How land owners can earn from land investments

By James Galabuzi Mukasa

In Uganda, land was owned communally before the 1900 Agreement. This is the Agreement which distributed land within Buganda and subsequently in 1908 registrable interests were introduced.

People started to acquire land titles. However, land which wasn’t distributed composed of hills, forests, wet lands etc was calculated to be 9,000 square miles and was put in Her Majesty the Queen of England in trust as Crown land. When Uganda attained her independence in 1962, the Parliament constituted a Land Commission where Crown land was vested.

 Beneficiaries of the 1900 agreement land distribution were among others, the King of Buganda, the Royal family, the Chiefs plus 8,000 square miles to 1000 indigenous people (Commoners) plus the different religions. Anyway, those days, terms like MAILO (square mile) were the order of the day because the population was too small to deal in plots of decimals therefore, people would own land in square miles. Other parts of Uganda like Ankole and Toro accepted a Native free hold system of land registration. The rest of Uganda, Land was owned customarily without registrable interest. Fortunately, the economic forces have made people from areas where land is owned customarily to accept an introduction of registrable interest and this was resolved during the National Land Policy conference which I attended.

Land has been a social item within the  indigenous people transferring it from one generation to another through inheritance until recently when it has become a commodity due to a large population growth leading to increased need for land since its in-elastic. This evolvement has created formations of Land Agents, Real Estate Developers and at the same time, criminal elements in land dealings. Example, there is land on Block 295 at Bukaya  in Njeru town council , Jinja District  which was leased to the Colonial Government on November 1, 1948 for 99 years. The Registrar of Lands in Mukono issued a Land Title to certain fraudsters who transferred it to a certain Company. This means that there is an original Title on lease with Government and a Special Title owned by a certain Company.

Records show that between 1908 when registrable interests on land were introduced in Uganda up to 1990s, land transactions were very low. Few people had grasped the importance of acquiring land although subsequently it became a commodity hence triggering a high degree of fraudulence.  Many land owners have ended up losing their land due to occurrence of professional criminal elements who deal with some officials from Land Registries.  Therefore, now days, land is dealt with as a commodity.

Given, the afore stated history of land ownership in Uganda, some Ugandans became land owners and others became Tenants on land.  This reality was accepted and adopted as a culture whereby tenants would contribute a nominal annual ground rent known as Busuulu and they would offer a percentage of their commercial harvests to the Land owner which was known as Envujjo. An uprising of the 1920s by the Tenants evolved into the first regulation between the land Owners and the Tenants called the Busuulu and Envujjo Law of 1928. However, this law was repealed by Idi Amin and  A land Reform Decree of 1975 was made which allowed people to stay wherever they wished because land ownership was now taken over by Government. The 1995 Constitution restored Land ownership recognizing the Land owner in Title but also included owners in occupancy known as Lawful and Bonafide occupants on land. Bonafide Occupancy means a person who was on land 12 years and above before coming in force of the 1995 Constitution and Lawful Occupant  is a person  occupying land by virtue of repealed Busuulu & Envujjo Law 1928 etc it caters for another category of a person who entered on land by consent of registered owner  including a purchaser . Chapter 15, Article 237(8) gives security of occupancy to lawful or bonafide Occupants on Mailo land, freehold or Lease hold

This means that land in Uganda has two categories of holdership ie people with registrable interests and those with Lawful or Bonafide Occupancy.

Since many Development investors are flocking into Uganda for tangible large scale businesses, we can avoid an impasse which may result from the aforementioned land ownership in Uganda, the understated alternative may be considered   as a solution;-

(a)     Identify land prime for business regardless of Occupants on it.

(b)   Value the land according to market price. This value should reflect both in land ownership and in Occupancy( Bibanja)

(c)    Identify a development investor interested in that piece of land.

(d)   Interest both the Land Owner and the Occupants to come up with an understanding showing their readiness to offer this land for development purpose. The understanding should show the economic values of their interests.

