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Unl
ockingthePot
ent
ial
ofUganda’
sHousi
ngVal
ueChai
nThr
oughSt
rat
egi
cPar
tner
shi
psand
Col
laborat
ion

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ockingt
hePotent
ial
ofUganda’
sHousi
ngVal
ueChai
nThr
oughSt
rat
egi
c
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tner
shi
psandCol
labor
ati
on

Unl
ockingthePot
ent
ial
ofUganda’
sHousi
ngVal
ueChai
nThr
oughSt
rat
egi
cPar
tner
shi
psand
Col
laborat
ion

Post
edonMar
ch29,
2021

Downl
oadPr
esent
ati
on

ByJi
mmyEbongandMar
iaNkhonj
era

Uganda’sFinanci
alSectorDev elopmentSt r
at egy( FSDS)est i
matest hecountry’
shousingdefi
cit
tobe1.6mi ll
i
onuni t
s,wit
hanannual r
equirementbet ween180, 000and210, 000units.Gi
ven
rapidr
atesofpopulationgrowt handur banisation,awi deni
nghousi ngneedmayov erwhelm
cit
iesi
nt henearfutur
e.Ugandahast het hi
rdhi ghestpopul ati
ongr owthrateinAfri
ca(at3.
6%),
whilet
hecount ry
’surbani
sationr atei
spr oj
ect edt obe5. 6%perannum.Ur banhouseholdsare
expect
edt ogrowt o3.8mill
ioni n2025, f
rom 2. 9mi ll
i
oni n2020–a31%i ncrease.Uganda’
s
urbanareasaretherefor
epoi sedf orarapidincr easeinhousehol ds,impl
yingahugedemandf or
adequate,
affor
dabl
ehousi
ng.Onl
y44%oftheurbanpopul
ati
onownthei
rdwel
l
ings[
1],
whi
l
ethe
2018FinScopeSurv
eyindi
cat
es19%ofadul
tsaspir
etoacqui
reahouse.

I
n2020, thepriceoft hecheapestnewl ybuil
thousebyaf ormaldeveloper,i
nUganda,wasf ound
tobeUSh183mi ll
ion( US$49,900)–af f
ordabl
eonlyto4.4%oft heurbanpopulati
onwithfinance.
Therefore,mostl ow-andmi ddle-
incomehouseholds,wit
hgr ossmont hl
yincomesanywher e
betweenUSh50, 000( US$13)andUSh600, 000(US$163)permont hl
ackt hefi
nanci
alcapacityto
accessmar ketdeliv
er edhousing.Thethreshol
dforaffor
dablehousinginUgandai st
ypicall
y
wellbelowUSh100mi ll
ion(
US$27, 327)
.Expandi
ngaccesst oadequat eandaffor
dabl
ehousi ng
andfinancingmechani smswoul dneedtocatertothewor ki
ngclassandl ow-i
ncomeearners.

Themostef fectiveappr oachtot ackli

ngthehousi ngcr isisisthroughst rategicpar t
nerships,
whichunl ockthehousi ngv al
uechai n,toscaleaffordabl ehousi ngsuppl y,
whi leenhanci ng
sustainableeconomi cgrowth.TheCent reforAffordabl eHousi ngFi nancei nAf r
ica’s(CAHF)
HousingEconomi cVal ueChainr esearchprovidesev idenceoft hesignifi
canceofhousi ngt o
Uganda’ seconomy .Thestudyest i
mat esthathousi ngconst ruct i
onandr ent alactiv
iti
es
contri
but econsi derably(11%in2018)t oUganda’sgr ossdomest icproduct .Adequat ehousing
notonl yimprov eshousehol dlivi
ngcondi ti
ons,buti talsost i
mul ateseconomi cgr owthandj ob
creati
on.Housi ngal soenhancesassetaccumul ationwhi chbui l
dsthel ong- t
ermr esil
ienceof
househol ds.Thisi sinturncentraltoachievingsev eralsustainabl edevelopmentgoal s,
consistentwitht heaspi rat
ionsofUganda’ sThi r
dNat i
onal Dev elopmentPl an( NDP)and
NationalHousi ngPol i
cyof2016.

