A photo montage of President Museveni (Left) and Housing Finance Bank Managing Director, Michael K. Mugabi
President Yoweri Museveni is a witty person. During the launch of NSSF’s US$400m (UShs1.5 trillion) housing project in Lubowa on Thursday, the President sent guests into uncontrolled laughter after he sarcastically questioned the existence of Housing Finance Bank and its role in mortgage financing.
This was after the NSSF Managing Director, Richard Byarugaba said that the mortgage industry in Uganda is less developed and attributed it to limited credit, noting that banks aren’t willing to invest in long term projects like mortgages.
“Banks don’t have liquidity to invest in a mortgage that will take 20 years (to be repaid). Banks’ money is in current and savings accounts. Most banks can’t invest in long term investments,” Byarugaba said.
It is at this point that he proposed the creation of a mortgage bank, Uganda Mortgage Refinance Company/bank to handle issues of credit that is a big limiting factor in growing the mortgage industry in the country.
He said Uganda currently has 13,000 active mortgages.
Mortgages are loans that are used to buy homes and other types of real estate. The property itself serves as collateral for the loan.
In response, President Museveni said: “When you meet Mr. Kasaija, ask him about Housing Finance Bank. What happened to that bank? I heard a rumour that there was a bank like that.”
The guests reminded the President that the bank is operational and its Managing Director was present at the event.
The President responded, saying: “Oh! The MD is here? Young man of Housing Finance Bank, come and tell us how you have maliciously refused to develop mortgages because that’s what you’re supposed to be doing.”
Unlike many people who are shaken up after the President calls them to clarify on certain issues, Michael K. Mugabi, the Housing Finance Bank Managing Director, stood up and walked majestically to the podium amid applause from fellow bank CEOs and other industry captains.
He started: “…Your Excellency, Housing Finance is a very strong bank. It is 64 years old. It controls over 65% of the (mortgage) market. We are leaders in the mortgage space.”
He was however interjected by the President, saying: “65% of little is little.”
Mugabi responded saying that the bank has strategies in place to make it bigger by having partnerships with key institutions and stakeholders.
He said the bank wants to actualize low-cost housing by putting in place houses for the lower market.
This seemed to have convinced the President and let the Housing Finance Bank boss to go back to his seat.
“The Minister of Finance is there. He has heard….Thank you. I thought the boy (referring to Mugabi) is malicious,” the President said, sending guests into uncontrolled laughter amidst applause for Mugabi for the brave responses.
Housing Finance Bank is 100% owned by the Government of Uganda.
It has in recent months partnered with Buganda Land Board, Uganda Cooperative Alliance and the Church of Uganda among others in a bid to push for affordable/low-cost housing in Uganda.
Uganda’s housing deficit is estimated at 2.4 million housing units.
Housing Finance Bank’s asset base grew by 22% to Shs1.11 trillion in 2021, up from Shs912.2bn recorded in 2019. This now places the bank over the 1trillion shillings mark, a feat achieved by very few banks, let alone HFB being the only indigenous bank in this class after Centenary Bank.
The bank made a net profit of Shs20.6bn, placing it among the top 10 best performing banks in the country.
Notable also is that Housing Finance Bank only became a commercial bank in 2007, having previously operated as a Tier 2 mortgage institution.
The bank’s dominance in the Housing Finance sector continues with its consistent command of over 60% share of mortgages in the country.
Earlier this year, the bank introduced the Zimba Mpola Mpola ne Incremental Housing Loans to enable Ugandans to access affordable home financing. 60% of Ugandans build incrementally because many do not have the money to buy a house outright or build one in 6 months. The Zimba Mpola Mpola ne Incremental Housing Loans enable aspiring homeowners to overcome this challenge.
Through this product, the bank supports its customers at every stage of construction, from purchasing land to laying the foundation, roofing, making improvements, and even solar installations. All this with a flexible nature of securities to enable people at the bottom of the pyramid to create decent living conditions for themselves and their families.
In addition, the bank has extended its home financing solutions to Ugandans living in the diaspora, enabling them to build or purchase homes and land while in their domicile country.