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Uganda’s population growth rate is 3.5%. At 5.99%, Uganda’s urbanisation rate is high and this is complemented by high population growth. This has resulted in 48.3% of the country’s urban population living in the ever-growing informal settlements. Approximately 94.5% of the population live in informal settlements and do not have access to basic sanitation services. Over the last financial year ending June 2021, Uganda’s economy has grown by 0.3% to 3.3% from 3.0% recorded in the 2019/2020 financial year. This growth pattern is owing to expansions in household sector demand, supported by a strategy of monetary easing pursued by the monetary authorities after the earlier slump in growth attributed to COVID-19 and lockdown measures on the economy. However notably, the housing sector continues to operate, unabated by the lockdown.
Other sectors of the economy did not do fortunately as restrictions in the business environment translated into a reduction of growth in private sector credit to 6.8% for 2020/2021. This is a significant reduction from a year-on-year average growth of 12% for the previous three years to June 2020. The slow Growth in borrowing or lending is expected to continue over the next financial year to June 2022 on account of the low levels of economic activity after a second lockdown of the economy over the period 18 June to 29 July 2021.
On the market side, Uganda’s general price levels have remained relatively low and stable with headline and core inflation rates subdued at an average of 2.4%and 3.4% respectively over the one-year period to July 2021. This is well-aligned within the 5% inflation rate target pursued by the monetary authorities in the East African regional economies. The low inflation rate has mainly been due to lower food and utility prices coupled with low household demand for the bulk of goods and services. Bank of Uganda’s projections indicate that this trend will change, with inflation forecasts pointing to a gradual rise throughout the year on account of the pandemic containment measures, but remaining within the 5%target range in the medium term.
On the property market side, the marginal increment in general prices translated into a relatively higher rise in property prices, with implications for housing affordability. The Residential Property Price Index (RPPI) for the Greater Kampala Metropolitan Area rose 5.6% in the the2020/21 financial year compared to the previous financial year. The increase is largely attributed to increments in property prices across Uganda’s central region, mainly because of a high urbanisation rate of 5.2 %. The rise in the RPPI negatively affects housing affordability even in the restricted economic environment. This is because housing became a crucial need for the urban working population when the general population was confined in their homes during the COVID-19 lockdown periods. Homeownership has worked positively in boosting resilience to the effects of the pandemic as homeowners are spared the rent burden even through periods of restricted economic activity and low income. The property also works as collateral for the owner to access credit.
- Access to Finance
- Housing Supply
- Property Markets
- Policy and Legislation
- Availability of data on housing finance
- Urban Informality
Each year, CAHF publishes its Housing Finance in Africa Yearbook. The profile above is from the 2021 edition, which has up-to-date profiles for 55 African countriesDownload yearbook
Uganda is the third largest country in East Africa, situated in the heart of the Great Lakes Region. Uganda’s capital, Kampala, is the central node within a sprawling urbanised belt encompassing many smaller towns. This makes up the Greater Metropolitan Kampala Area (GKMA). The GKMA has a population of approximately four million, which is more than 50 percent of the country’s total urban population.
Although the country has progressed towards addressing poverty over the past three decades, housing provision remains one of the most pervasive challenges faced by over two-thirds of Uganda’s population. The country is largely informed by private-sector led housing development, which is unable to meet the growing demand for affordable housing. Thus there is a widening deficit of housing, estimated at 2.4 million units, growing by 200 000 units a year. Some of the issues that the sector has to deal with are supply-side bottlenecks, unaffordable credit, insecure land tenure, burgeoning informal settlements, as well as insufficient political will. Though it is estimated to contribute 7.5 percent of Uganda’s overall GDP, budget allocation for this sector stands at less than 0.3 percent, a reduction from USh1.613 billion (US$432 653) in the fiscal year (FY) 2017/18 to USh1.405 billion (US$376 861) for FY 2020/21.
According to the World Bank, Uganda’s economy is the third largest in the East African region, but has been severely affected by the COVID-19 global pandemic, locust invasions and rainfall-induced flooding in 2020. The country’s projected gross domestic product (GDP) for 2020 is significantly lower than that of 2019. Shrinking foreign direct investments, remittances, exports and income from tourism, coupled with high inflation levels, have created an uncertain economic outlook, especially for crucial sectors such as real estate and housing.
Inflation was 4.7 percent at the end of July 2020, up from 4.1 percent for June 2020, representing a three-and-a-half year high since 2017. To ensure stability, maintain confidence and support sectors such as real estate and housing, the central bank cut lending rates to an unprecedented low of seven percent, though on average interest rates on mortgage loans by major financial institutions remain above 15 percent, on par with pre-COVID 19 rates.