Despitethedi r
edef icitinhousinguni tsandt hecl
earimpor tanceofhousi ngtot heeconomyand
urbanhousehol ds, housingdev elopmenti nUgandar emai nsconst rained.Theseconst raints
emanat efrom policyi ssuesaswel lasbot hdemandandsuppl ysi def act
ors.Housing
developmentcost sar eacr i
ti
calbar ri
eront hehousingsuppl yside.Appl yi
ngtheHousi ngCost
Benchmar kingmodel ,CAHF’ sstudyf indst hatKampal a’
sconst ructioncost s(
US$58, 596)ar e
thethir
dhi ghestamongf i
v ecompar at orcountri
es,emer ginghi ghert hanPr et
or i
a(US$40, 199)
andLagos( US$52,103) .Const r
uct i
onr elat
edact i
viti
esconst i
tute43%ofhousi ngdev elopment
costs,whileland,compl i
ance,infrastructureandothercost s,combi ned, contr
ibutesigni f
icant
ly
(57%)tot otalcosts.At14%, bothVal ueAddedTax( VAT)andi nfr
ast ruct
urearekeydr i
versof
developmentcost s, foll
owedbyov erheadcost s(10%) .Highhousi ngdev elopmentcost si mpact
housingaf for
dabili
ty, l
eavingmanyur banhousehol dsinsubst andar dandcr owdeddwel li
ngs.

Thechal l
engeofi nformalityinUgandai scr
ucialtor ecogni
se,asithi ndershouseholds’abi
li
tyto
eff
ectivel
yengagewi ththef ormalhousingmar ketandaccesscr edi tforhomeacqui sit
ion.
Inf
ormal incomes, coupledwi thl
andt i
tl
ingconstraintsinUganda, hav eresul
tedinlow
penetrati
onoft r
aditionalhousingfinanceproductsamongmi ddle-andl ow-i
ncomehousehol ds.
Addressingaffordabili
tyissuesinthehousingmar ketshouldthereforedr i
veconsiderati
onfor
alt
ernativ
ei nt
erventi
onsandpr oducts.AsCAHFandFi nanci
alSect orDeepeni ng(FSD)Uganda
havedocumented, t
heliv
edexperiencesofr esi
dentsintheGr eat
erKampal aMet r
opolitanArea
(GKMA)showt hatmanyhousehol dsresorttoself
-const
ructi
on,incr
ement al
lybuil
dingt hei
r
homesasandwhenf i
nancial
resourcesbecomeav ail
abl
e,thusav oi
dingtheburdenofl arge
upfr
ontconst
ructioncosts.Housingmi crofi
nanceproductstapintothisr
eali
ty,adj
ustingt othe
constr
aint
sofaffordabi
li
tyandcashf lowofbor rowers,t
oimpr ovethehousingasset .

Criti
call
y,housi
ngf i
nancepr oductsandot herrelat
edcredi
tfaci
li
ties(includingmor t
gagesand
housingmi crof
inance)needt obef undedwi t
hmedi um-andlong- t
erm capi t
althatconsi
derst
he
structur
eandt erm oftheloan.Ami smatchbetweenhousingf i
nancepr oduct sandsourcesof
fundingoftenresult
sinunaf fordabl
epr oduct
st hatdonotmeett heneedsoft hemar ket
.The
pool ofavail
abl
ecapi t
altofundhousi ngloansshoul dt
heref
orebest r
ategicall
ysourcedto
mitigateri
skandcr eateamor efavourablel
endingenvi
ronmentf orlow-incomeear ners.

Althoughpr ojectedpopul at
iongr owt handt heef fectsofurbanspr awl pr esentachal lengef or
housi ng,thesedy nami csshoul dal sobeper ceivedasahugemar ketdemandpot ential,andan
oppor tunityforal lstakeholdersinv olvedi nthehousi ngsect ortodev elopt argetedi nter v
entions
thataddr esssy stemi cconst r
aintsatdi fferentnodesoft hehousi ngv aluechai n.Inspi redbyt he
needt osuppor tt hedev elopmentofawor kinghousi ngandhousi ngfinancemar ket,FSD
UgandaandCAHFsoughtt ol everaget heircol l
ectiveknowledgebaseonUgandaandconv ene
stakehol dersonWednesday17Febr uary2021.Thet woinstit
utionsjoint l
yhost edawebi nar
undert het heme“ Affor
dablehousi ngasapat hwayt oeconomi cresi
lience, ”bri
ngi ngt ogether50
stakehol dersf r
om gov ernmentmi nistri
es, fi
nanci ali
nsti
tuti
onsacr ossal lti
ers,andt hebui l
t
env i
ronment ,aswel lasdev el
opmentagenci es.Thesessi onunpackedt hecur r
entandpot ential
economi ccont ributionofUganda’ shousi ngsect orandengagedapanel ofexper tsar ound
bridgingt hefinanci nggapi nt heaf fordablehousi ngmar ket
, t
omeett heneedsof2. 1mi l
l
ion
househol ds.

