UGANDA PRIMARY MORTGAGE MARKET INITIATIVE
END OF PROJECT EVALUATION
June 2010
Prepared for International Finance Corporation
Prepared by
Sally Roe Merrill
THE URBAN INSTITUTE The Urban Institute 2100 M Street, NW Washington, DC 20037 1-202-833-7200 www.urban.org
UI Project 08513-000-00
TABLE OF CONTENTS
1.0 EXECUTIVE SUMMARY ...... 1
1.1 UPMMI HISTORY AND GOALS ...... 1 1.2 THE CONTEXT FOR THE UPMMI...... 2 1.3 SUMMARY OF RESULTS ...... 2 1.3.1 Component A ...... 2 1.3.2 Component B ...... 3 1.3.3 Component C ...... 4 1.4 SUMMARY OF FINDINGS ...... 5 1.5 SUMMARY OF RECOMMENDATIONS...... 7 1.5.2 Structuring a Follow-on Project ...... 9 1.5.3 Summary of Recommended Next Steps ...... 10 2.0 UPMMI PROGRAM CONTEXT AND THE EVALUATION METHODOLOGY ...... 11
2.1 INTEREST RATES AND BANK OF UGANDA MONETARY POLICY...... 11 2.2 THE CURRENT MORTGAGE MARKET ...... 12 2.3 DEMAND AND SUPPLY BARRIERS ...... 13 2.4 EVALUATION METHODOLOGY ...... 15 3.0 PROGRAM ACTIVITIES: UPMMI TECHNICAL ASSISTANCE AND TRAINING ...... 18
3.1 OVERVIEW ...... 18 3.2 COMPONENT A ...... 19 3.3 COMPONENT B: IMPROVE LEGAL, TAX AND REGULATORY FRAMEWORK FOR MORTGAGE FINANCE . 21 3.4 COMPONENT C: DEVELOP AND STRENGTHEN INSTITUTIONS AND PROCESSES THAT SUPPORT MORTGAGE LENDING...... 24 4.0 PROGRAM RESULTS...... 26
4.1 RESULTS FOR COMPONENT A: MORTGAGE MARKET CAPACITY BUILDING ...... 26 4.2 RESULTS FOR COMPONENT B: CHANGES TO THE LEGAL AND TAX FRAMEWORK ...... 29 4.3 RESULTS FOR COMPONENT C: IMPROVEMENT IN SUPPORTING INSTITUTIONS ...... 30 4.4 CROSS-COMPONENT NETWORKING RESULTS ...... 31 4.5 UPMMI STAFFING ...... 32 4.6 THE FUNDING STRATEGY FOR UPMMI LENDING PARTNERS...... 32 4.6.1 Overview ...... 32 4.6.2 The Lending Structure ...... 33 5.0 SUMMARY OF FINDINGS ...... 37
5.1 OVERVIEW ...... 37 5.2 RELEVANCE, SUSTAINABILITY, AND EFFECTIVENESS ...... 37 5.3 LONG-TERM RESULTS...... 40 6.0 RECOMMENDATIONS ...... 42
6.1 FOLLOW-ON ACTIVITIES FOR UPMMI COMPONENTS ...... 42 6.2 NEW ACTIVITIES ...... 43 6.3 NEXT STEPS IN FUNDING DESIGN...... 45 6.4 SUMMARY OF RECOMMENDED NEXT STEPS ...... 46 7.0 COMPARISON OF UPMMI AND GPMMI AND RECOMMENDED FOLLOW-ON PROGRAMS ...... 47
7.1 COMPARISON OF FINDINGS FOR UPMMI AND GPMMI ...... 47 7.2 RECOMMENDED FOLLOW-ON ACTIVITIES ...... 49
ANNEXES
ANNEX I: ACRONYMS ANNEX 2: SUMMARY OF INDICATORS ANNEX 3: SUMMARY OF TRAINING EVENTS ANNEX 4: SUMMARY OF TRAINEE RATINGS ANNEX 5: PERSONS INTERVIEWED ANNEX 6: REFERENCES
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
1.0 EXECUTIVE SUMMARY
1.1 UPMMI History and Goals
Introduction. UPMMI, the Ugandan Primary Mortgage Market Initiative, was launched in August 2007 by IFC (the International Finance Corporation) as a three-year program of training and technical assistance to the Ugandan mortgage and housing markets to increase access to, and decrease cost of housing finance for would-be homeowners throughout Uganda. UPMMI was managed by PEP Africa and received support from DANIDA (Danish Aid), AfDB (African Development Bank), and FMO (Dutch Aid). The Frankfurt School of Finance and Management was chosen as the implementation partner. Ms. Pamela Hedstrom served throughout the program as resident advisor and Wambui Chege as IFC’s project manager. UPMMI selected and hired their own staff: a lawyer, Vincent Agaba to address issues in the legal framework, and Paulo Luswata to assist with mortgage market development.
UPMMI followed quite closely the design for its sister program – the Ghana Primary Mortgage Market Initiative GPMMI). Thus, IFC has requested a brief comparison of results, findings, and follow-on recommendations for these sister programs. This is presented in section 7.01.
Like GPMMI, the UPMMI was conceived as having two interlinked goals: (1) provision of technical assistance and training and (2) provision of long-term funding via funds from Uganda’s main pension fund, NSSF, supported by a credit enhancement from IFC. The initial design was to provide a conduit for these long-term funds – the Mortgage Funding Trust (MFT). When the MFT failed to come into being – just as had occurred in Ghana - IFC shifted to providing funds directly to the bank partners via NSSF and the credit guarantee. In both programs, in the expectations of the partner lenders, these two elements were designed to be implemented together.
