New Vision (Kampala)

6 December 2012

Uganda: Low Cost Housing Remains a Dream

With a housing deficit of 1.6 million units, coupled with an annual population growth rate estimated at 3.4%, and a 5.6% urbanisation rate, Uganda needs to move swiftly to match her population explosion with decent and affordable shelter.

According to the housing ministry, out of the total deficit, 1.29 million is in rural areas and 211,000 in urban centres. The problem is even more worrying given that Uganda's population is estimated to hit 42 million by 2020, where more eight million affordable housing units will be required to address the deficit.

This is being exacerbated by commercial developers building only super luxurious houses.

According to Daniel Opio, the business development manager at Shelter Consult Uganda, the country suffers from lack of affordable housing units that can be acquired by the majority of the population.

"Some people build personal houses for more than two years because the finances required outstrip their capacities. This is time-consuming and detrimental to the efforts to close the deficit," Opio said.

Much as affordability is relative, in Uganda's context, a low cost house is usually one-bedroomed, established on 11 decimals and selling between sh45m and 50m, going by the standards of private developers of housing estates.

Anatoli Kamugisha, the president of the Uganda Private Property Developers Association, says developing an affordable housing sector for Uganda remains a dream because of the skyrocketing costs of land, building materials and bank loans.

"Even the house cost range we consider to be within the low-cost bracket is not affordable in reality, as far as low income Ugandans are concerned," he says.

He adds the developers are less attracted to dealing in low cost houses because they command less returns on investment.

Kamugisha says making low cost housing a reality requires a public-private-partnership arrangement, where there is a cost sharing with a company and other parties like the Government.

For example, the Government can finance road construction, extension of electricity and water to bring down the final cost of the houses.

"When President Yoweri Museveni's request to extend social amenities to Akright Kakungulu Estate was effected, it pushed down the cost of houses by 30%. This also happened when Akright handled a project in Jinja and the municipal council provided the firm with the social amenities" he said.

However, Kiganda Ssonko, an independent real estate broker, advises those intending to buy houses but find them expensive to consider buying land and building for themselves.

"Purchasing land and building will save you money. For example, one can buy 11 decimals at sh10m and complete a three-bedroom house using not more sh40m on the outskirts of Kampala," he says. Ssonko adds that direct purchase of low cost houses from developers is suitable for people with too little time to monitor the purchase of construction materials and overseeing the construction process.

The minister for Lands, Housing and Urban Development, Daudi Migereko says the Government, supports new technology for low cost housing units.

He told participants in a recent African Ministers for Housing and Urban Development Bureau meeting in Kampala that Uganda is looking for affordable construction technology to enable more people have access to cheap but modern shelter.

Migereko's revelations came in the wake of a call by Soita Shitanda, the Kenyan minister of housing, advising EAC countries to consider using newer technologies to bridge the increasing deficit of housing units.

In Uganda, developers are still stuck with the costly brick, blocks and motar technology, yet some cost sensitive countries are switching to technologies like building panels that lower the costs by up to 30% and builders can put up an affordable three bed-roomed house within a week.

The housing sector is also suffering the burden of higher interest rates on mortgages currently oscillating between 25% and 26% per year.

"We are optimistic that the rates will come down with the Central Bank's prudent monetary instruments, because the rates once hit 30%, but we can see them going down further. We remain hopeful of a better future," the KCB Uganda managing director, Albert Odong, said in a recent interview.

Lack of a National Physical Master Plan

Kamugisha said the absence of a strictly-adhered-to National Physical Master Plan is also serving as a detriment to the country's housing sector.

"The country's housing sector is struggling because we have no plan to follow in terms of what housing establishments must be built where, why, how, when and by whom. Master plans are helping countries like Rwanda to nurture a sector that has enabled citizens to have organised settlements," he says. Taking Kampala and its surroundings as an example, only 10% is planned, according to the industry experts.

Well-planned settlements are some sections of Kololo, Mbuya, Bugolobi, Ntinda, as well as a few housing estates established by private developers such as Akright Housing Estates, National Housing and Kensigton.

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