Lev er
aginghousi ngtostrengthenUganda’ seconomi cdev el
opmentagendaandt her esil
i
ence
ofitscommuni t
iescallsforstrategi
ccol labor ationandl ong-t
erm part
nershipsbet weenand
acrossadi versesetofsect or
sandmar ketpl ay ersthatmakeupt hehousingv aluechai n.Itis
thereforerecommendedt hatamul ti
-st
akehol derappr oachbeadopt edandpr iori
tisedt ounl ock
thepot entialofhousingconst ructi
onandr ental marketsandi mproveeff
icienciesal ongt he
valuechai n.Wi t
hinthis,t
hereisr ealpossi bil
ityforengagementt oensurebet t
ercoor di
nat i
onof
effort
st hatseekt oi
mpr ovesecur it
yoft enur e,pr i
ori
ti
set heavai
labil
it
yofbul kinfrastructure,
reducehousi ngconstructioncost sandsuppor tlong-ter
m andend- userf
inancemar ketsin
Uganda.

Sour
ce:
www.
moni
tor
.co.
ug-HowUganda’
sreal
est
atesect
orf
aredi
n2019

WednesdayJanuar
y292020

AccordingtoUgandaBureauofSt
atist
ics(Ubos),Ugandacur
rent
lyhasadef i
citof2.
1mil
li
on
housingunit
sandisexpectedtor
eacht hr
eemi l
li
onby2030.Thedeficit
,dat
ashows, wi
l
lfur
ther
expandt oei
ghtmil
li
onunits,
ofwhich2.5mill
ionwillbei
nurbancentresint
wodecades.
Partoftheexpl
anationforthisisthecountr
y’sf
ast-
growingpopul
ati
on.At3. 3percentperyear
,
Uganda’spopulat
ionwillst
andat75mi l
li
oninthenext20y ear
saccordingtoar eport(2017)by
theUnitedNati
onsPopul at
ionFund.Additi
onall
y,morethan70percentoft hepopulat
ionis
undertheageof30.Accor dingtot heWorl
dBank’scoll
ecti
onofdevelopmenti ndicat
orsof2018,
Uganda’surbanpopulati
onwi ll
standataround20mi l
li
onin2040,fr
om j ustover10mi ll
i
on
people(24.
4percent )i
n2018.

All
oft hismightpresentseri
ouschall
engesandi mmensepressur
eont hecountr
y’sresour
ces
butitalsopresentsimmenseoppor t
unit
ies.Thereal
estat
esectorisoneofthoseareaswhere
opportunit
iestoinnovateandadvanceinbusinessar
ehiddeninplai
nsight
.Opportunit
iesf
or
developers,par
ti
cularl
yintheaff
ordabl
eur banhousi
ngsegmentar ei
mmense.

St
agnat
ingr
ent
almar
ket

Havingsai
dthat,t
herent
al marketin2019conti
nuedbeingprof
itabl
eashasbeenthecasefor
overtwodecades.Andgoingbyt hefact
orspushi
ngthesector(someofwhicharementi
oned
above),
itwoul
dtakeacatastropheofBibli
calpr
oport
ionstochangethet
rends.

Thecountr
y’srent
almarketishuge.Mostpeople,
especi
all
yintheur
bancentr
es,
cannei
ther
aff
ordtobuil
dahouseoft heirownnoraf f
ordt
obuypropert
y.Theonl
yopti
onistor
ent
,
whetheri
tisresi
dent
ial
orbusi nessspaces.

Accordi
ngtoCent
reforAffor
dableHouseFi
nanceinAfri
ca,moret
han70percentof
househol
dsinKampalarentt
heirdwel
li
ngsandoverone-f
if
thofal
lhousehol
dscount
rywi
del
i
ve
i
nrentedhomes.

Accordingtorealest
ateconsul
tantsKnightFrank’
sKampalaMarketUpdate,occupancyr
atesi
n
pri
mer esident
ial
suburbsofNakasero,Kolol
o, Nagur
u,MbuyaandBugolobii
nKampal a,
i
ncreasedt o78percentinthefi
rsthal
fof2019, upfr
om 69percenti
nthesameper i
odin2018.
Thefigurestookadownturninthe2ndhal ft
hough.Occupancyi
ntheabov e-
namedar eas
droppedt o72percentdownf r
om 81percenti nthesameperi
odin2018.

