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Masindi prices soar as town gears up for oil boom

Picture: upmarket housing under construction in Masindi

Upmarket housing under construction in Kigunya zone of Masindi town

Before a drop of Uganda’s oil has been produced for sale, the small and once sleepy town of Masindi, 40 kilometres from the prospective oilfields of Butiaba, is bustling with investment and anticipation.  Hopes are high—but so are prices, as demand soars for land and services.  Property developers and service industries are reporting quick profits, but Oil in Uganda staff writers found losers as well as winners in this boom town in the making.

 

MASINDI, March 12, 2102:  Fifty-year-old farmer, Yoram Kwebiihe, who has toiled all his life on his 15-acre farm, growing mainly maize and beans for home consumption and selling a small surplus, cannot believe his luck.

For decades, Kwebiihe earned less than one million shillings (US$ 400) per year from his farm, twelve miles outside Masindi town. Two years ago, with savings put by carefully over many years, he managed to buy a small plot of land, measuring 50 by 100 feet, in the town centre.  He hoped to develop it in future by building a guest house.

However, the plot remained undeveloped, because the father of ten could not raise the cash needed to bring his dream to life. But recently a Kenyan businessman came knocking at Kwebiihe’s door, offering to buy his plot for 17 million shillings (US$ 6,800), also with the intention of developing a guest house.

“At first, I thought he had come to con me; so I used Bravo Auctioneers and Court Bailiffs, real estate dealers in Masindi, to negotiate the deal to avoid being defrauded,” Kwebiihe relates.  “That is when I realised that he was real.”

In the end, Kwebiihe minted 18 million shillings from the Kenyan entrepreneur, taking home 16 million, and paying the real estate dealers a commission of two million.

Inspired by this deal, Kwebiihe went home and sold ten acres of his land for 34 million shillings. He then relocated to town, where he invested the money in a two-roomed commercial property, from which he will now collect six million shillings in rent each year.

Kwebiihe says his life has improved considerably since the discovery of oil in the region. “More foreigners have come here and they are giving us money. I am rich and I am also taking care of my children’s needs – school fees, medical care and other necessities,” he told Oil in Uganda.

Simon ‘Wire’ Ssebuwufu, an electrician from Wakiso District, has not been so lucky. In late 2011, he heard that a small plot of land a stone’s throw from Masindi town was going for 2.5 million shillings. He set about raising money to buy the land but at the beginning of March he learned that it had been sold for a hefty 15 million.

Ssebuwufu, who also dabbles part-time in real estate, says that property prices in the area have been rising for several years but the steepest rise so far was in 2011. “It appears that the direction of this trend can only be upwards in 2012,” laments Ssebuwufu, adding, almost in wonderment, that, “People have money.” Most buyers, he says, appear to be in a rush, not even caring whether the properties have titles or not.

Tadeo Karatunga, the Director of Bravo Auctioneers and Court Bailiffs, recalls that just a few months after oil had been discovered in the area, both locals and outsiders started enquiring about the price of land and buildings in Masindi town.

“Since December 2006, when it was reported that Uganda had discovered oil, we began receiving outsiders wanting to invest their money here. On a weekly basis, we could get as many as 20 local investors and over 10 foreign investors,” explains Karatunga in his centrally located office.

Growing demand has driven prices up. Before oil was discovered, Karatunga says, a plot like Kwebiihe’s cost less than one million shillings. “But as you can see, in less than a year, it multiplied 18 times,” he says. “All this has come about due to the discovery of oil. Everyone wants to come and benefit.”

Prices of residential and commercial rentals have also skyrocketed. A year ago, 35-year-old Hannington Tubaganjana, a resident of Masindi town, used to let his one-roomed shop for just 600,000 shillings a year. But with the influx of outsiders buying into the property market he found a Kenyan willing to rent it for 5 million shillings a year.

“We have taken advantage of this and we are naming any price for our property. If one investor declines, we get another who can afford. Life has become better,” Tubaganjana boasts.

Service industries prosper

Mobile money agents and networks are also benefiting from the apparent boom. According to an employee of MTN Uganda’s Masindi branch, two years ago, only 1,500 customers a day were sending cash through their mobile money network. This number has since soared to more than 30,000 customers daily.

Moses Muhama, a local MTN mobile money agent, reports that his profits have improved. He used to find less than six customers a day, but now averages more than 30. “What is more interesting is that the deposits and withdrawals have increased from a few shillings, to millions,” he says.

“In a week, I can make 1.2 million shillings profit. Oil has brought money,” Muhama says. “We have a bright future because if oil production starts, we shall become millionaires.”

Commercial banks and micro-finance institutions are opening new Masindi branches to capture some of the money flowing through the property market and service industries.

Picture: entrance to Masindi Market

Entrance to Masindi town market, which, locals say, is slated for reconstruction

Internet cafes are registering more customers and raising their charges. Connie Agasha, who runs the Byte Internet Cafe, used to charge 1,000 shillings per 30 minutes online, but now charges 5,000 for the same period. She used to have only around five customers a day, but is now receiving more than 200.

Local restaurants have also not been left out in this boom. Oil in Uganda enquired at 15 restaurants and found that the average price of meals has shot up from around  2,500 shillings per plate to 7,000 shillings. More outsiders and locals are eating from the restaurants than ever before.  Anne Kesiime, who operates the Go Down restaurant on Hoima Road, has seen her customers grow from 10 per day to around 70 now. Her prices have increased too.

The hotels and guest houses are full, their prices rising steeply as this once sleepy and remote town bustles with new activity.

Downsides to the boom

The prospect of oil may have brought early profits for traders, but it has also brought trouble for some locals.

Masindi District Vice Chairman, Kanaginagi M. Atenyi, warns that hunger is looming in the District, as the locals sell off once productive farm land to real estate investors.

He explains that some of these local people had never “touched” more than a million shillings. So when they do, they go on a spending spree into town and blow the cash. Consequently, the District is registering landless and hungry people, amidst soaring commodity prices.

Forty five-year-old Nicholas Kwesiga had five acres of land on the outskirts of Masindi town. When Masindi District Farmers Association approached him with an offer of 120 million shillings (USD 48,000) for his land, he rapidly agreed. “I’d never seen so much money in my life and when I got it I thought it would never come to an end,” Kwesiga told Oil in Uganda.

He spent most of the money, 102 million, on buying a Mercedes Benz. The rest went on women and drinks until Kwesiga was broke.  Once the money was gone, he sold off the Mercedes, at a throw-away price of five million shillings, which he also spent on leisure. Kwesiga is now homeless and ekes a living begging from friends and relatives.

Prostitution is also on the rise, with commercial sex workers plying their trade increasingly openly, even during the day time. According to Atenyi, commercial sex workers from Kampala and other urban areas have besieged the town. Some local girls, he says, are dropping out of school to join the sex trade.

“Our culture is slowly being eroded,” laments Atenyi. “We are tongue-tied and we do not know what to do.”

Picture: pegging out new land for housing

Workers peg out property lots in the upmarket Kigunya area of Masindi town

Kanaginagi says that the District is planning to sensitize the people not to sell their farm land. However, this may come too late, as over 20,000 hectares of arable and commercial land has already been sold to both local and foreign investors since the year 2010.

Report by FW & CM
Pictures, NY