Uganda, East Africa’s third largest economy, has had a decade of strong economic growth, helped by a robust private sector, liberal policies and a stable macroeconomic environment. Key challenges lie in transport and energy infrastructure, and in high unemployment and poverty rates.  Rampant inflation, at 18.7%, made 2011 a difficult year, but the government managed to stabilise the economy, bringing inflation down to 14.6% in 2012.  It is expected to come down further, to 7.8%, by 2014.  As a result, GDP growth decreased to 4.4% in 2012 – the lowest rate in the past decade – but is projected to rise by 4.9% in 2013 and by 5.5% in 2014, supported by growth in the telecommunications, financial services and construction sectors.  The construction sector comprised 14.2% of GDP in 2011, while the finance, real estate and business services sector comprised 9.1%.

Uganda has exploitable quantities of oil; it is estimated that Uganda’s reserves could produce 200 000 barrels a day.  Large-scale oil production is predicted to begin in around 2015.  The new National Development Plan (NDP), launched in April 2011 and setting

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Uganda, East Africa’s third largest economy, has had a decade of strong economic growth, helped by a robust private sector, liberal policies and a stable macroeconomic environment. Key challenges lie in transport and energy infrastructure, and in high unemployment and poverty rates.  Rampant inflation, at 18.7%, made 2011 a difficult year, but the government managed to stabilise the economy, bringing inflation down to 14.6% in 2012.  It is expected to come down further, to 7.8%, by 2014.  As a result, GDP growth decreased to 4.4% in 2012 – the lowest rate in the past decade – but is projected to rise by 4.9% in 2013 and by 5.5% in 2014, supported by growth in the telecommunications, financial services and construction sectors.  The construction sector comprised 14.2% of GDP in 2011, while the finance, real estate and business services sector comprised 9.1%.

Uganda has exploitable quantities of oil; it is estimated that Uganda’s reserves could produce 200 000 barrels a day.  Large-scale oil production is predicted to begin in around 2015.  The new National Development Plan (NDP), launched in April 2011 and setting economic plans until 2015, plans for increased infrastructure spending, especially in the energy sector. Such plans include building an oil refinery, an oil distribution network and hydroelectric power projects that would increase energy production by 3 500MW.

Although only 14% urban in 2009, Uganda has been rapidly urbanising, at 5.1% per annum, and it is expected that by 2050, Uganda will be amongst the most urbanised countries in Africa.  In 2012, the Uganda Bureau of Statistics initiated a housing and population census to update the information available from the previous 2002 census. Findings are expected in 2014.  Uganda ranks 120th out of 185 countries on the World Bank’s Doing Business indicators for 2013, down one place from its 2012 ranking.

Access to finance 

Uganda’s banking sector continues to grow. The number of commercial banks has increased to 25, with 455 commercial bank branches and 660 ATMs across the country.  By June 2012, commercial bank assets to GDP comprised 30%, while bank credit to GDP stood at just below 15% and deposits to GDP at about 18% of GDP. In recent years, lending by banks has increased substantially, especially given their historical inclination to invest in government securities. The Bank of Uganda forecasts that the shift from public to private sector investment will continue, although the high lending rates and low credit availability may stifle demand somewhat.  Building and construction loans as a percentage of all private sector credit jumped from 16.4% in 2009 to 23.3% in 2012, overtaking personal and household loans, and trade.  This growth eased slightly, but the building and construction sector maintained its lead across all forms of credit between April 2012 and March 2013, holding a 22.6% share of total private sector credit.

Of the nine financial institutions that offer mortgage finance in Uganda, five dominate: Housing Finance Bank (HFB), Stanbic Bank Uganda, DFCU Bank, Barclays Bank and Standard Chartered Bank. Of these, the market leader is HFB, established in the 1980s by the Ugandan government as the Housing Finance Company of Uganda.  Now a private institution, HFB holds about a 55% share of the total mortgage finance book value, and 4% of total banking sector assets.  By the end of December 2010, the total mortgage portfolio was estimated at USh 1.65 trillion (US$660 million), or 4.8% of GDP, compared to USh771 billion (US$308.4 million) in 2009, or 3.3% of GDP, and USh2.4 billion (US$12.9 million) in 2002, or 0.3% of GDP.