The outcomes for UPMMI and GPMMI, and also their strengths and weaknesses, are also remarkably parallel. Thus, this evaluation closely follows the format of the GPMMI Evaluation. The long-term goals for both UPMMI and GPMMI were stated by IFC as follows: • Creation of long term high quality mortgage lending operations; • Availability of long-term, local currency funding; • Ability of lenders to serve consumers with efficiency and honesty; • Competitive forces operating in an open and unfettered market place; • Provision of bankable and affordable housing; • Increased economic activity; and, • Expansion of mortgage lending and construction finance.
1 This report’s author also carried out an evaluation of GPMMI on behalf of SECO. See Sally Merrill, Ghana Primary Mortgage Market Initiative: End of Program Evaluation, Urban Institute for SECO, December 2009.
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
The activities under UPMMI and GPMMI were organized under three Components: • Component A:to launch modern mortgage lending operations within participating lending institutions; • Component B: To improve the legal and tax framework for mortgage finance, and • Component C:To develop and strengthen institutions and processes that support the mortgage and housing markets.
1.2 The Context for the UPMMI.
Macroeconomic Context and the Mortgage Market. The mortgage market in Uganda, barely 1% of GDP, is exceptionally small, even for Africa. In contrast, in Ghana, the mortgage market equals 3.9% of GDP; in Senegal 2%, and in South Africa 34%.2 Three lenders provide the bulk of Uganda’s mortgages: Housing Finance Bank, Stanbic, and DFCU. Mortgage volume has increased in the last few years although macroeconomic conditions and high returns on government paper, most likely leading to some degree of “crowding out”, make long-term lending quite expensive. Mortgage rates currently range between 16.5% and 18%, which is slightly lower than the average long-term rate of about 19%.
Barriers to the Supply and Demand for Housing. Like Ghana and other emerging economies, Uganda’s housing market is plagued with problems of both supply and demand. Land problems abound, including land titling problems, together with inadequate land use planning and public infrastructure provision. Building material costs are very high, and construction finance remains very limited. The real estate sector – the brokers and valuers – does not yet operate in a coordinated manner nor benefit from computerized information on the market
Constrained by low income and high interest rates, the vast majority of people, including the middle class, build their own homes in an incremental fashion. Only a very small proportion of households can afford a “standard” home. Huge estimates of housing “need” – or the housing gap - are frequently cited, but this is not a statistic with particularly meaningful policy content: that is - the housing gap has not been translated into an “effective demand” context. Uganda would benefit from a better understanding what type of accommodation can be afforded by different groups of households. A number of recent studies have emphasized these problems.3
1.3 Summary of Results
1.3.1 Component A. UPMMI made several important inroads in improving the mortgage market in Uganda, but ultimately fell far short of its own goals. Under Component A, only three banks were actively committed to UPMMI’s programs of TA and training, For DFCU, a long-standing mortgage lender, operations were improved and streamlined. Significant capacity building was achieved for two banks previously without mortgage
2 See “Making Finance Work for Uganda, The World Bank, Financial and Private Sector Division, Africa Region, Final Draft, December 2009. 3 For an assessment of supply and demand problems see Sally Merrill, William Kalema, and Duncan Kayiira 2009, and William Kalama and Duncan Kayiira, 2007.
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
training: Orient and Bank of Africa. However, because the program’s promised funding did materialize neither Orient nor Bank of Africa have yet launched mortgage lending. Lack of funding was also a key reason that a number of other banks chose not to join UPMMI, despite a second attempt at bringing in new bank partners mid-way through the program.
Clearly, the results for mortgage lending could have been much stronger had the IFC funding been realized and more mortgage lenders brought actively into the market. As discussed below, the funding fell prey to a variety of barriers, including ongoing and severe management problems at NSSF, the only major source of local currency long- term funds. In addition, the complexity of the funding design relative to an immature market, together with the failure to find an index that would yield a cost-effective pricing structure, were also barriers. Note, however, that at program launch, the IFC team expended a great deal of energy trying to find a solution and is still working on an approach should there be a follow-on program to UPMMI.
In sum, the overall results for Component A must be seen as mixed. DFCU, Orient, and Bank of Africa, were, in varying degrees, capacitated in best practice mortgage lending. In addition, UPMMI has left a large body of well designed training materials which could be taken up by Ugandan training institutions. Also, UPMMI coordinated efforts with the World Bank’s Making Finance Work for Uganda program in addressing capital market strengthening. While mortgage portfolios have increased since 2007, the results cannot really be viewed as a “success” resulting from UPMMI, as only one active lender participated in the program. However, because improvements in the legal framework are indeed a success, as discussed below, mortgage lending from any lender is now better supported.
A Mid-course Correction. As the hoped-for partners under Component A fell short of expectations, UPMMI wisely made what could be called a “mid-course correction”. A second wave of tenders for bank partners yielded only Bank of Africa, although, interestingly, Finca, a worldwide microfinance lender, also joined UPMMI mid-way through the program. As a result, for the first time in IFC’s mortgage efforts in Africa, a training course for HMF (housing microfinance) was developed.
In sum. As a result of lesser activity under Component A, staff energies were increasingly focused on Components B and C. It is in these components that the most significant contributions to the Ugandan were made. .Indeed, the achievements in strengthening the legal infrastructure and the capacity of various real estate support organizations must be very favorably viewed.
