Cheaper and better
housing is a priority
HOME RUN WAYS ARE BEING SOUGHT TO INCREASE CONSTRUCTION AND CUT COSTS. JOINT VENTURES WITH PRIVATE INVESTORS PROJECTS COULD BE ONE ANSWER
CITY of 1.2 million people, the nations capital, Kampala, has a shortage
of roughly 30,000 homes. Good quality, affordable housing is in short supply
in Uganda, where construction materials are expensive and mortgages high.
The government is responding to the problem by setting up a program to develop low-cost housing and encouraging private investors to take part in joint venture projects with the state-owned National Housing and Construction Corporation (NH&CC).
There is a big housing shortage, says John Nasasira, Minister of Works, Housing and Communications. Our policy has been to create an enabling environment. This will include having more mortgage institutions, because at present we only have one.
General Manager of the National Housing and Construction Corporation
Martin Kasekende, General Manager of the NH&CC, says housing
should be made one of the governments top five priorities. He believes
new homes need to be made cheaper to build and to buy. It is important
to recognize housing as a basic human need. Once you do that, your priorities
are clear and you place it along with education and health.
Set up in 1964 to construct and increase the housing stock, the NH&CC carries out the property management and maintenance of huge housing estates, and construction and sale of houses. It has also built office blocks, such as Crested Towers in Kampala, shopping centers and schools, and been involved in road construction. Its aim is to be the national leader in real estate development.
Right now the construction industry has a problem, especially related to housing, says Mr. Kasekende. We depend a lot on imported materials. A house could very easily be 70 percent imported if you dont make the pipes or the electricals and all the finishing touches are brought ineverything except the bricks and mortar.
BUILDING FOR THE FUTURE NH&CC has been developing houses for sale rather than rent
the industry hasnt picked up on producing high quality construction materials,
the construction of houses is still very expensive, and we dont have many
players in that field.
He would like to see the government take a new look at taxation on building materials and at standardization regulations to encourage more private investment in construction and housing.
He believes the government should consider whether the rules could be relaxed to allow cheaper cement to be used for housing to lower construction costs.
A 50kg bag of
Ugandan cement costs almost $10, with cement imported from Kenya, Tanzania or
South Africa selling at about the same price. Contrast this, says Mr. Kasekende,
with a price of around $3 a bag in other parts of the world, such as Ireland,
and its clear why building is expensive.
The government should do something about taxation and about standardization, so that the requirements for constructing a house are not so stringent that an investor will have to put in too much money simply to meet the standards, he says.
He also believes
mortgage rates are too high. Until recently, the Housing Finance Company of
Uganda, the countrys sole mortgage institution, in which the NH&CC
has a 50 percent stake, was charging an interest rate of 15 percent for a period
of 15 years. Recently, we came down to 14 percent, says Mr. Kasekende,
but thats still very high. There must be a way to inject funds into
the mortgage industry.
The NH&CC has been moving away from being a landlord to a policy of facilitating home ownership. We develop houses for sale, rather than retaining them for tenants to occupy. We think that is the best way of multiplying the housing stock, says Mr. Kasekende.
which is undergoing privatization, already operates very much like a private
company, with assets in excess of US$70 million, annual turnover of over US$6
million and a track record of profit-making. We dont receive any
money from the government. We make deals with the assets we have and the revenue
we get from our completed projects, Mr. Kasekende explains.
The NH&CC would welcome approaches from companies interested in joint ventures in the production of cement, ceramics, glass, marble, granite and other related products. Foreign investors are very welcome in Uganda and if they want to invest with us, we are ready, says Mr. Kasekende.
He agrees that privatization is the way forward. The more players in this industry, the better. Let there be more players, so the buyers have more choice. He believes, however, that the government should retain 49 percent participation because of the strategic importance of the corporation to the country.
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