The mortgage lending sector has diversified considerably since 2002, when only residential mortgages were available. In additional to residential loans, lenders now also offer mortgages for commercial property, land purchase and construction finance to property developers.  Residential mortgages still dominate, comprising 40% of the mortgage book. Between January 2009 and December 2010, mortgages to property developers almost doubled to USh 271.9 billion, followed by residential mortgages growing by 38% to USh 435.1 billion.  Commercial mortgages recorded negative growth in the period, and in December 2010 accounted for 15% of all mortgages in Uganda.  Mortgages for land purchase comprise only about 3% of the total mortgage book.

In August 2013, the Bank of Uganda maintained its Central Bank Rate at 11%.  Mortgage interest rates are therefore still expensive, above 15%; as a result, the residential mortgage sector mainly serves middle and high income earners.  Still, a number of mortgage lenders are beginning to take an interest in the lower end of the market.  Post Bank Uganda, for example, provides low costs savings accounts and is reportedly operating in the lowest income quintile.  Commercial banks such as Stanbic and Centenary Bank have product mixes that include microfinance services.  Nevertheless, the sector has a long way to go, as access to financial services is still available only to a minority. According to the World Bank’s Global Financial Inclusion Database (Global Findex), only about 20% of adults over the age of 15 have an account at a formal financial institution. and only 1% of adults say they have an outstanding loan to purchase a home, while 3.6% say they have a loan for home construction purposes.

Obtaining long-term funding for lenders has also always been a challenge, although this is improving. Banks rely mostly on their short-term deposits to provide mortgage finance, meaning shorter terms for loan products.  Also, between 2009 and 2010, the value of government securities held by banks more than doubled in response to a rise in interest rates.  This attracted money away from the mortgage sector.  The Uganda Securities Exchange, while growing, is still a small stock exchange by any standards, and has a relatively modest market capitalisation of USh 9.9 billion (US$4.4 million). It has nevertheless offered some opportunity for fundraising, with over 25 treasury and corporate bonds, as well as a number of successful Initial Public Offerings. In January 2010, for example, Stanbic issued a bond for about US$15 million, to be used for long-term liquidity, raising hopes for more readily available and affordable mortgages.

The Ugandan statutory pension scheme, the National Social and Security Fund (NSSF), offers much potential as a funder. The NSSF is a mandatory scheme requiring that employees of medium companies contribute 5% of their gross monthly salary, while employers contribute 10% of the total monthly salary to the fund. The NSSF has invested considerably in the financial sectors, acquiring 50% equity in HFB and holding shares in Stanbic and DFCU. It is also involved in providing lines of credit for the DFCU bank. The NSSF has, however, not been involved in direct lending for housing acquisition to its members.  The NSSF is complemented by a number of private pension schemes, pointing to great potential for a large role to be played by pension funds in the housing finance sector.

Other sources of long-term funding include international credit institutions. The HFB recently launched new mortgage funds that are funded by the African Development Bank, the East African Development Bank and the European Industrial Development Bank. The government also announced its intention to provide the HFB with USh 15 billion (US$6.5 million). DFCU sources credit lines from, amongst others, Kfw Bankengruppe, the International Finance Corporation, the Netherlands Development Finance Company, the European Investment Bank and the Norwegian Investment Fund for Developing Countries.

In 2011, the European Investment Company granted a €40 million loan to five leading commercial banks in Uganda to assist in providing financial support in the areas of small and medium-sized enterprises, as well as housing. Also, the Kenya Commercial Bank (KCB) Uganda has invested US$15 million to address the increasing need for mortgage facilities in the country.  In addition, Uganda is set to also access funding from Shelter Afrique at an interest rate of below 10% to improve its housing sector.