1.3.2 Component B. Under Component B: UPMMI provided very significant input in improving the legal framework for mortgage lending in Uganda. In fact, the UPMMI staff consider this to be their most significant contribution under the project. The passage of the 2007 Mortgage Bill (passed in 2009) is clearly a major milestone in improving Uganda’s legal framework for mortgage lending. Although several issues remain to be addressed, the foreclosure process and framework for mortgage lending are much improved. Also, work on the Stamp Act levy sought to change this from a prohibitive tax
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
of 0.5% of value to a more reasonable flat fee. This change has now been accomplished, as of July 1, 2010.
In addition, UPMMI undertook a wide range of activities to spread awareness and promote mortgage finance. One key activity was assistance in the development of the Mortgage Association of Uganda (MAU). MAU has supported numerous training activities and, importantly, is attempting to launch a real estate database. However, its sustainability is in some question, as there are few members and no others likely to join at present.
1.3.3 Component C. Two important and related accomplishments were made under Component C: (1) significant association building and (2) launching sector-wide networking, helping all stakeholders to see how working together can bring benefits. UPMMI helped to develop key supply side players: the realtors, (AREA, the Association of Real Estate Agents) and valuers (ISU, Institution of Surveyors in Uganda). These groups were assisted in both association building and technical skills. While this process is certainly far from complete - and these groups still struggle to realize viable business plans – important foundations have been laid.
Summary. In sum, despite disappointing results for funding bank partners under Component A, UPMMI achieved significant results in Components B and C. In addition, there were numerous activities that involved stakeholders from all the components and therefore do not fit neatly into component-by component analysis. Major efforts at networking across all the components enabled players in both the housing and mortgage markets to work in concert. AREA, ISU, and late in the program AMFIU (Association of Micro Finance Institutions of Uganda) were active stakeholders.
Discussions with stakeholders have made clear that a more coherent view of the inter- dependencies across the housing sector has been put in place. Workshops and seminars were held that variously included member banks, non-member banks, MLHUD (the Ministry of Lands, Housing, and Urban Development) and especially the Land Users Committee, realtors, valuers, bailiffs, advocates, police officials and local government commissioners. As noted, UPMMI worked with several World Bank programs and the PSFU, the apex body of private sector organizations in Uganda (funded by the World Bank). UPMMI utilized the services of local and regional NGOs such as ACIST (African Community Initiative for Social Transformation) with a particular focus on foreclosure and the implications of the new Lands Act Amendments and with FinLit to help increase awareness of mortgage finance.
Finally, it should be noted that UPMMI staff received many compliments concerning their efforts. In sum, effective networking and viable public/private partnership were encouraged to improve the workings of the overall housing market. This networking, together with advances in the legal framework and training that included non-members of UPMMI, will continue to impact operations in support of housing.
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
1.4 Summary of Findings
To what extent can UPMMI be deemed a success in the Ugandan context? Are the final outcomes relevant? sustainable? effective? What problems and challenges occurred?
Relevant, Sustainable, and Effective Results
• Legal Framework. UPMMI greatly improved the legal framework for mortgage lending by recommending changes to the draft Mortgage Bill, which was passed in 2009. Adoption of these changes is likely to be one of the most lasting and sustainable legacies of the program.
• Adoption of Amendment to the Stamps Act of 2009. During the period of UPMMI operations, the Stamps Act retained the charge of 0.5 percent of the value of the property rather than adopting the flat rate of UGX 50,000 that UPMMI proposed. The stamp duty can add substantially to the cost of obtaining a mortgage, and thus is an impediment to mortgage market development. However, the Ugandan government in July 2010 agreed to UPMMI recommendations on the Stamp Duty Amendment Bill. Effective July 1, 2010, the Ministry of Finance confirmed they would apply a new maximum flat rate of UGX 100,000 on property valuations for mortgage deeds.
• Capacity Building in Training Materials The Mortgage Toolkit (MT), together with numerous training modules such as ALM, risk management, IT and others, have benefited the member banks and offered the potential for training institutions in Uganda to continue capacity building.
• Sector-wide Networking. Importantly, UPMMI effectively reached across components and brought together supply side associations, banking associations, and public sector actors to help form a vision of a coherent housing sector. As noted, these included AREA, ISU, MAU and MLHUD (Ministry of Lands, Housing, and Urban Development) in particular. This broad cross-component outreach may be one of the most important legacies of the program.
Relevant Results yet to be Sustainable.
• Association Building. UPMMI greatly assisted MAU, AREA, and ISU, but they will need further support. A developers association is only just now being formed, so was not part of the TA program.
• Microfinance for Housing (MFH). When Finca expressed interest in UPMMI during the second wave of applications, UPMMI developed a MFH training course and engaged MFIU. Many MFIU members attended, as well as other lenders. This will hopefully lead to an increased offering of HMF, which was not in UPMMI’s scope of work. HMF is an important input into the housing sector in countries such as Uganda, and is a key candidate for follow-on activities
• Regulations for the Mortgage Bill. As discussed in Section 4, UPMMI made many recommendations to improve the draft Mortgage Bill of 2007, most of which were
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
followed in the final version passed by Parliament in 2009. However, the procedures for implementing some of the reforms in the Bill were not adequately spelled out and will need further elaboration in regulations to support the Bill.
• Land Act of 2009 and land use regulations. Since much land in Uganda is held as customary land rather than individually owned and titled, exclusion of this land from the mortgage market is a serious impediment to development. Even persons with established legal rights (“Bibanja”) to use customary land do not have adequate security of tenure to qualify for mortgages. Creation of an intermediate title system or more clearly clarified rights should be considered to open up the mortgage system to these persons.
