Magic Plots

The urban areas with special emphasis on Lusaka and the Copperbelt have experienced some interesting and ingenious magic incantations that manufacture plots of land in areas that are known to be fully developed.

The town planners and government departments will close files on development in certain areas only to be re-opened a few years later with a mission to magically create some new plots for sale to the general public.

The magic tricks and juju that goes on in Lusaka is emulated in many other parts of the country to the extent that city planners and local councils begin to create a shanty town that is poorly serviced purely out of greed and abuse.

Commonwealth road in Matero is undergoing some changes that will generate official tuntenba’s along this main trunk road unless arrested by the Ministry of Local Government. Shortsighted immediate gains are chosen instead of orderly development that will have a future positive impact on the quality of life for Matero residents.

Vubu road in Emmasdale is being threatened with the creation of numerous new plots on the interlink roads connecting Vubu road to the opposite parallel roads. Some local council staff have seen it fit to block off the interlink roads on one end and create a plot on the actual road thereby now converting the road into a single access close. There is a current dispute on the Kalanga road and Mimosa road junction where such a plot has been approved for creation using this urban development magic.

The development of a block of commercial plots in Jesmondine has been stalled for a few years now due to a new plot number JES 220 that was magically created on the access road reserve which was designed to not only provide access to the existing commercial plots, but to also provide access routes for sewer and water supply lines.

These examples of magic plots are but a few instances where the local authorities have ignored all city planning blueprints and opted to undermine the orderly development of the city at the expense of frustrating economic development.

Correspondence to the city planners, Ministry of Lands, and Anti Corruption Commission has been forwarded and the acid test will be to see what kind of response and action will be taken.

The urban plots saga is at the brink of evolving into full scale anarchy unless the top brass in the Ministry of Local Government, the top Civic Leaders, and the Minister of Lands, collaborate to eradicate the creation and allocation of magic plots which in many cases create huge legal complications once allowed to flourish.

The real magic plots should come from professional town and city planning that either redesigns complete areas, or develops new areas to be offered to the public through the usual application systems.

Other real magic plots are created through the act of shanty compound dwellers selling their small plots in bunches that share common boundaries. These consolidated small plots magically become one new commercial plot. Examples of this form of magic plots can be seen along the Kafue road in Lusaka in Misisi Compound and John Laing compound.

An interesting magic plot is one that is given by a traditional ruler to an individual or institution. In many cases the plot will not have title deed because although it has been allocated to a single entity to be used for an agreed purpose, the land still officially belongs to the local people and is administered by the traditional ruler.

The most well known creation of magic plots comes from the new plots that are created as a result of a sub division of a much bigger plot. This form of plot is so common that most of our title deeds bear the plot number as being SUB x of Plot number y, where x and y represent the new plot and older mother plot respectively.

The political players use magic plots to attract votes and to cement loyalty. When the exercise is done haphazardly the net result is that service lines are obstructed, several owners with convincing documentation begin to fight for one particular plot, and the city or town degenerates into a slum due to limited road access and lack of maintenance.

There is an obvious shortcoming in the way we manage the creation and allocation of plots in Zambia. This is evidenced by the increased levels of corruption in plot creation, and allocation.

In many countries the residents of any particular area are consulted before the creation of any new plots, or the re-designing of older existing roads and plots structures.

The advice on the street is that don’t be fooled into buying a plot that either has not been publicly advertised, or is clearly located at the end of an existing road or street.

The public must be made aware that obtaining and buying plots can be a tricky business which can easily lead to a huge loss of money and possibly attract some criminal charges.

The Latin property law doctrine of ‘Caveat Emptor’ translates into English as ‘Let the buyer beware’. The buyers or recipients of plots in Zambia must also beware that they do not lose their hard earned money on some magic plots that may disappear as fast as they appeared when the transaction was being made.

Ignorance is no excuse before the law in many cases. The purveyors and customers of magic plots will only have themselves to blame when deals go sour and the authorities demand that illegal or illogical magic plots be eradicated to maintain a measure of development sanity in the nation.

Watch out for magic plots because they could turn out to be magic tricks to extort your money but worse still, they could suddenly vanish at the first signs of trouble. Magic is all about illusion, and illusion is all about seeing something that actually does not exist.

