Housing: Auditor General decries undercapitalisation of NHCCL in new report

KAMPALA, February 7, 2025 — The Auditor General Edward Akol, has urged the government to allocate more funds to the National Housing and Construction Company Limited [ NHCCL ] to enable the production of mass and affordable housing. The NHCCL is a key government institution responsible for implementing housing development programmes in the country.

In his recent audit report for the financial year ending June 2024, Akol highlighted that NHCCL management had resolved to capitalise the company to the tune of Shs 231.5 billion through a rights issue, with the government contributing Shs 118 billion. However, during the year under review, the government allocated only Shs 30 billion, which is just 25 per cent of the expected contribution.

“Due to the undercapitalisation of NHCCL, only 1,474 units [2.12 percent] out of the planned 69,288 units were constructed during the strategic plan period,” the report states.

According to the NHCCL Strategic Plan 2018–2022, the country faces a national housing shortage estimated at 1.6 million units, although some estimates suggest the figure could be as high as 2.4 million.

Eng. Kenneth Kaijuka, the CEO of NHCCL, speaking at the company’s Annual New Year Prayers in Kampala, recently emphasised the urgent need to address housing affordability in Uganda. He noted that the company is committed to changing the narrative around affordable housing by embracing collaboration and leveraging partnerships with various stakeholders.

“Housing affordability depends on the components chosen by customers, such as the specifications, scale, and scope of what they want to build. One strategy we have adopted is to see how collaboration can help reduce costs,” Kaijuka explained.

He also stressed the importance of working with manufacturers, financiers, and suppliers to make housing more accessible. “We are not manufacturers of materials; we must collaborate with manufacturers. Similarly, we need to engage financiers to provide affordable options for the young and growing population.”

The demographic challenge

Kaijuka discussed the unique challenges posed by Uganda’s demographics, noting that 85 per cent of the population is under 35 years of age. “When we talk about affordability, people have a specific price point in mind for houses. However, when you analyse the population, the majority are young, just starting their careers, and cannot afford high-priced housing.”

He explained that many Ugandans between 25 and 35 years are still transitioning from school to employment and financial stability. “At 25, you finish university. By 28, you may pursue a master’s degree. By 30, you get married, and by 35, most people are just starting to earn a significant income. Acquiring a house worth Shs 50 million is often out of reach, which makes Uganda predominantly a rental market,” he said.

For Ugandans above 35 years, Kaijuka observed that only 15 to 20 per cent can afford a house worth Shs 100 million. He called for urgent discussions to foster collaboration among financiers, developers, material suppliers, and landowners to make housing more affordable for the majority of Ugandans.

Kaijuka reiterated the importance of partnerships to address Uganda’s housing challenges. “The conversation we must have now is about attracting collaboration. By working together with financiers, developers, suppliers, and landowners, we can make housing affordable for the majority of Ugandans,” he said.

The Uganda National Housing Policy

The Uganda National Housing Policy recognises housing cooperatives as one of the key modes for housing delivery in the country. The policy identifies cooperatives as crucial stakeholders that can be supported by government and other entities to deliver affordable housing to Ugandans.

The policy notes that housing cooperatives face challenges related to sustainability, such as limited membership, inadequate funding for cooperative housing development, and a lack of public awareness about cooperative housing.

To address these challenges, the government in the policy committed to promoting the formation and development of housing cooperatives by: providing technical assistance and building capacity for cooperatives; mobilising resources for cooperative housing development; creating awareness of the benefits of cooperative housing; and establishing and maintaining a register of housing cooperatives in the country.

According to the Uganda National Housing Cooperative Union, housing cooperatives have been launched in various districts, including Kampala, Wakiso, and Bundibugyo. However, members have not been able to raise enough capital to build decent houses, thus requiring government support.

Homes built through housing cooperatives come in different types and sizes, ranging from high-rises and townhomes to small multi-family buildings and clusters of single-family homes, according to experts in the housing sector .

Experts say housing cooperatives offer tangible benefits to their members, including access to affordable housing, financial and social returns, and stability. “Housing cooperatives also often have a ripple effect on the community, fostering a greater level of trust among neighbours and increasing civic participation. All these benefits contribute to the development of a stronger, more socially engaged community,” say Prof. Shuaib Lwasa and Teddy Kisembo of the Urban Action Lab at Makerere University, a research and innovation hub.

Housing cooperatives provide an affordable homeownership opportunity for people at all income levels. Buying a share in a coop is usually less expensive than purchasing a single-family home. Moreover, because no actual real estate changes hands in a housing cooperative purchase, title work and other closing costs are generally much lower.

Because the housing cooperative is owned by its residents, it operates at minimal cost, cutting out third-party profit motives. ”Members have no incentive to substantially increase monthly charges unless taxes or operating costs rise. The operating budget covers only what is required to manage and maintain the cooperative, including reserves for maintenance and long-term improvements, thus significantly reducing costs to residents. Additionally, since members control the budget, they can achieve cost savings through higher levels of self-management,” Lwasa and Kisembo note.

Cooperative housing can be employed as a model for providing affordable housing with a community spirit and an element of mutual support.

Housing cooperatives can be engines for affordable housing, as they focus on helping people who face difficulties accessing housing. They target low- or moderate-income households, offering not only a significant improvement in their quality of life but also a supportive environment conducive to personal, family, and community growth. Affordable housing is an important social asset that contributes to the fight against poverty, increases social integration, and improves public health.

Housing cooperatives doing wonders elsewhere

Housing cooperatives have been successful in countries like the United States, India, Canada, the United Kingdom, and Kenya, among others.

Recently, the Canadian Federal Government released its 2024 Fall Economic Statement, setting its financial priorities for the coming year. Following sustained efforts by the cooperative housing sector, the statement included a commitment worth Ca$ 362.6 million to extend the Federal Community Housing Initiative [FCHI] by five years.

The programme, which was previously scheduled to end in 2028, provides rental assistance for low-income households in housing cooperatives and non-profit organisations, and housing cooperatives in Canada welcomed this news.

In Kenya, housing cooperatives provide opportunities for members to save slowly and collectively purchase large plots, which are cheaper and easier to procure than small individual lots. “Housing cooperatives provide more than just a roof over your head. They create community, allow members to have a say in the management of their homes, and, perhaps most importantly, offer members and their families a more physically and financially secure future,” said a Kenyan cooperative leader.

https://thecooperator.news/canadian-coops-given-362-6mln-for-housing-initiative/

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