• Legal framework for Asset Backed Securities and Securitization. As the mortgage market grows, the ability of lenders to access funds to use for making mortgage loans will become increasingly important. It will be necessary to develop a legal framework for using mortgage loans in the capital markets.
• Spreading Knowledge of Foreclosure Resolution. One important change in the Mortgage Bill is to increase the ability of lenders to take control of collateral and sell it in the marketplace as efficiently as possible. In order for the system to remain equitable, however, it is necessary for borrowers and potential borrowers to understand the significance of the contract they are entering into, and how noncompliance with its terms can result in the loss of their property. Public information campaigns will be needed and both the benefits and the risks of mortgage borrowing. In addition, regulations are needed to implement the provisions of the Mortgage Bill relating to informed consent and certification by an “independent advisor” that the borrower understand the terms of the loan documents.
• Spreading Knowledge of Mortgage Finance. This will require a long-term effort. Although NGOs, such as FinLit and ACIST, as well as efforts undertaken by MAU, AREA, and others, are promoting mortgage finance, it is a new concept to the vast majority. FinLit, for one, feels that the booklet prepared by UPMMI, despite editing, remains too complex for most. Note, however, that only a handful of Ugandans will be able to afford a mortgage in the new future, so that increased knowledge of HMF, as noted below, may be more relevant.
• MAU. The establishment of MAU is a positive step in trying to organizing a coherent “mortgage industry” in Uganda. However, MAU is still struggling as an organization. It needs a larger membership to be viable and given the limited number of banks now lending for mortgage finance, this will not be easy.
• Housing Microfinance (HMF). When Finca expressed interest in UPMMI during the second wave of applications, UPMMI developed a housing microfinance training course and engaged AMFIU. Many AMFIU members attended, as well as other lenders. This is a very important first for Uganda. Although HMF is widespread in Latin America, and growing in Asia, it is only now being addressed in some African countries.
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
Lack of Effectiveness and/or Sustainability
• Lack of Funding under UPMMI. The major weakness of UPMMI was the failure to deliver long-term funds to the eligible lender partners. The lack of long-term funds must be viewed as a major flaw: the funds and technical assistance were to be a “package”. As further discussed in section 4.0, there were many hurdles to overcome and perhaps both NSSF and IFC must share the blame. On one hand, NSSF continued to suffer from mismanagement and corruption. On the other hand, the proposal being offered by IFC was probably overly complex for the banks. Finally, decisions taken with regard to the “index” interest rate – the 182 day T-bill, resulted in a pricing structure that was not cost-effective for the banks for mortgage lending.
• Mortgage Lenders. UPMMI provided training to 3 partners. DFCU was already a major mortgage lender, and has sourced funds from abroad for many years. However, 2 of the partners have yet to enter the mortgage market: Orient Bank and Bank of Africa were left with trained staff (and even trained trainers) and were anxious to begin lending, but lacked sufficient long-term funds
In sum, the lack of funds: • limited the number of lenders who were interested in joining the program; • prevented the two banks that were not mortgage lenders, but who had planned to be and were trained by the program, from entering the market during the program period; • “diluted” UPMMI efforts in the sense that some of the newly-trained staff of these two banks have now left for other opportunities; and the newly-gained mortgage lending processes have been left to wither as these partners failed to issue a single mortgage loan; • limited the competition that might have come about with more mortgage lenders in the market. One result of this competition might have been more down-market lending, which is sorely needed to provide housing for a greater proportion of the population. Centenary Bank, for one example, is interested in modest income lending and housing improvement loans, but did not think engaging in the training was worthwhile without the finding.
1.5 Summary of Recommendations.
Uganda’s mortgage and housing markets continue to face a host of challenges. Thus it is recommended that a follow-on project be developed. Many of the respondents interviewed for this evaluation noted that the program was too short: it is ending just as many activities, especially under Components B and C, were in the process of being consolidated. The follow-on activities should include both continuation of existing efforts and introduction of new and complementary activities, especially with regard to supply side issues, affordable housing and strengthening of efforts for downmarket lending. Also, coordination with ongoing World Bank programs should continue, as the Bank’s “Making Finance Work for Uganda”4, which encompasses both improved access to
4 See “Making Finance Work for Uganda, op. cit. World Bank
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
finance and improving the supply of longer-term finance, has important overlaps with many of the recommendations for future efforts. In sum, while further activities should be undertaken in all three components of the program, a shift in emphasis to include more supply- side activities is needed to increase the supply of affordable housing. A summary of the recommendations follows as well as some important caveats.
• Component A. Component A activities should not be renewed in the absence of local currency funding. Any follow-on should be coupled with a satisfactory approach to obtaining long-term funding for those lenders with an interest in mortgage finance, but who lack sufficient long-term funds to enter the market without additional liquidity. Provided that funding can be obtained, Component A should both seek new partners and continue training via the Mortgage Toolkit and other courses with the original partners, such as Orient and Bank of Africa. It is quite likely that other banks will join if funding is linked with the TA.
In addition, having opened a unique window for housing microfinance, and association with AMFIU and its members, training should continue in HMF. Ultimately, more liquidity should be provided to this sector. (Note that in Tanzania, a separate liquidity facility ahs been proposed for HMF).
Finally, construction finance should be explicitly introduced into the program.
