For years, Standard Chartered Bank occupied a distinctive corner of Uganda’s banking sector.
Before the Mortgage Refinance Institutions Act, Uganda had already tried to link long-term savings to housing finance.
The country faces a housing deficit of more than 2.4 million units, according to Habitat for Humanity, with about 60 percent of the population living in informal, overcrowded, or substandard housing.
To help address this, Uganda Retirement Benefits Regulatory Authority (URBRA) introduced mortgage security regulations in 2022, allowing pension savers to use up to 50 percent of their accumulated benefits as collateral for a mortgage, subject to trustee approval and proof of sufficient income.
If a borrower defaulted, trustees could settle the outstanding balance with the lender.
The idea largely failed. ‘In practical terms, the people who had enough savings to qualify, those with benefits worth more than Shs5m, already owned houses. So, it wasn’t, in a way, helping,’ Eric Mugisha, an investment and regulation analyst at URBRA, explains.
The arrangement faced another obstacle. Section 70 of the National Social Security Fund (NSSF) Act protects members’ savings from attachment, creating uncertainty over whether lenders could enforce pension-backed security in the event of default.
NSSF dominates the pension industry by over 85 percent with assets under management worth Shs29.5 trillion by the end of February 2026.
‘Banks have had a challenge with that kind of conflict,’ Mugisha says. ‘There’s nothing that gives comfort to the bankers.’
Uganda’s first serious attempt to connect long-term savings to housing finance, therefore, stumbled because the legal framework pulled in opposite directions. That experience is worth remembering as the country embarks on a far more ambitious housing-finance reform.
The problem
To understand what the Mortgage Refinance Institutions Act can and cannot do, one must start with the structural problem it is designed to solve.
‘Commercial banks, on the whole, are short to medium-term because that’s the nature of their funding. On the rates side, the current average lending rates can be challenging, unless it is commercial property that generates income,’ says Wibrod Owor, the Uganda Bankers Association executive director.
Three barriers define Uganda’s housing finance market. First, banks fund themselves largely with short-term deposits but are expected to provide loans that run for 15 to 25 years.
Second, mortgage rates of between 16 and 22 percent make repayments unaffordable for many households.
Third, the pool of borrowers who can meet banks’ income, collateral, and credit-history requirements remains small.
The result is one of Africa’s smallest mortgage markets. Fewer than 40,000 mortgages exist in a country of about 50 million people, according to banking industry records.
Income levels help explain why. Uganda Bureau of Statistics data show that about 60 percent of Ugandans earn less than Shs200,000 a month.
In a workforce of roughly 20 million people, six out of every 10 workers have incomes that leave little room for a mortgage payment.
As Emmanuel Kaganzi, Commissioner for Physical Planning at the Ministry of Lands, Housing and Urban Development, observed last month, ‘more than 60 percent of Uganda’s urban population lives in informal settlements and slums’.
‘The current mortgage market serves less than 5 percent of the population, with interest rates between 17 and 20 percent, making homeownership unattainable for the vast majority of Ugandans,’ he said.
These constraints reinforce one another. Expensive credit reduces the number of eligible borrowers.
Fewer borrowers mean lower lending volumes. Lower volumes keep costs high, which pushes rates higher still and excludes even more households.
The mortgage refinance company is intended to break that cycle. ‘Banks will sell that mortgage to the refinance company. The refinance company can wait much longer.
That is how the sector is trying to sort out the issue over the medium to long term,’ Owor explains.
In practice, the refinance company purchases mortgage portfolios from banks, freeing up capital for new lending.
Backed by long-term funding from government, the World Bank, African Development Bank, and other development finance institutions, it is designed to hold the long-term risk that commercial banks struggle to carry.
Oscar Mgaya, the former chief executive of the Tanzania Mortgage Refinance Company, says Tanzania’s equivalent reform expanded the mortgage market tenfold over 14 years, increased participating lenders from three to 29, and reduced lending rates from about 22 to 24 percent to 13 to 17 percent.
The experience suggests the model can work. The more important question is whether Uganda has the conditions needed for it to work at scale.
Problems beyond the law
The mortgage refinance company solves a problem for banks. Whether it solves a problem for borrowers is less certain.
Mugisha ‘feels it could still revolve around capacity’. ‘You might have all these refinancing entities, but still find that the capacity is restricted to a few.
It may not be helping the low-income earners. It could provide some mileage until you start the operationalization of it. I just need to see the uptake.’
