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How to address Uganda’s huge housing deficit

By Vision Reporter

Added 13th July 2015 02:39 PM

What should be clear to all of us is that there is an unprecedented need for the managers and decision makers to act aggressively to meet the huge shortfall and growing demand for housing in the country.

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What should be clear to all of us is that there is an unprecedented need for the managers and decision makers to act aggressively to meet the huge shortfall and growing demand for housing in the country.

On July 2-3, 2015, there was a Uganda Housing Finance Conference. Daudi Migereko, the Minister of Lands, Housing and Urban Development, addressed its launch that was attended by the Vice-President, Edward Ssekandi.

Below is the minister’s abridged remarks Your Excellency,

We are greatly honored by your presence at this function.

This is a clear sign of the importance your Excellency, the President and the NRM Government attach to the housing sector.

Your Excellency, the country is faced with a huge shortfall of housing, standing at over 1.6 million housing units.

Paradoxically, this presents us with unusual opportunities. In the first place it presents an opportunity for exploiting and utilising of our local construction materials such as sand, bricks, cement, timber, iron and steel. The production of these items presents new investment and business opportunities. Their increased utilisation ensures increased production of these materials which will result into a reduction in the cost of construction materials hence a reduction in the cost of housing production.

Your Excellency, these items and the housing industry have huge forward and backward linkages with incredible multiplier effects. This saves the country a lot of foreign exchange at a time when we need to stem the depreciation of the shilling. More importantly, undertaking housing projects presents us with a clear avenue for tackling unemployment in the country; which is our single biggest problem today. Dr Ezra Suruma has written widely on this subject. 

It is, therefore, highly timely that this conference, which seeks to find solutions to the challenges confronting the development of the housing sector has been organised at this time. The timing is also important because our party NRM is developing its manifesto for 2016-2021 - as such the recommendations of this conference will provide good input to Government programmes.

What should be clear to all of us is that there is an unprecedented need for the managers and decision makers to act aggressively to meet the huge shortfall and growing demand for housing in the country.

What are the challenges?

Accessibility to well-planned and serviced land.

My ministry would like to ensure that housing units are developed in comprehensively planned neighborhoods. Due to land tenure systems, it is at times a problem to get sizeable land for massive comprehensive housing development. However, with increased sensitisation and transformation of our people from informal/traditional society into modern and organised communities; land is being made available to activities that ensure the highest returns which include modern commercial housing. Urban and local authorities in a bid to attract investment in their areas are also making land available for real estate development.

As a ministry, we have to take a decision of partnering private land owners with developers and financiers as a new initiative to overcome some of the problems related to availability of land for housing construction. For example, Shelter Afrique is already participating in this model with private land owners in greater Kampala.

The recently introduced computerisation of the land registry should make it easy to ascertain the availability and status of this land. It also enhances the efficient and effective management of land in the country which comes in handy for financing arrangements. I hope the difference has been noted by the financial institutions. Indeed we would like to get feedback on the performance of the registry after we have computerised it. Sarah Kulata will throw more light on this.

Housing finance is one of the most critical inputs in the process of housing delivery. It is unfortunate that in Uganda availability of affordable long term construction financing and mortgage are not easily accessible to all of us. The existing statistics show that only 0.68% of the 5.2 million households in the country can access mortgage loans through financial institutions.

Lack of affordable construction finance for large housing estates is also a big constraint observed in the market. As a result companies such as National Housing and Construction Company end up borrowing from commercial banks at very high interest rates.

Consequently the houses constructed are expensive and can only be affordable to upper middle income earners or high class. The lower middle and low income earners end up fending for themselves and contribute to the unplanned construction observed in most parts in the country. 

We must put a stop to this and handle housing development as specialised big business.  This is already happening in Ghana, Ivory Coast, Madagascar, Algeria, Morocco. They are constructing tens of thousands of homes every year. The duty of the citizens is to select the home they want, make money and service the mortgage that they will have acquired to enable them own the home of their choice.

There should be specialisation in mass production of affordable housing so that banks can do the leveraging and provide cheap construction and mortgage finance.

Therefore, banks such as Housing Finance Bank should explore ways of partnering with financial institutions such as the National Social Security Fund, Pension Funds, Provident Funds and Shelter Afrique and other multilateral funding agencies like AFD, ADB, EIB etc in order to be able to access long term construction finance. This would enable local companies such as National Housing Construction Company, HL Investments, Property Services, Canan Sites etc. access cheap construction finance for house construction for all.

As a way forward, we should popularise quick to build alternative technology to ensure affordability of housing as well as quick completion of construction.

My ministry has a duty to work with everyone to build and grow the real estate industry so that in future we are able to reach out to a much bigger population in terms of providing them with well-planned housing estates in the country to cater for teachers, health workers, public servants at district level and the private sector.

I, therefore, hope that this conference will enable the key players to come up with strategies of mass production of affordable housing to all and provision of cheap and long term construction finance as well as mortgage finance so that the supply and demand side effects are addressed.

Before I resume my seat, I would like to propose to this conference, the need to develop innovative mechanisms and products to drive the housing finance market in Uganda.

We should strive to secure single digit interest rates as opposed to the current 15-25% that are not favourable for large scale long-term capital investment in the real estate sector.

Let all of us the key actors in the housing industry act aggressively and come up with housing development programmes that will enable us to construct at least 50,000 housing units every year for a start.

I now take this opportunity to invite H.E the Vice President to come forward an address us.

I thank you for listening to me.


How to address Uganda’s huge housing deficit

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