Uganda's housing dream is built one stage at a time
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With Uganda's housing deficit estimated at 2.4 million units and mortgage lending stuck below 1% of GDP, a housing finance practitioner argues that incremental, stage-by-stage building is the country's real housing delivery model.
Uganda's housing deficit is estimated at about 2.4 million units, and the country produces roughly 60,000 housing units a year against demand of about 200,000. But in an opinion piece published by The Independent, housing finance practitioner Anthony Kivumbi argues that the sector has been measuring the wrong market.
Kivumbi writes that most Ugandan homes are not built by large developers or through mortgages, but by households building one stage at a time over several years, using income as it arrives. A plot with a ring beam and no roof is not necessarily a stalled project, he argues, but a house being built on a payment plan no bank wrote.
The formal housing finance system, he says, is designed around a market that barely exists at the required scale. Mortgage lending in Uganda has remained below 1% of GDP for years while interest rates stay in the high teens; a mortgage typically requires a registered land title, yet about 80% of Uganda's land is held under customary tenure. It also requires a payslip that most working Ugandans do not have.
The result is that the financing gap is filled informally by hardware dealers extending cement on monthly terms, savings groups, SACCOs and family contributions. "In many ways, that hardware dealer is one of Uganda's biggest housing financiers, even though he does not have a banking licence," Kivumbi writes.
He points to incremental housing facilities dedicated to specific stages of construction, such as putting up a roof, plastering, adding rooms, installing a water tank or connecting to the grid, with loans typically repaid within 12 to 24 months. One such facility, implemented by Housing Finance Bank, reached more than 8,400 households, with delinquency that has been consistently better in places than in some more conventionally "bankable" parts of the loan book.
Kivumbi sets out three changes he believes are needed: underwriting cash flow rather than just a payslip, using mobile money records and SACCO statements as evidence of income; matching collateral to loan size so that a small roof loan does not require a land title and valuation report; and selling construction stages rather than only finished houses. "The market that already exists wants a roof this year and a floor next year," he writes, adding that Uganda will not close a 2.4-million-unit housing deficit through ribbon-cutting ceremonies alone.