His concern reflects a common pattern in emerging markets. Financial-sector reforms often improve access to credit for formally employed middle-income households while doing far less for low-income and informal workers.
The reason is that cheaper funding does not remove the requirements that keep many borrowers out of the market in the first place, such as stable income, a verifiable credit history, sufficient collateral, and the ability to service a loan.
Uganda’s numbers illustrate the challenge. According to Uganda Bureau of Statistics, the median urban income is about Shs190,000 a month.
Yet the cheapest formally constructed houses typically cost around Shs100 million, according to property developers.
Even if mortgage rates fell significantly, the repayments would remain far beyond the reach of most households.
That is why Michael Mugabi, the Housing Finance Bank managing director, argues that affordability remains the sector’s central challenge.
‘The key challenge for us is at the bottom of the pyramid that has low to medium income. That is the biggest challenge,’ he says.
Edward Mkangi, the Pride Bank executive director, reaches a similar conclusion from the lending side.
Pride Bank finances incremental construction, where borrowers build one stage at a time using loans ranging from Shs3m to Shs50m.
‘If there is some form of guarantee that can be offered to the lender to extend to the person on the ground, if they do not have the form of security required, then I am also driven to offer relatively affordable financial services,’ he said.
What he wants is not cheaper funding, but a guarantee mechanism for borrowers who lack conventional collateral and a modern digital land registry that makes ownership easier to verify and use as security.
Neither is a function of the Mortgage Refinance Institutions Act.
The law addresses the supply of long-term funding to lenders. It does not reform land administration, create credit guarantees, or change the rules that determine who qualifies for a mortgage.
Those challenges lie elsewhere in the legal and policy architecture.
The land question
Underlying the qualifying-borrower problem is a land tenure challenge.
More than 75 percent of the land in Uganda is held under the customary tenure systems that do not produce formal titles.
Millions of households have land, but cannot easily use it as collateral.
This law helps banks access more money for housing loans, but it does not solve the separate problem that many families still cannot qualify for those loans in the first place.
‘Financing alone would not fully resolve the housing crisis,’ acknowledges James Ssonko, a senior economist at the Ministry of Finance.
‘There are several interconnected challenges like limited access to land, physical planning constraints, inadequate infrastructure, and broader sector coordination challenges,’ he notes.
The risk is that the benefits accrue mainly to households already inside the formal economy.
The concern is not new. In 2015, the UN Committee on Economic, Social and Cultural Rights urged Uganda to take stronger measures to realise the right to housing. A decade later, housing spending remains below 0.3 percent of the national budget.
The Mortgage Refinance Institutions Act addresses a funding constraint. It does not address the land, infrastructure, and affordability constraints that continue to keep millions of Ugandans out of the housing market.
Absence of a social housing system
The biggest flaw in Uganda’s housing debate is one of framing. The mortgage refinance company is being presented as a solution to the housing crisis.
It is really a solution to a housing finance problem affecting a relatively small, formally employed segment of the population.
Anthony Kusingura, the Equal Housing executive director, argues that the deeper challenge is the absence of a well-funded social housing system.
‘The challenge is not the absence of developers or investors, but the absence of a strong, well-financed social housing system to cater for those that cannot afford housing on their own,’ he says.
The Constitution commits the state to ensuring access to decent shelter, while the Constitutional Court held in the Salvatori Abuki case that deprivation of land and shelter violates fundamental rights.
Housing is, therefore, not merely a market issue but a constitutional obligation.
But housing policy has increasingly shifted responsibility to the private sector. The result is that developers build for those who can pay, while those who cannot are left behind.
Other countries bridge this gap through public intervention.
France, Germany, Austria, and the Netherlands subsidise social housing. South Africa funds low-cost housing construction. Rwanda integrates housing into state-led urban planning.
Kenya is pursuing affordable housing through public-private partnerships and dedicated funding mechanisms. In each case, the state helps close the gap between incomes and housing costs.
Uganda has no comparable system on a meaningful scale. As investment increasingly targets urban land, the absence of social housing raises the risk that market-led reforms benefit property owners and higher-income households more than the people most in need of housing.
Uganda needs a mortgage refinance company, but it also needs a funded social housing programme.
Kenya’s Affordable Housing Programme provides one example. Through a housing levy, public land, and partnerships with private developers, the Kenyan government helps reduce the cost of housing and reserves units for lower- and middle-income earners who cannot be served by the mortgage market alone.
Without that second pillar, the Mortgage Financing Act may improve access to housing finance for some while leaving the broader housing crisis largely unchanged.