Published 25 May 2010

Property Scams

As the Zambian economy grows the environment becomes much more sophisticated. Businesses assume more complex mechanisms and things begin to move much faster.

The ordinary person must now rapidly learn to be more careful and more conscious of what is going on around them as an increasing number of unscrupulous people walk the streets of our cities.

In all professions there are rules and regulations to follow coupled with a code of ethics to ensure that business is done in a fair manner. To this end, many professionals are obliged to join various associations and be registered with specific bodies in an attempt to use both per pressure and oversight institutions to promote good business practices.

In the property business it often becomes difficult to distinguish the professionals from the conmen.

Furthermore, one cannot easily determine who the perpetrator is and who represents the victim.

Take the property rental business as an example. Too often one assumes that the person renting out the property is likely to be the conman while the person renting the property is labeled the victim.

Experience notes that in many cases people that go into the market to rent out a property will do every thing in their power to rent out the premises. In an increasing number of cases the people renting out the property do not even have an official mandate to rent out the property. The required official mandate will be in the form of a signed agreement between the property owner and the agent that will authorize the agent to rent out the property on behalf of the owner. Many people sign lease agreements with agents, family members, and friends that do not have the authority to enter into any agreement on behalf of the owner of the property. In short, the agreement or contract is null and void, and borders on fraud.

Money will have changed hands and at some point the legal owner of the property can demand re-possession of the property, or claim for un-paid rentals, or both.

The flip side of the argument is that legitimate representatives for property that needs to be rented out can negotiate with a prospective tenant and still find themselves experiencing losses and possible legal action.

A situation where a prospective tenant offers to rent a property and requests for access to the property so that they can start preparing to make new curtains or other furnishings, can develop into a property owner’s nightmare. The prospective tenant highlights that payment for the rentals is being put together within a few days and offers that on the date of payment the lease agreement will be signed by both parties. In the meantime they would like to visit the property from time to time and make preparations to move in once the money comes in. It seems like a harmless arrangement at face value.

The prospective tenant then visits the property a few times to take measurements and comes with different colleagues each time.

Before anybody knows what is happening, the prospective tenant receives six months advance payment rentals for the same property from one of his so called colleagues.

How? The prospective tenant actually offers to other people, the same property that he states that he wants to rent. The fact that he has access to the property gives him credibility in the eyes of the new tenant, and often the rentals demanded will be well below market rates, thereby making the new tenant pay up front in a hurry in a bid not to lose this good deal.

The conman with the cash in the pocket disappears and leaves the fight to begin between the real owner and the cheated new tenant who is unknown to the owner.

This is a common scam in many countries and often the owner of the property and the cheated tenant have to fight it out in court as the cheated person alleges that the conman and the owner were working together to cheat innocent people.

Sometimes the conman even goes further than just renting out property that he has no authority over. Instead of renting the property out, the conman actually sells it at a price that is one third of the market value. The unsuspecting buyer loses even more than a few months’ rentals as he rushes to his bank to withdraw all his savings to pay for this jackpot bargain property!

If one is looking to rent or buy property then it is important to use some basic rules to ensure a legitimate and mutually beneficial outcome.

It is always a good idea to use registered estate agents and to part away with one month of rent for the work that they do to avoid losing money or spending months in court.

If you want to rent property then make sure that the agent has a bona fide letter of authority from the owner. Ask to see the Certificate of Title if you are considering buying the property.

Do a check at the Ministry of Lands as to who the registered owner of the property is and what encumbrances the property has. Is it mortgaged? Is it being contested by another party? Are they any Caveats registered? Is the property owned by an individual or a number of individuals, or an institution?

If you are renting out property through an agent be sure to be clear about whether you are giving them exclusive rights to rent out he property, or whether they have non-exclusive rights that allows others to market the property.

Holding onto a security deposit of one month rent helps to keep both landlord and tenant focused on eventually terminating the property rental relationship in an amicable manner.

The Law Association of Zambia and other bodies in the legal sector have drawn up sample Property Lease Agreements, sample Property Sales Agreements, and sample Property Assignment documents for use by the general public when dealing with property transactions.