In this year’s budget, the government has targeted improving access to investment finance for Savings and Credit Cooperative Societies (SACCOs) and microfinance institutions to USh94 billion (US$25 213 501). It has also capitalised the Uganda Development Bank with USh1.045 billion (US$376 861) to offer cheaper financing for the private sector. These interventions present significant opportunities for the housing sector to access affordable financing in order to narrow the housing deficit. The government has also employed a mixture of fiscal and monetary measures during 2020 to increase expenditure on health infrastructure, reducing the central bank rate and providing credit relief. During the COVID-19 lockdown, the government advised landlords not to evict tenants who default on rent.
Residents in informal settlements are especially vulnerable to the COVID-19 pandemic, given high density and limited social infrastructure. Subsequently, municipal governments in major towns including Jinja, Wakiso, Mbarara, Kira and Kampala have partnered with civil society organisations, such as the Slum Dwellers International (SDI)-affiliated Uganda Alliance and Cities Alliance, to address inequalities in informal settlements.
 Haas, A. and Slack, E. (2018). Why metropolitan governance structures matter: Kampala. International Growth Centre. https://www.theigc.org/blog/metropolitan-governance-structures-matter-kampala/ (Accessed 5 August 2020).
 Habitat for Humanity. (2020). The housing need in Uganda. https://www.habitatforhumanity.org.uk/country/uganda/ (Accessed 09 August 2020).
 Urban areas and rural areas account for approximately 210 000 units and 1.4 million units respectively (Habitat for Humanity, 2020).
 CS-BAG, (2020). CSO Position Paper on the Lands, Housing, and Urban Development Sector Budget FY 2020/21. Pg. 5.
 Uganda’s GDP growth rate for FY 2019/20is projected to oscillate between 0.4 percent and 1.7 percent which is below the 2019 rate of 5.6 percent (World Bank, 2020). https://www.worldbank.org/en/country/uganda/overview#:~:text=Uganda’s%20economy%20has%20experienced%20a,compared%20to%205.6%25%20in%202019. (Accessed 3 August 2020).
 UBOS. (2020). Uganda Consumer Price Index 2009/10=100. Uganda Bureau of Statistics. https://www.ubos.org/wp-content/uploads/publications/07_2020CPI_Publication_for_June_2020.pdf (Accessed 26 August 2020).
 Trading Economics. Uganda Inflation Rate. 1998-2020 Data.
https://tradingeconomics.com/uganda/inflation-cpi (Accessed 8 August 2020).
 Oketch, M.L. (2020). Banks meet over high interest rates on loans. 10 July 2020. Daily Monitor; Busuulwa, B. (2020). Bank of Uganda cuts key lending rate. 17 June 2020. The East African.
 Rupiny, D. (2020). Uganda National Budget 2020/2021: Key Investment Takeaways. 12 June 2020. Uganda Investment Authority.
Nabejja, R. (2020). Museveni bans landlords from evicting tenants during COVID-19 lockdown. 9 April 2020. Kampala International University.
 World Bank. (2020). Feature Story: COVID-19 Turns Spotlight on Slums. 10 June 2020; UN-Habitat. (2020). Key messages on COVID-19 and informal settlements. https://unhabitat.org/key-messages-on-covid-19-and-informal-settlements (Accessed 5 August 2020).
 Cities Alliance. (2020). Uganda: Helping Communities Fight COVID19. 13 May 2020; Slum Dwellers International. (2020). Mitigating the Impact of Covid-19 on Informal Settlements: An update. 19 June 2020.
Access to Finance
The country’s financial sector has demonstrated high levels of resilience amid slumps in credit expansion and worrying levels of non-performing loans. The growth in private sector credit declined over the year 2020 and the first half of 2021 on account of depressed consumer demand. For the existing stock of loans, the harsh economic environment drove some business entities towards near collapse, unable to service their financial obligations with lending institutions.
More than 30% of Uganda’s banking sector players reported a drop in profit for the year 2020 because of increasing portfolio delinquency, which rose from 4.9% in December 2019 to 5.3% in December 2020.7In response to the deterioration in portfolio quality and its potential impact on the stability of the country’s financial sector, Bank of Uganda devised key interventions aimed at alleviating the situation. A number of credit relief programs for both financial institutions and borrowers were put in place.