• Component B. A follow-on project should also build on the gains made by UPMMI with regard to the legal framework. In particular, regulations to support the implementation of the Mortgage Bill are still needed. In addition, the Mortgage Bill contains provisions for consumer protection (such as certification of independent advice to the borrower about the contents and significance of the loan documents), but there are no regulations or procedures in place for implementing the protections. These are extremely important for building trust in the marketplace, and to balance the new rights of lenders to exercise foreclosure and sale of collateral more expeditiously.
MLHUD and especially the Land Users Committee should continue to assist with training and development of regulations for the Land Act amendments and other issues. In conjunctions with reforms adopted in the Mortgage Bill, increasing security of tenure through certification or an intermediate title system for persons with established legal rights to use customary land should open up the mortgage market to a much larger portion of the population.
• Component C. The follow-on should continue to support association building, especially for AREA, ISU, and MAU. Also, supply side assistance is badly needed: This might include assistance to the nascent developer’s organization, including TA for developer capacity building (such as the NAHB (the U.S. National Association of Home Builders) assistance under GPMMI). Also, affordable housing should be addressed, and an effort made to link incomes to effective demand to different types of affordable housing and affordable loans. The networking begun under UPMMI should definitely continue.
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
1.5.2 Structuring a Follow-on Project
A National “Champion”. Uganda’s public sector should be much more engaged with any future efforts. Ultimately, Uganda should “own” this type of reform. Thus, UPMMI should partner with several national entities, including Bank of Uganda and/or the Ministry of Finance and the Ministry of Lands, Housing, and Urban Development. The recommendations below touch on both the financial sector and the housing market, so it is appropriate to have more than one champion.
Funding for a Follow-on Project. Any follow-on program that includes Component A activities should include long-term funding for existing and would-be mortgage lenders. Without this funding, efforts to train banks not already in the market will be diluted. As funding for a future program is likely to involve NSSF, whether or not pension reform is underway, BoU or the Ministry of Finance may be able to assist the funding process. Similarly, since choice of an appropriate index will remain one key to achieving a cost- effective pricing structure, the funding efforts should be coordinated with BOU. And importantly, BoU should continue its efforts in issuing longer-term paper in order to build liquidity into this portion of the debt market and thus yield pricing points for a yield curve.
Privatization of Housing Finance Bank. As Housing Finance Bank is fully government owned it was not eligible for UPMMI. Offers of assistance with privatization have not yet borne fruit, but efforts should continue. As a leading player in mortgage lending, it would be expeditious to have Housing Finance in a follow-on program.
Mortgage Regulation Work with BoU. As the mortgage market grows, it will be increasingly important to engage BoU in a regulatory structure for mortgage finance. The MT was proposed as a starting point for a regulatory structure under GPMMI, and although it was not implemented during the program, it is recommended as part of GPMMIs follow-on. So too in Uganda, where other efforts such as reporting on mortgage statistics, consumer protection, and supervision of BoU liquidity regulations would assist market regulation.5
Downmarket Lending and Housing Microfinance. HMF should be a mainstay in any follow-on activities. The interest of Finca in housing microfinance (HMF) was a fortuitous occurrence in UPMMI, and one that did not happen under GPMMI. AMFIU should be encouraged to support its members in introducing HMF into their product mix. So too should banks be encouraged to introduce HMF. Centenary Bank, as one example, would like to expand its downmarket housing lending.
Liquidity Facility for Longer-term Funding Assistance. Liquidity facilities, under the right circumstances, can assist countries to utilize the capital markets in providing long- term local currency funding for mortgage finance as well as for infrastructure and other needs. The World Bank plans to introduce such a facility in Tanzania, and this should be carefully watched. It is likely, as Uganda continues with its efforts in capital market
5 See Richard Ketley, Jessica Kramer, 2009 and Merrill, Kalema, and Kayiira, op. cit. 2009. Both reports were produced for a FIRST-supported project, managed by the Urban Institute.
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
development, pension reform, and a more favorable interest rate structure, that a liquidity facility could assist the country in bringing needed liquidity into the market without continued donor support.
1.5.3 Summary of Recommended Next Steps. Although a follow-on project for Uganda should again be fairly broad-based, there should be a relative concentration on liquidity, housing supply and affordability, and lending down-market with affordable loan products. However, there are important conditions that should be met in any follow-on program. These priors pertain to both Uganda and Ghana:
• the funding framework and all accompanying due diligence for potential partner banks should be successfully in place prior to beginning the program; • Component A should not take place unless funding approach is vetted and ready to go; • if there is no funding, do not undertake Component A activities, as banks not yet in the mortgage market generally do not think the TA is worth it without funding. If the partner banks do not have long-term funds of their own to commit, but receive TA, the value of the TA is dissipated if no lending begins as the staff gain no practical experience;
In sum, the follow-on for Uganda should: • revamp proposals to bring long-term funds into mortgage and construction finance, and hopefully open the doors to interest by more lenders • work with BoU in its efforts to reduce interest rates and develop a long-term yield curve in order to design an appropriate index for funding • work with NSSF to develop a viable funding design, as no other capital market institutions are likely partners until some time following pension reform. Also, a 100% guarantee should not be necessary for NSSF, another area for negotiation; • extend the initiatives begun under UPMMI for all components; however, place the emphasis on Component C, including consolidating progress with AREA, and ISU, and the broad-based networking; • assist developers formalize and strengthen their nascent association and begin TA in construction management and affordable housing; • begin a new “linked supply and demand” effort to join affordable housing production at scale with loan products and underwriting procedures aimed at middle and modest class - but “bankable” Ugandans; this should ultimately bring a boost to mass market housing development; • secure one or more dedicated “champions” in Uganda from the public and private sectors, such as BoU, the Ministry of Finance, and MLHUD; • consider Uganda’s readiness for a liquidity facility in the medium-term
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
2.0 UPMMI PROGRAM CONTEXT AND THE EVALUATION METHODOLOGY
The conditions facing both the mortgage and housing markets in Uganda have posed significant barriers to expansion. Although growth in GDP has been fairly robust, both inflation and interest rates are volatile, and high mortgage lending rates make long-term loans expensive. Local banks are generally less liquid than the large regional and international banks.6 However, most of the latter have generally shown little interest in the broadening the mortgage market. Demand is weak, as only a fraction of the population can afford a standard dwelling and problems in housing supply result in high production costs, thereby exacerbating the affordability problems. This section first provides a very brief overview of economic conditions, and secondly, a summary of the evaluation methodology.
