Kamugisha: How loans drove Akright proprietor to the edge

He forced his brand into the elite circles, becoming a true and undisputed authority in a sector that was not so familiar with private developers.

Certainly, everything seemed to be going so well for Kamugisha until the mid-2000s when stories about his struggles started to filter through.

But these would vividly manifest in around 2010 when Uganda Revenue Authority (URA) first struck at the core of his business.

By then, it was difficult to understand what was really going on because Kamugisha had built an opaque brand of his empire that only insiders or close associates would have enough knowledge of the events within.

Few, many of them in his circles, would put a face to the name of the Akright boss, whose touch was changing the face of real estate.
But how did Kamugisha go from being the authority that he had become to the edge on which he is pandering on now to revive his real estate dream?

“From the outside, the world is green and could look glittering. But when you dig in a bit, the inside reveals molted ore,” Kamugisha says in an interview that takes us on a journey into the life of a man who has gone through the furnace and is now trying to bounce back, albeit with many lessons.

Many people, actually Uganda’s so called middle class, know a thing or two about Akright projects but cannot put a face to the man who curved it from nothing.

He has been through all including going to prison for alleged fraud.

The prison episode is actually a little fresh but what he went through during the period leading to 2010 and after was wrecking in its own way.

In December 2016, Kamugisha was arrested and subsequently sent to Luzira prison.

The arrest followed a complaint from Moses Twinomugisha, who later told the High Court that Kamugisha had defrauded him of Shs40.5m. The money, Kamugisha says, had been paid in 2014 for a parcel of land in one of Akright estates.

However, beyond this, Kamugisaha has had a more complex story that nearly collapsed his empire in 2010.

“I would be cheating the world if I don’t share my experience,” he says, starting on a journey that brought him face to face with a global real estate bubble and a brawl with URA that invited more trouble into an already troubled empire.

“URA estimated and slapped me with a very heavy amount of unpaid taxes. They said I had to pay or they recover it forcefully,” he says without going into details of the tax bill.

After he had received the estimates, he claims, he objected and asked URA for a re-audit, which the tax man rejected.

He had also done his own audit but URA, he says, rejected it and warned of dire consequences that included forceful recovery of the amount due. Weeks later “they closed my office and wrote letters to all my banks [asking them] to terminate my access to the money”.

The agency notice sparked off a new frontline that would turn out more tragic than it had been.

“It was disastrous. Nine of the banks I had been banking with were threatening to recall the loans. I had to pause and design a strategy,” he says, adding: “I took URA to court and sought an injunction. I got a restraining order stopping URA from closing my office.”

But this was not all because the strategy, he says, had also looked into negotiating with banks to persuade them into agreeing to sell the properties through public treaties, instead of auction.

“This was going to give me a window to find buyers to buy the properties at a relatively higher rate than what they would fetch through an auction,” he say.

Certainly, the strategy worked and Kamugisha, he claims, has been able to settle all banks but one, which is “still giving me some trouble”.

“I was able to convince the banks because I had been a good customer,” he claims, emphasising the negotiations were protracted and difficult but at least it was agreed that when the money is paid within an agreed maturity period, the titles would be released.

“I would get buyers. They would pay in the bank and go with a title. So, I sold most of the mortgaged properties in the bank. I managed to recover some money and paid other obligations quietly.”

All this was never a rosy process as it might sound. Sometimes Kamugisha would have to borrow from money lenders to save a title given that in most cases buyers were never available at the time of maturity.

“It was my first experience to deal with money lenders. Some of them treated me so badly though I had to use them as a bridge to manage banks. To be honest, out of the nine banks, I have one left because they want me to pay all the money in one go,” he says.

Building the Akright dream
In 2006, Kamugisha embarked on a project that would see him establish 12 Akright cities in Uganda at least by 2040.

However, for now, it is difficult to conclude that this will be possible as he continues to battle a number of cases and challenges.

For now, he claims, he has been able to settle at least 1,400 of his clients out of the 1,700 that had complaints. “I only have about 300 unsettled clients and I won’t retire until I have settled them all,” he says.

Some challenging times
Kamugisha had considerable challenges but he had vowed never to let loose.

Key among the challenges was when Akright borrowed funds from Shelter Afrique, Nairobi and developed the Namugongo real estate project only to be told by Uganda Electricity Transmission Company Limited (UETCL) that some houses were to be demolished to pave way for power transmission lines.

When Akright bought the land, he said in a 2015 interview, it didn’t have any incumbrances.

“We asked to be compensated but UETCL said it would only pay for the houses which will be demolished claiming their project had been approved first. When bankers heard of the conflict, they recalled the loan immediately saying we didn’t do due diligence. The Shs500m compensation from UETCL was not enough to pay back the entire loan so the bank sold property and this was a big blow to Akright.”

About Kamugisha
Kamugisha was born in Mbarara on February 25, 1963 to Baturimayo and Tereza Ruhigirwa.

He attended Rwomuhoro Primary School before joining Mbarara High School for his O and A level.
He then joined Kyambogo Polytechnic to pursue a course in civil engineering.

However, he dropped out in his First Year after his father, the only bread winner, was shot in head and leg.

In the process, he did a lot of petty jobs, before starting Kanoblic Group of Companies.

It, however, collapsed and it is then that Kamugisha saw an opportunity in the real estate sector.