HOUSING a responsibility of government has over the last 30years been provided by the citizens of Uganda. This has affected the cash flows in the economy because of the high currency drain from circulation into housing and yet it has low returns on investment(ROI).
Housing being an infrastructure is the government's responsibility and I think it is high time the government took over from the citizens. The government can borrow money for the housing sector as it has always done for other infrastructure sectors and let the citizens use their savings for other social priorities.
When the citizens use their savings for housing the cost of investment is equivalent to the bank loan rate he or she borrows from a commercial bank which is about 23%. Now, this is so high in the housing sector. This applies to whether you are borrowing, personal savings or money stashed under your bed.
What has this done to the national economy? In the process of citizens providing houses, Ugandans have all collected their money and given it to the following few individuals; building materials manufacturers, stockists, builders, property developers, and land dealers. That's why we see many building materials manufacturers and stockists, property brokers, and developers in all towns and suburbs of Uganda.
If the houses you have built are rental units for the middle and high-class tenants the return on investment is 3.2% per annum. If you have business premises like a mall in the Kampala CBD the ROI is at 8% per annum.
In the last 30years Ugandans have built 2m housing units countrywide with their personal savings. Assuming the average cost of each unit is 35m/= then the total investment in housing is 70t/=. This means we have collected 70t/= and passed it to the above-mentioned persons. If the government was providing the housing units like it is in other countries with say a revolving mortgage facility then the personal savings would be circulating in the economy in trade, manufacturing, services, tourism, agribusiness, etc.
If the 70t/= was left to multiply in the economy through a business that has a higher ROI then Uganda would be a middle-income country as The President has wanted. We cannot develop this country with more residential houses than businesses whose ROI is 3.2% thinking our children will get the returns in their lifetime.
The government should change its strategy and provide housing so citizens can invest in better businesses. These will create jobs, pay taxes and provide goods and services.
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