It pays to use these professionally developed documents when dealing with property. For many Zambians, property owned reflects the work and achievement of a lifetime. Let us all be watchful for the property scammers that are out there looking for a soft and foolish target.

Published 11 May 2010

Audited Accounts

Last week the accountants and tax collectors met at the Mulungushi International Conference Centre in Lusaka as part of a series of planned meetings to discuss the demand by the Zambia Revenue Authority for the submission of Audited Accounts with annual tax returns at the end of each financial year.

The meeting produced some hue and cry from the public on this newly introduced hurdle, to be faced by local businesses, which could possibly affect this year’s tax returns, as the country ended the business financial year on 31 March 2010.

A scrutiny of the Companies Act under chapter 388 of the Laws of Zambia reveals that actually this demand for Audited Accounts to be produced is enshrined in Part VIII Section 164 (3) which reads;

‘The directors shall take reasonable steps to ensure that the annual accounts of the company and, if it is a holding company for which group accounts are required, the group accounts, are audited as required by this Part within the time allowed by subsection (1). Sub section (4) further reads ‘The directors shall cause the auditors' report relating to the annual accounts that is furnished to the directors in accordance with this Part to be attached to, or endorsed upon, the annual accounts.

The interpretation of the word ‘company’ is contained in Part I and reads; ‘company’ means - (a) a company incorporated under this Act; or (b) subject to section four and Division 14.3, an existing company; ‘company limited by guarantee’ means a company incorporated as such, being a company satisfying section nineteen.

In a nutshell, the production of audited accounts is a requirement under the law, but only for companies incorporated under the Act. This generally means Limited Liability companies and companies Limited by Guarantee although there may be some special companies that are incorporated but are unlimited. This requirement applies both to private companies and public companies.

Now that the legal issues are dispensed with, the next question is; how does this legal requirement which is now demanded by the Zambia Revenue Authority impact on the private sector in particular?

For the medium to large corporates this requirement is part of their year to year activities and forms part of their annual due diligence and performance analysis program which focuses on improving the productivity of the company and protecting the interests of the shareholders or guarantors as the case may be. No dust is kicked up by this demand for audited accounts and life goes on as before.

As for the medium to small entrepreneurs, a new hurdle will have been introduced that will demand a higher level of book keeping which requires qualified accountants that cost more money to the business. In addition, the cost of an audit by an accredited or recognized auditing firm is likely to be a large burden that will add to the cost of doing business. Figures of between a low of K 5 million and a high of K 30 million were thrown across the room during the private sector – public sector debate on the issue in Lusaka.

However one wants to interpret this development, it is clear to see that there is a cost that companies will have to bear which may escalate even higher if the auditing firms decide to hike their charges across the board in response to this new revelation within the law. After all, business is all about seizing the opportunity to maximize profits where possible.

Part of the rationale behind the running of a series of meetings across the country to discuss this issue, is to receive the various views, concerns, criticisms, and comments on the way forward for Zambian registered companies.

It is extremely important to address this issue with an open mind and a spirit of nation building by both the private sector and the various arms of government and the public service.

Open and candid discussion and debate can chart a path for the private sector that should prevent hundreds of companies that constitute the medium to small businesses from de-registering as limited liability companies and re-registering as sole traders to avoid having to produce audited accounts for tax purposes. This undesirable move renders many companies unable to borrow from the banks in any meaningful way, blocks a clear pathway for equity partnerships and joint venture, and leaves firms and families exposed to economic storms as the country integrates with the region and the global economy. In the case of Zambia, this shift could account for more than 90 percent of all businesses registered and active.

Some smart planning and strategic engagement must be implemented with all stakeholders to ensure that Zambia promotes economic growth and higher productivity within the solutions agreed upon.

Options to research how this issue has been handled in Europe with special focus on the United Kingdom and her former colonies across the world, may offer some insights and possible solutions for Zambia, aside from simply following the law of the day.

Across the world, laws are made every day, amended every day, and in some cases repealed every day, when they do not support the aspirations and positive evolution of the people they govern.