This system shall enable big chunks of land to be available for development purpose since parties involved are in agreement. 

Ugandans should refrain from land fragmentation since large scale investors want large chunks of land in single blocks other than scattered pieces which complicate development,

I have been involved with international Chinese Company called Zhongding International Engineering Company in collaboration with the Ministry of Lands, Housing and Urban Development. This Company has shown interest in constructing more than 6000 social housing units in Uganda. This means that we need land to construct these housing units. Uganda has a deficit of 1.6 million housing units. Therefore, this is just a drop in the ocean.

The Government embraced a system of Public Private Partnership in such ventures where individuals can offer their land for development patterns.

Land is going to be acquired through the following arrangements

(a)    Equity and Joint Venture. This is when land is valued at market price and offered by owner for development purpose. Here, the owner becomes a share holder in the entire business setting according to the value of his land.

(b)   Exchange of land to an agreed number of built housing units at completion. In this regard, the land owner is given housing units at completion worth the value of the land.

(c)    Outright sale or lease. The land owner shall be free to sale or lease his interest to the Development Investor.

We were sponsored by Zhongding International Engineering Company to China and Algeria to visit their construction projects as part of a due diligence. This was done because of the fact that there are some fake Chinese Companies which have come in Uganda. This Company has constructed more than 10.000 housing units for both commercial and social housing in China, 13000 completed and 17000 still under construction in Algeria, 3000 units in Botswana and Ghana respectively. We realized that Algerian Government is fully funding the entire low cost housing projects which ease the entire process of acquiring these units by low income earners because the annual interests are too friendly. This system has enabled many Algerians to own their own housing units hence covering on the housing deficit in that Country.

This Construction Company is willing to offer good construction rates to any big construction project in Uganda

We anticipate Social Housing units to be attainable at 50 million shillings through mortgage finance and   the loan shall be payable in 15 to 20 years.

 In calculation, if a fresh graduate is employed, he is entitled to a housing allowance which is by all standards not less than sh300,000. If this graduate is enrolled on this program, he will be in a position of servicing the loan in 15 years. However, there is a category of graduates employed in corporate bodies who can service this loan in a shortest period of time possible.

In case  Civil Servants  are  enrolled on this program despite the fact that many of them have no entitlement to housing allowances, and  in consideration of a fact that a junior Civil servant’s  salary  is not less than sh500,000,  a  commitment of sh277,777 monthly  to service  the loan shall be possible. Fortunately,  he shall be occupying the unit at the same time.  However, there is a category of senior Civil Servants who can service this loan in a shortest period of time possible.

Another category is of the business community whereby these social housing Units may be purchased in a shortest period of time possible with a condition that  after the  first purchase, they are not supposed to be transacted upon before 5 years elapse. This system shall control on the rate of business men who would wish to purchase the Units for commercial transactions and profit maximization since they are meant to benefit low income earners and to fulfill a Government program for social housing.

The Ministry of Lands, Housing and Urban Development intends to inform the general public about this program and we strongly believe that many people will be interested in acquiring these Units because of a friendly and fixed interest rate and in consideration of a long period of servicing the loan.  Bank interest rates will be fixed throughout the entire servicing of the loan.

When people enroll on this program, they will find it a better option than paying a monthly rent to a housing unit which will never belong to them.  This program will offer an opportunity to people to own housing Units in perpetuity.

I therefore appeal to all Land Owners to accept to co-existence on land with Lawful and Bonafide Occupants,  to  register  all the occupants on your land with documentary evidence, to refrain from land fragmentation but instead aim at big blocks of land  will ease the potential for business and to register  with the  Uganda Land Owners Association so that we can render any possible service to you.

Once this approach is blessed by all Land Owners and Occupants on land in Uganda, the entire investment on land will be simplified because investors fear to get involved into land conflicts.

The writer is the founder member - Uganda Land Owners Association