Uganda has a fairly diverse, well established and growing microfinance industry. In 2013, 30 MFIs were reporting to the Mix Market (an online source of microfinance performance data and analysis), registering a total of 422 122 active borrowers and a gross loan portfolio of US$379 million (a four-fold increase on 2011 numbers). With support from the Stromme Foundation and Habitat for Humanity Uganda (HFHU), a number MFIs are piloting housing microfinance products in which they will lend low income earners up to USh 8 million (US$3 478), payable over two to five years.  HFHU directly issues home improvement loans to low income earners through two of its branches in Luweero and Masindi. These are disbursed in cash at an average loan amount of US$805, payable within two years at an interest rate of 2% a month.

In 2010, Ugafode Microfinance, an MFI that had been incorporated as an NGO in 1994 under the name of Uganda Agency for Development Limited, was incorporated as a company, and in 2011 was licensed as a micro deposit taking institution (MDI) regulated by the Bank of Uganda, bringing the total number of MDIs regulated by the bank to four. Ugafode has a range of products targeting low and moderate income earners.  Three products are explicitly for housing: asset acquisition loans, micro-mortgage loans and flexible housing loans. With 8 578 active borrowers in 2013, Ugafode has a gross loan portfolio of US$4.7million.  Ugafode’s deposit base is strong, with 18 450 depositors saving almost US$1.4 million.

Uganda Microfinance Limited and Centenary Bank also provide home improvement loans. These are generally short-term consumer loans designed for regular income earners to finance home improvements and to purchase land, for construction, renovation and the installation of energy and water, and to purchase furniture and recreational equipment.  Over 100 NGOs and 700 savings and credit co-operatives also offer microfinance.  Some, such as Pride Microfinance and Women’s Finance Trust, have been providing loans that have indirectly gone to house construction.  Over time, many of these are developing explicit housing loan products.  Pride Microfinance, for example, offers a micro-mortgage of between USh 200 000 (US$80) and USh 2 million (US$800).

In 2013, a five-year project was launched by Habitat for Humanity and the MasterCard Foundation to support microfinance institutions in Uganda to develop housing loan schemes for low income earners in Uganda.  It was estimated that about 6 000 households would benefit.

Uganda has a credit reference bureau that has been operating since December 2008. The CRBS, operated by South African firm CompuScan, carries the particulars of borrowers’ debt profiles and repayment history, enabling lenders to make informed lending decisions.  In the long run, this should support and enhance the lending industry in the country. The Bank of Uganda sees it as a means of reducing the risk on lending and ultimately making loans more affordable, given the high interest rates in the country.  A national identification system is also under development. As a result, Uganda improved by 12 rankings to 40th place out of 185 countries on the World Bank’s ‘ease of getting credit’ index, according to the Bank’s 2013 Doing Business report.  Just over 600 000 individuals (3.7% of the population) are included in the private credit bureau.


Housing affordability is a serious challenge for Ugandans.  According to the National Statistical Office of Uganda, in 2009/10, about a quarter of the population, or 7.5 million Ugandans, living in 1.2 million households, were defined as poor. This was a reduction from five years previous when about a third of the population was poor.  In that same period, however, inequality increased, with the Gini coefficient deteriorating from 0.408 in 2005/06 to 0.426 in 2009/10.  UN-Habitat reports that the per capita income of Ugandans is about US$300, although this amount is slightly higher in urban areas.  More than half of the city dwellers in Kampala live on less than USh 1 600 a day (US$0.62).

Of the mortgage products on offer from commercial banks, typically a deposit of 20% to 30% is required, and terms range from five to 20 years. Products cover house construction, new home acquisition as well as house improvements, and loans of between USh5 million and USh200 million (US$2 000 to US$80 000) are available, depending on the size of the lender.  Interest rates are high at over 18% in 2012, and this compromises loan affordability.