Published 20 April 2010

Service Madness

The world is raising the bar on service levels in an effort to mitigate against the possible loss of business due to the impact of the global credit crunch.

Financial institutions are looking at innovations in product design so that they can lend out money but at the same time minimize the risk element that was ignored in the last few years which finally led to the crisis that we now find ourselves in. To this end, shiny new brochures are suddenly showing up on the service counters, branded T-shirts and caps are handed out, mugs and pens are issued with the opening of new accounts, all in an attempt to woo customers in with public relations efforts.

Restaurants have started to offer specials where the customer pays one fixed price for a meal but is allowed to eat multiple rounds of servings. This gimmick is practiced all over the world and attracts flocks of new customers who always want a good deal.

Some fuel stations offer a soft drink with every purchase of fuel of K100,000 or more. Most fuel stations try to offer windscreen cleaning, oil checking, and tyre pressure balancing as a standard service to set themselves as the fuel station of choice for local residents.

Even the contract hawkers that walk the streets of Lusaka and the Copperbelt knock at office doors selling camping lights, fly swatters, and storage bins, on a special offer system where you buy one and get one free.

The name of the business game in 2009 is to improve the service levels, keep the prices stable, and push for more turnover.

One curious observation in the cities, is that although there are these great efforts to keep businesses afloat, the fundamental support system to get the customers into the desired business premises is not addressed.

The business doors may open at 08.00hours, the staff may be pleasantly dressed, the premises may be squeaky clean, but there are no parking spaces available for driving customers to enable them bring their cash to the cashiers.

A quick look along Cairo Road in Lusaka reveals that most of the parking spaces are 'reserved' for the directors, managers, and staff of the very same businesses that are trying to attract customers. Where do the customers park?

In the developed world, directors and staff will either park at the back of the premises, or in out of the way parking areas so that the parking spaces for customers in front of the business premises is available to the public.

In Lusaka, there is now a budding industry for reserved parking barriers popularly known as 'visenke' to block every available parking space in the Central Business District. Businesses still wonder why they are not getting the customers that they expect after putting so much effort into upgraded in-premises service and freebees.

It is quite obvious that upgraded service must go all the way. It starts with the customer being facilitated to come to the business premises before the onsite service can begin to take effect.

One can imagine the anxiety and hassle of getting to any of our local radio stations located at the south end of Cairo Road for an early live show at 09.00hours. The guests will have to circle the area like vultures for at least thirty minutes before any kind of parking is found. Strangely enough, parking on the pavement in this area seems to be permitted and encouraged, but parking on the pavement in areas north of the Post Office building, attracts the wrath of the Lusaka City Council traffic wardens that clamp your vehicle and demand a K240,000 fine.

It is refreshing to note however, that Barclays Bank has recognised this difficulty at their new Premier Banking Centre at Elunda Park located adjacent to the Addis Abba round about. The car park at the entrance to the premises is reserved for customers and the top bosses and staff have to park on the gravel embankment along side the road. The customer is for once coming first.

2009 promises to be the year that will challenge service levels in all businesses. The current service level madness of ignoring the customer in favour of business bosses will impact on balance sheets, and top people will lose their jobs both in the private sector and the public service.

Businesses that will put the customer first, operate more efficiently, set a conservative profit margin, and deliver the goods, will survive the current global economic crisis and may even prosper.

Published on 21 April, 2009

Burning Business

Not too long ago, the identification of a town consisted of a minimum set of public services which included a Post Office, a Police Station, a Hospital, a Church, a School, and a Fire Brigade Station.

When we look at the oldest buildings in any town or city, these relics of public services still characterize the genesis of urban development. In the developed world these old facilities have become museums for the kids to marvel at, as new and more sophisticated installations are put in place to replace these now inefficient buildings and associated equipment.

Old Churches and hospitals are often elevated to tourist attractions, and as we see in Lusaka, the old Post Office at the corner of Katondo Street and Freedom way is now a national monument. This is generally the fate of most old and now historical buildings and equipment as the value is more for capturing lessons learnt and experiences, than functionality in this constantly developing world.