For the financial institutions, the Bank of Uganda established measures aimed at strengthening the banks’ ability to absorb shocks. Banks were given permission to grant credit relief to borrowers affected by the pandemic and also permission to access the COVID-19 Liquidity Assistance Program (CLAP), established for banks under liquidity distress. The CLAP was subsequently expanded to include support to lower-tier credit institutions and Microfinance Deposit-Taking Institutionswhich normally does not have access to central bank liquidity facilities. To limit the impact of the pandemic on the financial system, the central bank also established stringent limits on the loan-to-value (LTV) ratio for residential mortgages and land purchase and instructed the deferral of payment of dividends to shareholders of financial institutions. In April 2021, the central bank established an additional support mechanism in the form of the Emergency Liquidity Assistance facility. This was aimed at supporting viable banking institutions that may face liquidity stress under the Lender of Last Resort function. During the quarter to March 2021, a total of Ush551.82trillion (USh155billion)was borrowed by three banks to address short-term liquidity needs and subsequently were repaid on time.
The 85% limit on the LTV for new residential mortgage loans and loans for land purchase, established with effect from 1 June 1 to alleviate the risk of bank losses from reduced property prices during the pandemic, has in effect worked to restrict the amount available to individual seeking finance to buy or build a residential property or buy land.
For borrowers, the central bank provided flexible credit relief measures to banks for the management of distressed borrowing clients through restructuring and capitalisation of interest due. The necessity of the relief measures was amplified by the Bank of Uganda’s assessment that almost a third of gross loans in the banking industry was underpayment deferrals in December 2020, while the level of past-due restructured loans remained significant.
Also worrying was that banks loan books are likely to deteriorate significantly, with rising losses as the payment deferrals come to an end. The moratorium put in place by the central bank is scheduled to expire on 30 September 2021. Granting any credit relief is entirely at the discretion of the lender, and extensions are allowed only if the lender believes that the borrower will be able to repay by the end of the relief period. In addition, financial institutions were directed to implement International Finance Reporting Standardsguidelinesby recognising bad loans promptly, particularly those whose financially distressed condition is likely to be permanent. To promote the credit relief program, the Bank of Uganda conducted a countrywide print media and radio publicity campaign to ensure that eligible borrowers who were financially distressed were informed of the extension of the program and used it.
For prospective homeowners with limited access to the main mortgage facilities of banking institutions because of insufficient collateral and irregular income sources, microfinance institutions and Savings and Credit Co-operative Societies (SACCOs)continue to be instrumental in improving access to credit. Leading SACCOs in the country, including Y-Save and others, have been active in purchasing chunks of land for parceling out to members at affordable rates thanks to the benefits of bulk purchases. These members then access microcredit for incremental loans that enable them to construct homes over an average period of four years.
Oketch, M.L. (2020). COVID-19: Bank of Uganda reduces working hours for banks. 27 March 2020. Daily Monitor.
 Uganda Bankers Association (2020). Statement on the banking sector. https://ugandabankers.org/statement-on-the-banking-sector/ (Accessed 27 August 2020).
 Bank of Uganda (2020). Financial Stability Review. Quarter ended 31 March 2020; Bank of Uganda, (2020). Credit to the private sector statistics.
 Oketch, M.L. (2020). BOU asks banks to limit lending on mortgages. 5 June 2020, Daily Monitor.
 Bank of Uganda (2020). Bank Lending Survey Report Fourth Quarter – FY 2019/20. Pgs. 1-3.
The strain in the economic and business environment over the years 2020 and 2021 has had a negative impact on housing affordability for the majority of households in the country, with 48.3% of Uganda’s urban population living in slums and informal settlements,8affordability for decent housing continues to hamper development in the sector. The price of a newly constructed housing unit by a formal developer in 2020 was recorded at USh48 million(US$13 482.73), which remains out of reach for a country with a GDP per capita of US$643.02. High mortgage lending rates continue to constrain access to affordable housing finance with the leading mortgage lenders quoting interest rates in the region of 17% for residential housing loans. Even with the entrance of a 26th financial institution in Uganda’s banking space, interest rates have remained high, averaging 19.2%. The central bank’s reduction of the central bank rate from an average of 8% in 2020 to a record low of 6.5% in June 2021 has not yet been reflected in a reduction of commercial bank lending rates across the industry. On the microfinance side, incremental housing loans are available at interest rates varying from22% to 26% over four years.
 Uganda Bureau of Statistics. (2019). Housing and Household Conditions. Decent Housing for Improved Household Welfare. Pgs. 5-14.
 The RPPI has risen significantly to an average of 6.9 percent from 2.5 percent for the previous financial year, according to the Uganda Bureau of Statistics (UBOS) (2020). Residential Property Price Index (RPPI), Fourth Quarter 2019/2020, Press Release. Pg. 4.