Ther ewasay earonyear8.5percentincreaseinsuppl

yofapar t
mentuni
tscomingont othe
mar ket,
parti
cular
lyi
ntheprimeresi
dent i
alareasofKol
olo,Nakaser
oandNagur u.Theincrease
i
nst ockhasf or
cedsomel andl
ordspar t
icul
arlyf
orthenewerstocktodi
scountthei
rrentsin
ordertobemor ecompet i
ti
ve.Asar esul
t,KnightFr
ankregi
stereda9percentyearony ear
declineinoccupancy.

Low-
costhousi
ngshor
tage

Towar dstheendof2019, t
heAssoci ati
onofReal EstateAgentsUganda( AREA)conv eneda
three-
dayconf er
enceatSpekeResor tMuny oyo.Oneoft hemaintopicsthatkeptcomi ngupin
thediscussionswastheshortageofl ow-costhousing.Pr adi
pKaria,
ar ealestat
edev elopersai
d:
“Thereisabi ggapinthel
ow- costhousingsegment .Therearesomanyf act
orshinder i
ng
player
sint hesectort
ofil
lthegap,andgov ernmenti sdoingnot
hingabouti t
.Thet axesarehigh,
i
nvest
orsinthesect
orar
enotgi
venf
reel
andbygov
ernmentt
hesamewayt
heygi
vel
andt
o
manufact
urers,
andsoon.
”

Headded:“Todeli
veraff
ordabl
ehomes,gover
nmentmustcreat
eincent
ivesorsubsi
dise
materi
alsi
norderfort
hepr i
vat
esect
ortomoveanddel
iver
.Also,y
oungpr of
essi
onal
smustget
conduci
vemortgagessotheycanbuycheaphomes.
”

Theminist
erofLands,Housi
ngandUrbanDevel
opment,DrChr
isBary
omunsi,
whoopenedthe
meeti
ng,str
essedtheneedforgov
ernmentt
ostopleav
ingtheheav
yburdenofhousi
ngi
nthe
handsofpri
vatepl
ayer
s.

“Thechall
engeofshort
ageoflow-costhousi
ngisbroughtonbythecur
rentgr
owthrat
eof3.2
percentperannum.Itl
ooksl
ikeitwil
lonlygetwor
seasi ti
sesti
matedthatev
ery20year
s,our
populat
ionwil
ldoubl
e.”

Demandf orl
ow-costhousingcont i
nuest ogrowatamuchhi gherrat
et hanhigh-endhousi ng.It
wasunani mouslyagreedthatal l
dev el
opersincludingt heNat i
onalHousingandConst r
uction
Company( NHCC),havetendedt ofocusonbui ldinghousesf ortheupper-middleclass,l
eav i
ng
thepoorwor ki
ngclasstofendf orthemsel v
es.Ther esulthasbeensl umsal lovertheKampal a
met r
opolit
anarea.Thedev eloperwiththemostaf f
or dablehousingunit(exhibi
ti
ngatt heAREA
conference)pri
ceditatShs48m.I ncompar ison, t
hiswas“ cheap”becauseot hercompani es
withthesameki ndofhousehadpr iceditatShs85m, andsomeatShs95m.Mostt wo-andt hree
-bedroom housesrangebet weenShs130m andShs200m.

Thehighmor tgagerat
esinadditi
ontoveryhi
ghdemandf orhousingandtheever
-incr
easi
ng
costoflandaresomet hereasonstheproper
typlayer
sgav efort
hehi ghl
ypri
cedhouses.To
evenstartscr
atchi
ngthesurfaceofthi
sshortageoflow-costhousing,mort
gageratesmust
comedownandl andmustbesubsi di
sedforinvest
ors.

Upsur
gei
nmor
tgagemar
ket

I
nSept
ember2019,
BoUr
educedt
heCent
ral
Bankr
atet
o9percent
,downf
rom 10percent
.

Thecredi
tadvancedtot
herealest
atesector
,bei
tbuil
ding,
mor t
gageandconst
ruct
ion,
i
ncreased12.
8percentyearonyeartoShs3.
19tr
il
li
on.Accordi
ngtoBankofUganda,thet
otal
amountofmor t
gagesoutst
andi
ngroseby11percenttoShs1.34tri
l
li
oninSept
ember2019.

Nonethel
ess,t
hemor tgagemarketst
il
lremai
nedsmal
l
,amer
e1.
2percentoft
heGDP,
unchangedinthepastthreey
ears.