2.1 Interest Rates and Bank of Uganda Monetary Policy.
Short-term interest rates have been volatile for some years in Uganda. Indeed, lack of a suitable Ugandan reference index was one of the key problems in the IFC funding structure. UPMMI tracked short-term rates since program inception, as seen in Chart 2.1 below.
Chart 2.1: Quarterly Treasury Bill Rates
Source: UPMMI Quarterly Report Q1 2010
The Bank of Uganda has in place a 5 year plan (2007 – 2012), one of the key goals of which is to reduce volatility of the T-bill rates and gradually build a yield curve. To this
6 See Ketley and Kramer, op. cit.
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
end, BoU has been issuing more debt in a variety of longer terms. This has begun to pay off although there is some way to go. The rate structure as of April 15, 2010, taken from Bank of Uganda data, was as follows:
Table 2.1: Treasury Bill Rates: April 15, 2010 Term Primary Market % Secondary Market % 91 days 4.00 4.00 182 days 5.11 5.27 364 days 7.10 6.38 2 years 12.26 7.05 3 year 11.58 7.45 5 years 8.80 8.45 10 years 12.30 12.85
2.2 The Current Mortgage Market. A combination of low incomes, high interest rates, and a variety of supply side problems continue to negatively impact the mortgage market. As noted, a number of recent studies have provided ample information on this topic.7 There are currently only three active mortgage lenders in Uganda: Housing Finance, Stanbic, and DFCU. (Standard Chartered provides mortgage loans for its executives but is not aggressive in the mass market.) The three mortgage lenders were also the only players prior to UPMMI, and, as noted, only DFCU was a partner under UPMMI.
Table 2.1: Mortgage Lending in Uganda. Indicator 2005 2006 2007 2008 2009
Total Mortgage Finance $60.32 74.73 100.5 122.95 $154.7 Book Outstanding: million of US$ Total Mortgage Finance 111.6 130.8 170.9 240.7 294.5 Book Outstanding: UGX billions Number of Loans 2176 2506 3028 3563 3795 Average Loan Size UGX 51.3 52.2 56.4 67.6 77.6 millions Average Term 13 14 13 14.75 14.75 Maximum LTV 80% 80% 80% 80% 90% Maximum PTI 35% 35% 55% 55% 55% NPLs (over 90 days) 2% 7% 14% 8% 4% Exchange Rate: UGX/$ 1850 1750 1700 1958 1904 Source: P. Hedstrom, UPMMI Draft Final Report
Mortgage rates range from 16% (DFCU, Housing Finance, and Stanbic, to 18.5& for Standard Chartered. However, there are high margins on the average longer-term lending rates for banks, and the mortgage lending rates are somewhat lower, offering
7 IFC conducted a market study in 2005 (see Mark Boleat). Both Fin Mark Trust and the FIRST Initiative have sponsored more recent studies of demand and supply problems in the housing and mortgage markets. Also see Sally Merrill, William Kalema, and Duncan Kayiira (2009); William Kalema and Duncan Kayiira (2007); and Richard Ketley and Jessica Kramer (2009).
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
slightly less margin. Also, the volatility of T-bill rates does not seem to have much impact on the mortgage lending rate.
The mortgage market as of the end of 2009 is shown in Table 2.1. These data were collected by UPPMI staff for their final report and represent data received from Housing Finance Bank, DFCU, and Stanbi As noted the mortgage market, as measured as a proportion of GDP, is extremely small: barely 1% of GDP. In contrast, in Ghana, the mortgage market equals 3.9% of GDP; in Senegal 2%, and in South Africa 34%.8
There are major barriers in terms of liquidity in longer-term funds, limited income and thus limited demand, and numerous supply problems which boost housing prices. The large gap between the interest rate on financial savings and inflation strongly discourages savings in the formal financial system, and supports savings in the form of incremental construction instead. The large gap between inflation and the lending rate strongly discourages borrowing to speed up construction. And the supply of housing finance is constrained: with the mortgage market only offering a small margin above shorter term zero risk rated government securities, the latter is crowding out investment in the former. Smaller banks, in particular suffer from liquidity constraints.9
2.3 Demand and Supply Barriers
Due to low incomes, only a very small proportion of Ugandan households are currently able to afford formal mortgage products.
Figure 1 Distribution of Monthly Income in Uganda (UGX) Sources of income (%) Distribution of monthly income (%)
100% 5% Formal > 1m 0.6% 90% Sector 80% 31% Informal 200,000 -1m 19.5% 70% Sector 60% 150,000 -200,000 7.2% 50% 100,000 -150,000 10.3% 40% Informal 64% Agriculture 30% Sector 50,000 - 100,000 21.5% 20% 10% 0 - 50,000 40.8% 0% 0% 20% 40% 60% Source: Fin Scope (2007). Fin Mark (2008)
8 Op. cit. “Making Finance Work for Uganda, The World Bank, Financial and Private Sector Division, Africa Region, Final Draft, December 2009. 9 Op. cit. Ketley and Kramer.
