Financial Solutions Fostering Housing Affordability
World Business Journal talks to Michael K. Mugabi, MD of Housing Finance Bank (HFB), about addressing housing market challenges through supply—and demand-side finance and creating novel financial instruments to help increase accessibility and inclusion.
How is HFB addressing the gap in home ownership and providing affordable finance for the informal sector and beyond?
Our five-year strategy (2023-27) promotes home ownership and financial independence that targets youth, women, and those working in the informal sector, ensuring enhanced accessibility and inclusion in financial services. As a local bank, we provide customised solutions that surpass conventional offerings, ensuring flexibility to address unique homeownership demand and supply needs. We offer commercial rate funding to developers, increasing the availability of apartment units and providing buyers with affordable finance options to acquire units. The incremental Housing Loan/Building Solution gives loans as low as USD 100 to Ugandans in the informal sector, facilitating incremental construction without needing title deeds. This strategy addresses Uganda’s escalating housing gap, which is anticipated to expand by 300,000 units annually due to urbanisation. We actively support crucial sectors such as agriculture through the Agricultural Credit Facility, offering loans below 12%. Our engagement in oil, gas, trade, and commerce further cements our role, providing tailored and affordable financing solutions. Inclusivity is central, with partnerships with EIB and AfD supporting initiatives for women, youth, and the less privileged.
How has the bank embraced sustainability and digitalisation?
Banking is undergoing a global transformation fueled by technology. Our digital offerings, such as online account opening, agent services and internet banking, improve customer convenience and accessibility. The Online Securities Portal allow Ugandans to invest in securities and bonds for as little as UGX 100,000 (USD 26). In 2023, we initiated the process of achieving Sustainability Standards and Certification (SSCI), targeted for completion by the end of 2024. We focus on sustainable financing, environmental preservation, and tackling climate change, aiming to drive the transition towards a resilient, resource-efficient economy.
What is the primary liquidity concern currently facing the banking sector?
Accessibility challenges exist due to a shortage of long-term liquidity sources, and credit risk poses concerns, impacting liquidity and hindering loan repayments. Globally, high inflation rates affect liquidity flows, particularly in the US. Initiatives to boost oil and gas, manufacturing, and value-added coffee production are essential for exports and economic growth. Government programs like Emyooga and the Parish Development Model contribute to skill enhancement and market development, enhancing liquidity and improving economic indicators. Streamlining performance is crucial to positive outcomes.