The odd situation in Zambia is that the Fire Brigade Stations around the country seem to have escaped this natural course of evolution. We still have our old Fire Stations running more or less the same as they did in 1964 at the turn of independence. In some cases even the fire engines are now vintage vehicles fit for the museums with little or no functionality except to ferry firemen from one place to another.

Some ten to fifteen years ago, Society House on Lusaka’s Cairo Road was gutted by fire while the Lusaka Fire Brigade with support from the National Airports Fire Tenders and even the Kafue Fire Brigade helplessly made some feeble attempts to put the fire out. The equipment at hand was not adequate to deal with a fire in a multistoried building, and therefore most of the floors above the fifth floor became infernos that were fed by furniture, carpets and worst of all, a keen wind up there above the tree line. The ghost like building still stands with blackened walls like the remains from some war zone. Its current value is that it is now the most expensive giant bill board stand in Africa and markets products for a mobile phone company.

Did we learn any lessons from this experience? Did we use this nasty experience to prepare better to fight future fires?

Another memorable fire broke out on the top floor of Kulima Tower in Lusaka in the premises of the Zambia National Tender Board. Again, there was very little that the fire department could do even with support from their traditional Airport tenders and the whole floor was gutted as we all watched helplessly.

Over the years several fires have erupted at markets in Lusaka, Kitwe, Ndola, and Livingstone, and yet again we had inadequate fire tenders and equipment to prevent the loss of property and lives in these incidents.

More recently, Shoprite on Cairo Road went ablaze in broad daylight and in full view of many Lusaka residents. The usual team of Lusaka Fire Brigade and the National Airports Corporation and any other miscellaneous equipment came to the rescue, but the building which was no more than two floors tall, went up in flames until it could burn no more. Those people that work in the vicinity reported that the fire went on for days before it burned itself out.

Last week, another fire broke out in an office block in Kitwe. The Kitwe Fire Brigade, the various fire services operating in the mining companies, and the Copperbelt Energy Corporation fire tenders rushed to the scene and tried to put out the fire. The equipment was not very functional, the despondent firemen and women just seemed to go through the motions mechanically, and there was a general atmosphere of resignation to the fact that the building would either burn to the ground, or that the fire would somehow burn itself out. Fortunately, the latter proved to be the outcome due to lack of oxygen to feed the fire in the building, and only one floor was gutted.

Last Thursday night I received a phone call in the small hours of the morning from someone who was mistakenly informing me that our shop was burning to ashes in the market. When I told the caller in Nyanja that I did not have a clue about what he was talking about, he promptly apologized and told me that he had dialed a wrong number but that there was a fire in the market. My immediate thought was ‘will there be a fire brigade tender to put the fire out before it destroys goods and buildings belonging to the caller and other entrepreneurs?’ I was not too hopeful about that.

The prospect of fire breaking out anywhere in Zambia must be an Insurance company’s nightmare. The possibility of a limited insurance claim is almost non existent because without proper fire fighting equipment in our towns and cities the expectation is that the fire will wipe out everything flammable. Since the insurance business is all about risk, the premiums for fire insurance must be very high to mitigate against the fact that fires cannot be fought effectively and efficiently in Zambia.

What misery and wastage of resources do fires account for? How many small businesses in the various markets have perished due to fires? How many families move from survival mode with a small business, to destitute mode when their property and goods are burnt to ashes? How many men and women have we seen wailing on television because their homes were burned to the ground due to fire? Fire destroys completely. The only value of the end product after a fire is fertilizer for gardens, as was used in the Chitemene system.

We can all therefore see a strong case for investing in our various Fire Departments and Fire Brigades around the country. It is important for businesses, that fire should be a risk that can be managed. Our insurance premiums will be much lower if the insurance companies can count on our national fire fighting capacity to put the fires out to minimize the damage to property. Fire reduces an asset to ashes therefore it destroys wealth that has been created by hard working people.

It is time now to invest in our public safety with no budget hurdles. Every Zambian wants to live in an environment where he or she can count on the Fire Brigade to come to his or her aid when there is a fire. We have seen how helpless we are to deal with fires over the years. We must act now, because fire is like a disease. You may ignore the treatment and survive, but eventually it will catch you unaware and the price is usually much higher to pay.

Published 20 May 2008