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
Figure 1 presents the Ugandan income distribution.10 The pyramid represents sources of income, with the top 5 percent representing the formal sector, the next 31 percent the informal sector, and the remaining 64 percent the informal agricultural sector. The right hand side bars provide the distribution on income overall. Thus, approximately 64 percent of the population relies on the informal agricultural sector for income and approximately 62 percent earn less than UGX100,000 ($50) per month. Only the very top of the pyramid can currently afford a standard home financed with a mortgage.
Housing Supply. Demand for mortgages is further constrained by a lack of supply of good quality housing units at reasonable prices.11 The housing market in Uganda has been described by more than one commentator as a “seller’s market” Housing costs are high. To a very large extent, developers and builders focus only on the upper echelons of the market where housing can be finance or paid for in cash. Developer margins are said to be very high in this market.
In a well-functioning housing market, middle class households–assisted via a medium term housing loan–should be able to afford small homes and/or starter homes. Similarly, lower income households should be able to access suitable financing to enable them to build incrementally. However, the majority of builders and developers in Uganda—not unlike in many other lower income and advanced emerging markets, particularly in Africa—have focused on higher cost houses and flats targeted to upper income groups. Thus, neither modest priced homes (say UGX 20-50M, or $10,000-$25,000) nor developed and tested schemes for starter homes or incremental housing currently feature in the Ugandan market. This not only leaves the vast majority of the households in Uganda without access to decent and affordable housing, but also deprives both the economy and the financial sector of potential growth from the housing sector which has high multiplier effects.
Inadequate Land Supply. The lack of appropriate policies and the inadequate administrative infrastructure have greatly constrained the creation of an efficient land delivery system. Consequently, land utilization is insufficient, while ownership and occupancy are still a problem. Government, through the Ministry of Lands, Housing and Urban Development (MLHUD) is taking various measures to address these challenges, and to enhance private sector participation in housing development.12 Also, The rehabilitation and computerization of the Lands Registry Records, with support from the Private Sector Competitiveness Project II (PSCP II):. This initiative has markedly streamlined the provision of land registry activities.
Lack of infrastructure provision and high associated costs. The Local Government Act (1997) empowers local authorities to control development and provide urban services. However, delivery of the vast bulk of infrastructural services (access roads, water, sewerage and electricity connections) has been far from adequate. Due to the absence of serviced land, developers typically have to include the cost of both off-site and on-site infrastructure, which increases the cost—and hence selling price—of
10 Op. cit, Ketley and Kramer, from Finscope and FinMark data. 11 See Merrill, Kalema, and Kayiira, and Kalema and Kayiira 12 See Merrill, Kalema, and Kayiira
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
housing, rendering it largely unaffordable to the vast majority. Infrastructure investments are estimated at between 15 and 25 percent of the price of the house depending on the location of the site in relation to existing trunk infrastructure. The focus of developers then is to make the housing estates more attractive to high-end buyers.
Supply-Side Support Institutions. UPMMI made major inroads in the creation and functioning of two supply-side support organizations: AREA, the brokers association and ISU, the valuers association. These activities are described in section 3.0. Prior to this assistance, the brokers were extremely untrained and inefficient, with limited computer skills, and no database. Similarly, the valuers had not adopted international best practice and also had no database and limited quantitative analysis skills. Finally, there is no active and coherent developers association such as GREDA in Ghana. This lack should be addressed.
Legal Framework. Uganda has operated under an obsolete Mortgage Act (passed in 1974). Work under UPMMI focused on contributing comments to a new Mortgage Bill drafted in 2007. This Bill was passed in 2009 after many of the recommended changes were adopted. For purposes of increasing the size of the mortgage market, the most significant changes were allowing mortgages to be placed on marital property and some kinds of customary land. For efficiency of the market, more expeditious foreclosure procedures were adopted, including limitations on the power of courts to interfere with the terms of mortgage contracts after default and allowing the lender to sell property after foreclosure on the private market as well as by auction. Regulations to ensure full implementation of the Bill have been drafted, and UPMMI has provided comments geared toward maximum market-reform in the Bill. Evaluation of UPMMI’s success included comparison of the Mortgage Bill as originally drafted, with the Bill as passed with many of UPMMI’s suggested changes. UPMMI also had success with modifying the Stamps Act of 2009, as the the high tax on mortgage transactions of 0.5% of the property’s value was eliminated on July 1, 2010 in favor of a flat fee.
2.4 Evaluation Methodology
Evaluation is a tool which is being taken increasingly seriously by many donors. IFC and the World Bank are among the leaders in both methodology and funds being spent on evaluation.13 There are a number of classic approaches to evaluation.
• Assessment in a logframe approach or M & E (Monitoring and Evaluation) approach of achieving the planned for inputs/outputs/outcomes/ and impacts; • Assessment of outcomes relative to accepted standards of “best practice” , in this case, those features that have been shown to support effective mortgage market development in emerging markets;
13 IFC has a Results Division and the World Bank an Evaluation Department. See, for example, the Road to Results. Numerous experts have been reviewing whether aid works, including many econometric studies. The Center for Global Development is one prominent example. ”.
