Affordable housing is possible in Uganda
The housing challenge that comes along with immense opportunities has birthed subjective terms such as “affordable housing” and “low-cost housing”. Uganda’s housing deficit continues to worry government and real estate sector, players. According to Uganda National Bureau of Statistics (UBOS), Uganda’s population is projected to grow to 41.2 million by 2020, yet the country currently has a housing deficit of about 1.2 million units, with Kampala alone having a staggering deficit of over 200,000 units. How can this housing deficit be fixed to meet the already high and increasing demand from the growing population? How can all Ugandans regardless of their financial levels have access to housing which is a human right?
These are questions government, housing developers and other players must urgently find answers to. The housing challenge that comes along with immense opportunities has birthed subjective terms such as “affordable housing” and “low-cost housing”. These words are commonly interchangeably used but they are not the same. Affordable housing in simple terms refers to houses that are of good quality in a good neighbourhood and at lower prices for, especially middle-income earners. On the other hand, low-cost housing can refer to quality houses like settlements at low prices. These are mainly for low-end customers.
But how affordable is affordable housing?
Some people say an affordable house is one that is in the range of between Shs50m to Shs100m, while low-cost housing is one that can cost as low as Shs15m. However, going by the current market prices, it’s quite hard to find a good house that will live longer at the above price ranges. This though doesn’t mean affordable housing is impossible. This is because most developers have been concentrating on high-end clients – people who can pay in regions of Shs300m and above yet there is a need for people who can pay Shs50m –Shs70m for a two-bedroom house. It’s true that Uganda’s per capita income remains below US$700 (World Bank), but there are a sizeable number of Ugandans who can afford a house of Shs50m and above.
So, how can developers actualize affordable housing?
From my experience, it’s all about fixing the challenges real estate sector players are facing. The first factor that determines the price of a house is the cost at which the plot of land was bought. Considering the fact that the growth of Uganda’s economy has stagnated at around 5% for the last decade (World Bank), it is right to argue that land prices have unnecessarily skyrocketed, thus distorting the market. One can also argue that population has also increased. This is so true but income levels have remained low; many Ugandans remain poor as collaborated by various research surveys. Developers may not have a solution over this because it’s about market forces of demand and supply. The other important factor is the price of raw materials used when constructing a house. The prices of raw materials including but not limited to cement, roofing materials and tiles need to come down. On raw materials, developers can save some money by buying directly from the source-the manufacturers. Sometimes, it’s cost-effective to import some items. Therefore, the government must devise a means of reducing the cost of doing business in Uganda.
The government also needs to offer subsidies because the property sector is currently plagued by many taxes, thus contributing to the high cost of housing in the country. According to Vision 2040, the government expects that by 2030, it shall: “Ensure access for all to adequate, safe and affordable housing and basic services, and upgrade slums.” The National Housing Policy 2016 also talks about government providing some sort of guarantee to investors.
“Government shall mobilize partners to avail cheap sources of finance and where possible provide guarantees to financial institutions to be able to access cheaper offshore short-term borrowing finance for housing and related infrastructure development,” the policy reads. To attain vision 2040, the government must walk the talk. We also need to think of alternative building materials. It’s also clear that many developers in Uganda lack capacity and technical skills to construct large affordable housing projects because it is more cost-effective if constructed on a large scale. Ugandan developers also do not have long term funders willing to give their funds to short term projects. There is, therefore, need for cheaper sources of funding on a long term basis.