There is a recognised shortfall of affordable housing in the country. According to the Real Estate Database, rentals in June 2013 started at USh 300 000 (US$116) per month for a one-bedroom unit, and go as high as USh 10.3 million (US$3 995) per month.  Houses for sale start at USh 27 million (US$10 473) for a basic two-bedroom house, and go as high as USh 1.95 billion (US$737 000) for a four-bedroom house.  There are very few of the lower cost houses available, however.

The cheapest house built by a private developer in 2013 was US$32 000 for a 120m² house.  At current rates, this would cost an estimated US$515 a month (at 18% over a 15-year term) – well beyond reach of 99% of the population.  In 2010, it was reported that the cheapest housing loan products from commercial banks required at the very least that an individual have a monthly salary of USh 1 million (US$400) to qualify for a mortgage. According to these criteria, less than 1% of Ugandan households would qualify.

A key factor contributing towards the cost of housing is the infrastructure component.  Increasingly, given capacity constraints within local authorities, developers are developing local and bulk infrastructure as part of actual development, and covering this investment in the price of the housing rather than spreading it over the long life of the services delivered, as a municipality might be able to do.  This contributes as much as 15% to 25% to the purchase price.  Another factor is the cost of building materials. In 2010, domestic cement production increased by 34.7%, easing pressures somewhat.

Savings and credit co-operatives and MFIs also improve affordability among the lower end of the income spectrum. The Uganda Human Settlements Network has since 1999 sought to address many of the challenges in the sector through lobbying, advocacy and sharing information for better policies, programmes and practices.

Housing supply

Estimates of the national housing backlog vary, and in 2012 ranged from 560 000 to 1.6 million units, with an annual housing need of 233 000 units.  The Ugandan Minister of Lands, Housing and Urban Development noted in 2012 that the backlog could hit eight million by 2020 if nothing was done.  Some 28% of the backlog (160 000 units) is in urban areas, and the capital city of Kampala, has an estimated backlog of 100 000 units.  Formal supply is not keeping up with the demand – mainly because Uganda has only a few well capacitated formal housing developers. UN-Habitat estimates that Uganda has about six million households living in 4.5 million housing units. In Uganda’s slum settlements, residents are largely tenants living in single rooms. The 2002 Population and Housing Census suggested that 70% of houses are built with temporary building materials, and of these, 27% are in urban areas.  In 2012, UN-Habitat agreed on a five-year project to develop a sustainable long-term financing strategy for slum upgrading and economic development.  The estimated cost of the project was US$4 million.

The development of housing has been on the increase in recent years, and between 2010 and 2011, the number of plans submitted and approved increased by almost two thirds, with a total of about 1 500 plans approved in 2011.  The largest developer is NHCCL, which claims it has the capacity to develop as many as 4 000 units a year, although in 2009, it only put 900 units into the market.  A number of larger developers, both local and foreign, have entered the market recently, such as the Kensington Group from Dubai, Pearl Estates, Nationwide Properties, Akright Projects and more recently Highland Heights. These developers contribute only a modest number of units, mainly to the middle to upper income categories.  At the lower end of the income spectrum, the government, in conjunction with donors such as the Danish International Development Agency and UN-Habitat is involved in a number of local housing initiatives.  Recently, for example, UN-Habitat in conjunction with the government and DFCU Bank, launched a low cost 15-year mortgage project worth USh5 billion (US$2.1 billion) in Tororo Municipality. These efforts are, however, mainly localised and of insufficient scale.

Ultimately most Ugandans build their own housing incrementally.  This includes the poor as well as higher income earners, where a culture of incremental build using savings as well as loans from savings and credit co-operatives and more recently microfinanciers has been established.  Incremental housing construction is supported by government provision of serviced land.

Property markets

There is increasing activity in the property market in Uganda.  Kampala’s residential market has seen rapid growth, with construction of various housing estates, apartment blocks and townhouses in older residential areas, as well as new suburbs being opened up. As a result of this activity, land prices have been increasing such that the Minister of Lands, Housing and Urban Development recently said that a denser urban form, with the construction of multi-storey apartments, will be favoured over the construction of bungalows.