Thelendi
ngrateformor t
gageloansinUgandashi
ll
i
ngwasdr oppedto21. 4percentdownfrom
22.6percenti
n2018, accordi
ngtotheBankofUganda.Nonetheless,proper
ti
esinthecountr
y
conti
nuedtopredominantlytr
adeincash,
andonlyrar
elysol
dbymor tgage.Mostpeople
conti
nuedtochoosetobuil
dthei
rownhousesot
hert
hanbuy
ingasi
tisbel
i
evedt
obea
cheaperandmorefl
exibl
eopti
on.

Themor t
gagemarketisdominatedbyHousingFi
nanceBankwhichruns55percentoft
hetot
al
mortgagepor
tfol
i
o.Iti
sfoll
owedbySt anbi
cBank,St
andardChar
teredBank,df
cuBank,KCB
BankandCentenaryBankindescendi
ngorder.

Landl
ord-
tenantAct

Thi
swasalong-
awai
tedlegi
slat
ionthatfi
nal
l
ygotpassed.Fornearl
ythr
eey ears,
tradersin
Kampal
ahadprot
est
edthepracticeofbei
ngchar
gedi ndol
lar
s.Otheri
ssueslikearbit
raryhi
ki
ng
ofr
entr
atesbyl
andl
ordsandsoonst rai
nedther
elat
ionshi
psbetweentenantsandl andl
ords.

I
tbecamequi tecleart
hataregulat
ionwasneeded.I
nsomeinstances,t
heprotest
sbecameso
i
ntensethatthetr
adersclosedthei
rshopsf
ordays.Andso,t
heLandlordsandTenantsAct
,
2018,wastabledinParli
amentandpassedonJune26,2019,andwillt
akeeffecti
fthe
Presi
dentassentstoit
.

I
ntheAct,
Parli
amentover
whelmingl
yagreedt
hatt
hecur
rencyoft
ransact
ionbet
weenl
andl
ord
andt
enantsshal
lbetheUgandaShil
l
ing.

TheActst r
eaml i
nedevict
ionofbadtenantsandmadeitmandat or
yf oralandlordtoi
ssuea
l
egal not
iceofsixmonthst oatenanttovacatet
hepremiseswhenther eisbreachofthe
tenancyagreement.Fai
luretofol
lowthatwouldamounttounlawfulevict
ionandt hel
andlor
d
facesacustodialsent
enceofoney earorafineequi
val
enttothr
eemont hspay abl
eofrentor
both.

Thenewl awwasdesi gnedtoregul

atecollect
ionofut
il
it
ybil
lpaymentsfr
om t
enant
soutsi
de
themont hl
yrent
.Anewcl ausewasi ntr
oducedtoprovi
dethatthel
andlor
dshal
li
nstal
lpr
epai
d
elect
ri
cit
yandwat ermetersforal
ltenantstoavoi
dexploi
tat
ion.

2020Out
look

Accordi
ngt
oBankofUganda’smonet ar
ypoli
cycommitt
eestat
ementi
ssuedinDecember2019,
Uganda’
sGDPispr
ojectedtogr
owi ntherangeof5-
6percenti
n2020becauseofthe
accommodati
vemonetaryandf
iscalsti
mulus(l
ower
ingofl
endi
ngrat
eto9percent).

However,rentr
atesareexpect edtodropasthecompeti
ti
onfort
helimitedpoolofcor
porate
andexpatri
atetenant
sistightenedbylandl
ordsofnewproper
ti
es,accordi
ngtoKnightFrank.
Pri
meof f
icerentsareexpectedt odecl
inet
oo,owingt
oanongoingincreasi
nginsupply.

Uncer
tai
ntyassoci
atedwit
htheLandl
ordTenantBi
ll
hasconti
nuedtonegat
ivel
yaf
fectnew
devel
opmentsandleasi
ngacti
vi
tyacr
osstheenti
rer
ealest
atemarket
.
Youcanaccesstherecor
dingfrom t
heAf f
ordabl
eHousingwebinarhere.Apanelofi
ndust
ry
l
eadersunpackedhi
ghli
ghtsfr
om thestudyUganda’
sHousingEconomi cValueChainand
hi
ghli
ghtedi
nterv
ent
ionswiththepotent
ialtounl
ockf
inanceforaff
ordablehousi
ng.

[
1]UgandaNat
ional
Househol
dSur
vey2016/
17.

Ji
mmyEbongi
stheResear
chSpeci
ali
statFi
nanci
alSect
orDeepeni
ngUganda

Mari
aNkhonj
erai
saSeni
orResear
chManageratCent
ref
orAf
for
dabl
eHousi
ngFi
nancei
n
Af
ri
ca

Shar
e..
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tt
erShar
eonLi
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nPr
intt
hispage

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