Uganda’s housing deficit continues to worry government and real estate sector players. According to the 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. This housing challenge that comes along with immense opportunities has birthed subjective terms such as “affordable housing” and “low-cost housing.”

What is affordable housing?

Affordable housing, in simple terms, refers to houses that are of good quality in a good neighborhood and at lower prices, especially for 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.

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.

Affordable housing, in simple terms, refers to houses that are of good quality in a good neighborhood and at lower prices, especially for middle-income earners.”

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 the population has also increased. This is so true, but income levels have remained low; many Ugandans remain poor as collaborated by various research surveys.
 
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.

What can the government do?

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.

Developing capacity for affordable housing

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, a need for cheaper sources of funding on a long-term basis. To achieve this, the government must come up with policies that will encourage local and international investors to invest in affordable housing projects. Such policies could include tax incentives, subsidies, and guarantees for investors. The government could also work with development partners and international financial institutions to provide funding for affordable housing projects. Additionally, there is a need for the government to invest in technical education and skills development to build the capacity of local developers to undertake large-scale affordable housing projects. With these interventions, it is possible to bridge the housing deficit gap in Uganda and ensure that all Ugandans have access to decent and affordable housing.