 Twaha, A. (2020). COVID-19: UMEME suspends free power connections. 29 July 2020. New Vision.
Uganda’s requirements for decent housing continue to grow at an estimated rate of 200000 units a year, unmatched by supply. Uganda has a deficit of 2.4million housing units11with the bulk of these in the affordable housing segment. The growing need for housing is mainly attributed to the rapid rate of urbanisation and population growth. Besides the internal drivers of housing demand, Uganda boasts a long history of hosting refugees from the region, including South Sudan, Somalia, Eritrea, the Democratic Republic of Congo, and Rwanda.12The country currently hosts approximately1.5 a million refugees. Another 2 000 Afghan refugees13are scheduled to find accommodation in the country, which has already received the first flight with 51 evacuees following the Taliban takeover of Afghanistan in August 2021. Although the resettlement plans have not yet been made public, the probable option of establishing new refugee centers in urban areas will push the existing urban housing challenges to unprecedented levels.
The supply side of housing units has been dominated by private developers including National Housing and Construction Corporation, Universal Homes, Comfort Homes, Meera Investments, and Guoji Group generating an average of approximately800 units a year. However, houses delivered by these developers are mainly focusing on the middle to high-income earners who can access mortgages in the region of USh213.60million (US$60000)and above. The low-income segment is mostly dominated by individual homeowners building incrementally through their own savings and small loans from microfinance institutions. Government initiatives to develop residential estates for target groups, including medical workers, teachers, and police officers, have stalled for decades because of the unavailability of funding.
Overall, the housing supply side will need a multipronged approach involving participants in the private and public sectors to realise progress towards closing the housing deficit in the medium and long term.
 These include the US$476 Exim Bank/Chinese funded Kampala-Entebbe Expressway, the USh566 billion (US$151 817 465) EU-Government of Uganda (GOU) co-funded Northern By-pass and the US$184 million World Bank-GOU co-funded road upgrading for the GKMA in addition to the World Bank-GOU co-funded Uganda Support to Municipal Infrastructure Development programme covering secondary cities.
 Headlined by the United Nations Entebbe regional hub, which provides the basis for the multi-organisational Great Lakes region humanitarian programme.
 Prominent areas where workers in the diaspora operate include the Middle-East, Europe and the United States.
 The government has assisted communities displaced by landslides on the slopes of Mount Elgon, Eastern Uganda and another displaced by a proposed oil refinery in Buseruka sub-county, Kabale parish, Hoima.
Uganda’s real estate sector has been one of the most affected sectors during the pandemic. While the sector was recognised as crucial to addressing the growing housing needs of the population, the impact was still profound. During the lockdown period, the government permitted construction sites for real estate, industrial and infrastructural developments to continue on the condition that construction workers were confined to their respective sites. This supported construction works for mid-sized and large-scale property developers with the capacity to transport workers and host them at construction sites for the entire period of the project. Informal and small-scale developers, who mainly rely on casual labor, were hard hit by the travel restrictions across the country. This impacted the speed of delivery of informal housing developments undertaken by individuals.
On the demand side, the pandemic containment measures that emphasised the lockdown of economic sectors and travel restrictions resulted in depressed demand for residential apartments. This was the result of subdued demand by households, as the bulk of their income-generating activities were closed. Informal sector workers reacted by massively moving their families to rural areas where the cost of living is low and rental charges are usually non-existent thanks to an elaborate family support system. This translated into a temporary excess supply of housing units in the urban areas as landlords struggled to find credible tenants among the few remaining urban workers. The strain on economic activity also translated into reduced incomes for many tenants who subsequently fell behind with their rental payments. In an attempt to alleviate the problem, the government appealed to landlords to avoid tenant evictions during the lockdown period. This directive on evictions was significant for land transactions involving landowners and unauthorised settlers and occasioned by rampant unlawful evictions being implemented under the cover of the lockdown.
The effects of the pandemic are still prevalent on the property market with a number of incomplete homes being presented to the market for sale. These are mainly sold by owners whose source of income has been negatively impacted by the pandemic and are therefore unable to complete the building. Other properties flooding the market are completed homes whose owners have had to put them up for sale to settle various obligations, ranging from mortgages and raising capital to restart business operations after the devastation of their income-generating activities during the pandemic. A number of financial institutions have also been observed to foreclose on commercial properties for proprietors whose rental income earnings were negatively impacted by the pandemic on account of fatalities and lockdown.
