Jan

I took my time to listen to the lady who reportedly constructed 30 illegal shops in Kamwala, Lusaka, at a total cost of K972,000. A few things stood out to me. 1. The economics of the project. She speaks of generating K90,000 in monthly returns. What kind of infrastructure project generates that level of return and becomes net cash-flow positive within its first year? The question becomes: what risks were being priced into those returns? Part of the reason the project was so profitable was precisely because it was illegal. Some of those shops were reportedly built on titled land. You and a cadre effectively agreed to usurp someone's title deed and develop property without the necessary legal authority. What is the real cost/value of land those shops were constructed on. You cannot evaluate the returns without accounting for the legal risks, potential litigation, demolition and compensation liabilities. 2. The cost of construction. The shops were cheap to construct for a reason. They did not meet the requisite safety and construction standards. Compliance has a cost. Structural integrity, fire safety, sanitation, planning permission and other regulatory requirements are not unnecessary bureaucratic expenses. They exist to protect people and property. You cannot celebrate low construction costs without asking what standards were sacrificed to achieve them. 3. The business model itself. You were reportedly charging 10% of construction and acquisition costs per month in rental income. That is an extraordinary return, but it also raises questions about the sustainability and legality of the underlying investment. 4. Who actually carried the risk? This is perhaps my biggest issue. You effectively transferred the investment risk to the very traders you were supposedly creating opportunities for. Within a year, you could potentially have recovered your entire initial investment through rentals, while the traders remained exposed to the risk of eviction, demolition and losing the businesses they had established. I actually spoke to a few traders. Their biggest month-on-month concern was meeting rent. Imagine setting up a business in an environment where a substantial portion of your operating income goes towards servicing someone else's investment, while you have no security or tenure. At some point, we need to distinguish between creating economic opportunities and simply extracting value from people with limited alternatives. My issue is not with entrepreneurship or the ability to identify a commercial opportunity. It is with presenting returns generated under circumstances that disregard property rights, planning regulations and public safety as some sort of entrepreneurial masterclass. Ni same same as doing kaloba and then acting like you're a financial genius. A high return does not automatically mean you have created economic value. Sometimes it simply means you have found a way to transfer risk and costs to people who are less equipped to carry them & have little to no other alternatives.