Policy and regulation 

Uganda’s housing policy framework is still evolving.  A draft National Housing Policy has been under consideration for the past three years and in 2013 was ready for submission to Parliament.  The draft policy gives explicit attention to the affordable housing needs of low income earners, including slum upgrading, enforcement of minimum standards that will prevent overcrowding and the improvement of the living standards of the urban poor.  The policy also recognises the role of the private sector in providing housing on a commercial basis. The policy aims to increase the construction of housing units to 250 000 units a year so that the deficit can be decreased by 50% by 2025.  The policy addresses the delivery of housing both for rental and for ownership, and will enable government to build houses for public servants.  The government also plans to create a revolving fund to finance public servants’ housing.

In his 2013/14 Ministerial Policy Statement, the Minister of Lands and Housing committed to implementing the National Land Policy over the next year, and to finalise the review of Land Regulations.  The computerisation of land records would also continue, as would the issuance of land titles, certificates of customary ownership and certificates of occupancy.  The Minister also promised to finalise the development of the National Urban Policy and Strategy Plan, and to implement the National Housing Policy.  A US$150 million Municipal Infrastructure project was planned for 14 municipalities, 108 low cost houses were planned for construction in Kasooli-Tororo Municipality and the titling of land in the Masese slum upgrading project was planned to continue.

Uganda has a system of non-judicial foreclosure, often considered more useful for developing mortgage markets. There is, however, concern amongst mortgage lending institutions that proposed amendments of the Mortgage Act will force the foreclosure process to be administered through the court system, which is overloaded and understaffed. Uganda also suffers from an inefficient land administration and registration system that curtails the development of the mortgage market. In 2013, the country rated extremely low in terms of the World Bank’s Doing Business indicator for registering property – 124th out of 185 countries. It takes about 52 days to complete the 12 procedures involved in registering a property in Uganda.  The process is relatively cheap, however, at 1.9% of the property value, which is a fifth of the average cost in Sub-Saharan Africa. Cabinet approved a new land policy in 2013 to address the systems, procedures and information base supporting land use management and transactions in Uganda.


Continued macroeconomic stability has sustained economic growth and created a suitable investment climate in the country.  With this has come an unsatisfied demand for housing, especially in the affordable housing segment that caters for the growing middle and lower income groups.  This is a definite area for growth and opportunity, supported by the forthcoming National Housing Policy. The mortgage market is still in its infancy and can accommodate many more players, as has been illustrated by the entry of newcomers such as Stanbic and Standard Chartered banks. Microfinance is well established in the country, including housing microfinance lending practices. This is an area of enormous potential, given the established market for microfinance and the pre-dominance of self-build.


Africa Microfinance Action Forum (2008). Diagnostic to Action: Microfinance in Africa.

Agaba, V. (2008). Shrugging off the Lethargy – Trends in the Uganda Mortgage Market. Housing Finance International, September 2008.

Bank of Uganda (2012). Annual Report 2011/2012.

Bank of Uganda (2013). Current State of the Ugandan Economy, June.

Demirguc-Kunt, A. and Klapper, L. (2012). Measuring Financial Inclusion: The Global Findex. World Bank Policy Research WP 6025.

Kalema, W. and Kayiira D. (2008). Access to Housing Finance in Africa: Exploring the Issues (No.4) Uganda. Paper commissioned by the FinMark Trust with support from Habitat for Humanity.

Kalema, W. and Kayiira D. (unpublished, 2012). Overview of the Housing Industry and Housing Finance Sector in Uganda.

Ministerial Policy Statement for Lands, Housing and Urban Development. Vote 012 & 156 FY 2013/14. Presented to Parliament for the Debate of the Estimates of Revenue and Expenditures, 28 June.

Uganda Bureau of Statistics (2012). Statistical Abstract.

UN-Habitat (2012). Uganda National Urban Profile.

World Bank (2013). Doing Business 2013 Report. Uganda.





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