“Housing policy is the single most important factor in Africa’s economic development. It needs to be elevated to the highest political level” (Sir Paul Collier. Professor of Economics. Oxford University.)
Why does housing matter in Uganda?
The effects housing has on living standards are significant, for instance the impact that it has on the health of children, has a knock on effect on the productivity of the family. Decent housing leads to better health of children, which in many instances directly determines women’s ability to take part in economic activity. This is an opportunity to earn additional income for the family unit as well as channel resources away from healthcare to income generating ventures.
The reason that major towns and cities in Uganda feel congested is due to the fact that the infrastructure, housing and economic activity is all very scattered. This is only exacerbated by the fact that there are hardly any investments, particularly in affordable and low-cost formal housing, as well as infrastructure; to keep up with the population concentration in these towns and cities.
Towns in Uganda typically grow out of clusters of small, fragmented communities mainly through expansion from the outer edges as opposed to infill. The implications being that inhabitants are live further away from schools, hospitals and workplaces with poor access to reliable sources of transport. They suffer long slow commutes to and from work, dropping children at school; due to heavy traffic congestion, a common characteristic of streets in Uganda. In cases where companies have to factor in these higher commuting costs; higher wages mean they become less competitive, to investors that are looking to maximise their economies of scale which directly impact their return on investment.
Poor plumbing facilities and the related low sanitation levels are characteristic of poorly constructed housing structures which lead to the spread of contagious diseases like typhoid or cholera that spread through contact with water contaminated by faecal matter or sewage. Illness comes at a high cost to companies as a result of the frequent employee absenteeism due to their illness or that of their children or relative that they then have to take to a health centre. The effect of which, is reduced labour productivity for companies as well as negatively impacting the income generation potential of employees due to lost wages.
A frequently neglected issues the workers state of mind and how this is directly correlated to their levels of productivity. Research from the Ohio State University, discovered that workers moods at the beginning of the day can last throughout most of the day and have an important effect on job performance. The low living standards weigh heavy on the mind of workers and this does have a financial impact on their employees in the form of reduced productivity, slackness, errors, and accidents all due to not paying proper attention to their tasks.
Therefore there is an urgent need for an effective Housing Policy in Uganda that can be implemented through the adoption of new and innovative construction technology due to how the dire the housing situation is in Uganda with a current housing deficit of approximately 1.7 million and it is estimated that just the capital city, Kampala: has a housing deficit of 550,000 units. On top of this deficit, the annual need for new housing for the entire country is estimated at 200,000 habitable housing units. Innovative building solutions like reinforced polystyrene panels manufactured by TechBuilding Group, offer a quick solution given their durability and speed of construction, where a bungalow of 140m2 can be constructed in just 18 days that is 5 times stronger than conventional brick and mortar.
A housing policy would typically gazette land specifically for planned housing projects; Uganda needs such initiatives that cater for all classes of society: from affordable to low-cost formal housing. Tax incentives for real estate developers that invest in housing estates, would spark interest and further incentives from the central bank targeting more affordable interest rates for mortgages would grow and strengthen the market further.
There are a large number of unbanked Ugandans, only 20.3% of Ugandans have bank accounts which directly impacts on the numbers with access to mortgages, a major hurdle for growth in the housing market. The rise in financial inclusion for low income Ugandans in recent years has been on the back of innovative financial services by mobile phone operators, through mobile money. The mobile phone companies could again be the key to overcoming this hurdle.
The only limitation to innovation is how high one is willing to soar; imagine for a moment that mobile phone operators like MTN, Airtel and Africell to construct affordable and low-cost housing mortgages for 2-bedroom bungalow raw building shells that could be built in 3 weeks. They could offer 5 to 10 year mortgage products in their mobile money menus and using the same alternative credit scoring algorithms calculate a customer’s ability to afford a mortgage; this could revolutionize the housing market overnight. Phone companies could then deduct funds from peoples’ mobile money wallets on a daily basis for as low as 18,000/=, transfer this to the construction and real estate companies that will build these housing estates and offer the customers a raw building shell with a commitment to continue making the payments for the remaining years. Customers can then complete the raw building shell with the finishings of their choice.
Affordable and low-cost housing in Uganda has huge political stability implications especially in the urban regions. Slums are a breeding ground for crime and their growth in cities in Uganda will have dire consequences in the near future ranging from sharp rises in misconduct to possible riots. This is a concern that needs to be addressed and fast.