somewhat of an issue of age, but it’s also a socioeconomic privilege.
Those middle-class young urbanites may have returned home to live with their parents in the suburbs today, but for many others, this won’t be an option.
What follows for homeworking then? The expense of supplying office space will effectively be shifted from the employer (in a typical office) onto the employee if, as many believe might happen, home-working becomes a significantly larger component of the work model (wherever).
However, for the less well-paid urban employees, it could require finding a bigger apartment. Those who live far from the workplace (usually higher-paid, older, professional workers) may be content with this trade-off against their commute costs.
What Steps Can the Real Estate Sector Take to Address Inequality?
This may seem to be in direct contradiction to the challenge because our sector is focused on making money for investors. But it’s important to keep in mind that you and I are actually today’s landowners. By value, most organisations for example the National Social Security Funds (NSSF) and wealthy notable real estate tycoons like Sudhir Ruparelia, Hamis Kiggundu, John Ssebalamu and his family members, among others, are the owners of the majority of commercial real estate in Uganda.
Given this, taxing landowners rather than investors, will ultimately result in the elimination of inefficiencies and increase wealth for both investors and landowners. This is not, however, a simple turnaround and would need a readiness to reconsider how investment is encouraged.
Second, the government has to do a lot to speed up home construction in order to lower costs and relieve household debt. It is getting more and harder to avoid the conclusion that this calls for a brand-new, well-funded public housing programme. Although some privately held real estate firms are headed in that direction, their costs are not within everyone’s reach.
Thirdly, it goes without saying that society as a whole should benefit from planning gains rather than just landowners. There may be many people who disagree with this viewpoint. The majority of long-term real estate investors, however, do not plan for windfalls since they increase price risk and cause misalignments. We require a planning system that is efficient, and predictable, distributes wealth, and proactively solves amenity shortages and localised deprivation.
Finally, Uganda has developed into a more urbanised country over time, and if you work in the real estate business, you should be aware that a lot has happened since then. The lack of variety in Uganda’s real estate is embarrassing when compared to other businesses. We must all put in much more effort if we want to attract the top people from all backgrounds to the real estate sector. This includes an honest evaluation of why this hasn’t been successful thus far. More self-reflection is required to identify and remove both the existing and potential future hurdles.
Uganda’s national debt is also increasing. Each Ugandan had a debt of US$1.5 million by 2021 when the country’s debt reached USh65 trillion. Unfortunately, Ugandans are unwilling to actively participate in development because they disagree with the country’s aim for sustainable growth.
The level of economic disparities in Uganda would significantly decrease if Ugandans adopt a collective attitude in which they have the confidence needed to seek difficult and complex solutions to their issues.
In essence, enhancing the general well-being of the population cannot be overstated, even though economic growth is important. If Uganda wants to have a balanced expanding economy (both rich and poor considered), it is important to pay special attention to vulnerable and marginalised people.
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