Despite the growing number of houses being offered for sale, the pace of title transfers at Uganda’s land registry remains a concern. The digitisation of the registry has taken longer than anticipated as the implementation took more than 10years to be actualised. The digital land registry system had been in the pipeline since 2010 and was launched only in February 2020as a partnership between Uganda’s Ministry of Lands, Housing and Urban Development and the French company IGN FI with loan funding by the World Bank. The new system has enabled the production of new land titles marked with bar codes that make it more difficult to forge signatures. The title transfer cycle has also been improved from an average of 52 days to approximately10 days. However, the COVID-19 containment measures also affected the land registry with a number of zonal offices closed to prevent further spread. Travel restrictions also meant that there were fewer new applications for land titling and transfers. In addition, the cost of land surveys and land title production has almost doubled as professionals in this field cite delays and complexities in completing the titling process.
 FAO. (2020). BOU asks banks to limit lending on mortgages. 5 June 2020, Daily Monitor.
 Uganda Bureau of Statistics. (2020). Residential Property Price Index (RPPI), Fourth Quarter 2019/2020, Press Release.
 Uganda Bureau of Statistics. (2016). Uganda National Housing Survey 2016/17. Pgs. 122-123.
 Knight Frank (2020). Kampala Market Update H1 2020. https://www.knightfrank.ug/research/kampala-market-update–h1-2020-7257.aspx (Accessed 1 September 2020).
Policy and Legislation
The land tenure system in central and parts of western Uganda the Mailo system allows various kinds of interest by different parties to the same piece of land. The Mailo system is a unique form of land tenure that is similar to freehold. The system allows landlords to permit tenants to use the land for an undefined period. The system was introduced in a 1900 agreement between the Buganda Kingdom and the colonial administration when land ownership was given to a few chiefs, leaving others as tenants.
The absence of clear terms of land use has resulted in a number of land wrangles, court cases, forceful evictions, and loss of life, which have all constrained housing sector developments. To assuage the situation, the government, in July 2021, started the process of drafting a bill that will see reforms in the Mailo LandTenure System, with the objective of finding a lasting solution for evictions and wrangles. The amendment will seek to ensure that Mailo landlords don’t evict tenants or those who have no occupancy documents. The registered landowner normally carries a certificate of the title while the tenant by occupancy may have interest in the same piece of land by way of a land purchase agreement or inheritance rights. For most leading financial institutions in Uganda, the absence of a land title constrains access to credit and therefore housing-related developments on the respective piece of land.
 Within this programme, the government has helped to disseminate prototype building plans for affordable and environmentally sound housing to the poor and PWDs, guidelines for earthquake resistant construction for earthquake-prone areas, creating awareness about appropriate housing materials for vulnerable groups (Ministerial Policy Statement for the Lands, Housing and Urban Development Sector FY 2020/21).
The need for affordable housing continues to rise, characterised by a rapidly growing urban population. The emergence of COVID-19 has affected the supply side of new housing units and also led to the unanticipated influx of new houses on the secondary market as a significant portion of homeowners are unable to repay their mortgages or even meet the high cost of living in urban areas after the loss of income due to the restriction of economic activity across a number of sectors. Unfortunately, the secondary housing market is mainly informal, unregulated, and underdeveloped with heavy reliance on social media platforms to identify potential buyers and sellers.
The government’s plan to create 15 new cities over a period of four years provides an opportunity for budding developers of affordable housing for the new cities. This will also need the support of financial institutions with tailored solutions, including flexible repayment options and the use of alternative collateral to support housing sector developments across the country.
Availability of data on housing finance
Information on financing housing sector developments is available from the Bank of Uganda’s publications on private sector credit. Price movements for properties in the real estate sector are also tracked and published on a quarterly basis by the Uganda Bureau of Statistics. Access to information on the number of new properties developed within a period of time remains difficult. However, engagements with key sector players, including mortgage banks and developers, offer insights into the state of the sector and prospects for growth.
The rapid rate of urbanisation, estimated at 5.2% in Uganda, has led to the growth of informal settlements across all districts of the country. These offer accommodation to casual laborers and petty traders operating in the respective districts. Whereas the government ministry in charge of Lands, Housing, and Urban Development has laid out a number of plans for slum upgrades, none of these plans has been implemented. Lack of adequate funding and complexities in the land tenure system remain the biggest challenges in addressing the slum problem. Countrywide, 48.3% of the population resides in slums and other informal settlements. The country’s population growth rate remains high at 3.6%, increasing pressure on urban sanitation services.
Bank of Ugandahttps://www.bou.or.ug/Uganda Bureau of Statisticshttps://www.ubos.org/Ministry of Lands, Housing and Urban Developmenthttps://mlhud.go.ug