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
• Assessment of results via utilization of a quasi-experimental design, or counter- factual control group outcomes; • Assessment of the relevance, successfulness, effectiveness/efficiency, and sustainability of the outcomes and impacts – the classic triumvirate of evaluation.
All of these approaches except the quasi-experimental approach are in some way relevant to an evaluation of UPMMI. Each approach has its pros and cons. And, each approach ultimately includes both quantitative findings – based on review of program documents and evidence on inputs, outputs, and impacts – and qualitative findings – based on interviews with program stakeholders to seek their opinions on satisfaction, impacts, relevance, and so forth. A few comments are offered as regards the evaluation of UPMMI:
Relevance, successfulness, effectiveness/efficiency, and sustainability. This is the main framework used for this evaluation. While quantitative outcomes are of course be considered, the evaluation also relies on value judgments – including both the stakeholders in the UPMMI and the program manager and staff. Indeed, the TOR for this evaluation is framed in this manner.
M & E and Logframe. The evaluation included both of these types of approaches. . Please refer to Annex IV, for a summary of the indicators used by IFC to evaluate UPMMI and the results for each indicators. In addition, he log frame approach has been utilized here in “summary” form, as the evaluation summarizes activities (Section 3.0), results (Section 4.0), findings (Section 5.0) and recommendations (Section 6.0).
Assessment of Program Design and Outcomes Relevant to Best Practice. The recently published World Bank book Housing Finance Policy in Emerging Markets is the result of years of experience by a variety of experts and provides guidance on numerous aspects of international best practice. And there are many other examples of this approach offered by mortgage market analysts.14
Quasi experimental or Counter-factual Examples. This approach has become increasingly popular as it has the potential to provide the most convincing case on the impact of any given program. That is, if the outcomes of a program differ (in a statistically significant) manner from the outcomes of a control group, the impact (or lack thereof) can more safely be attributed to the program. However, this is also the most difficult approach to design and implement, as appropriate control groups are either hard to find, hard to convince to cooperate, or both.15
UPMMI was not set up to have a quasi-experimental control as a comparator. However, the quasi-experimental approach highlights the problems associated with utilizing the change in mortgage portfolio as a key indicator of program success. Mortgage lending did increase from 2006 through 2009; however, as discussed in Section 4.0, it is difficult
14 See Housing Finance Policy in Emerging Markets; and see, for example, Bertrand Renaud, “Mortgage Finance in Emerging Markets: Constraints and Feasible Development Paths. 15 .The author manages the evaluation project for IFC’s AMSME project: promoting SME lending via TA and funding for partner banks throughout Africa. A quasi control group for the banks has been abandoned, as no similar banks wished to participate.
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
to attribute this to the program, as only one of the major mortgage lenders joined the program.
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
3.0 PROGRAM ACTIVITIES: UPMMI TECHNICAL ASSISTANCE AND TRAINING
3.1 Overview
UPMMI carried out a broad-based set of training and technical assistance activities with a considerable number of partners and stakeholders in the three components – the same components as for GPMMI • Component A: Launch of modern mortgage lending operations within participating primary lending institutions. • Component B: Improve legal, tax and regulatory framework for mortgage finance. • Component C: Develop and strengthen institutions and processes that support mortgage lending. As the UPMMI Final Report and the Quarterly Reports describe UPMMI activities in detail, this section provides only representative highlights. In addition, please refer to Table A.1, in the Annex, taken from the UPMMI final report. This table notes training events and presentations across the three components and provides a convenient summary of activities, noting the number of participants, and the number of organizations involved.
A Mid-term Shift in Strategy. The Inception Report clearly states that the “vast majority of the UPMMI activities are to launch modern mortgage lending operations within the PFIs”. However, as noted, as a result of disappointing participation under Component A, a shift in strategy was undertaken mid-way through the program.
A Concept Note was prepared in November 2008 which described a concerted shift in strategy in the program. The note makes clear that no funding was to be forthcoming, and that, in addition, the activities with the three Component A partners, were proceeding at a very slow pace. DFCU was undergoing a major restructuring which was absorbing the attention of the staff. Orient Bank was not willing to commit its own funds to mortgage lending and uncertainty surrounding its Nigerian parent precluded getting funds from outside sources. Stanbic had not signed the TA Agreement, so UPMMI activities with the bank had been halted; Also, since Stanbic’s mortgage procedures were close to the MT in any event, and the bank was floating a bond which could be used for mortgage lending, the bank had much less need of the program.
Given this situation, the following changes were made in UPMMI’s focus16:
• De-link the investment function from the TA. Continue the TA independently of the investment agreements with existing banks as warranted.
16 See Concept Note
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
• Invite new banks to the TA program on a cost share basis without any obligation in providing long-term finance which will enable UPMMI to move on with introducing and operationalizing the Toolkit within the selected banks. • Devote attention to other important areas of mortgage lending benefiting the entire financial sector in Uganda: 1. Increase training activities in housing finance through the cooperation with Mortgage Association of Uganda (MAU), Uganda Institute of Banking and Financial Services (UIBFS) and other appropriate institutions. 2. Focus on activities related to the legal framework including the Mortgage Bill 2007 and collaborating with IFC’s ESMID project on securitization.
It is in this context that the activities, and also the results discussed in section 4.0, are reviewed.
3.2 Component A
Component A had two main activities: • Customize IFC’s Mortgage Toolkit to the Ugandan market and to UPMMI partner conditions; • Support the partners in implementing their mortgage strategies, procedures and skills.
Funding Mortgage Lending. Of the initial bank partners, only DFCU and Orient were active partners in the TA and training. And, as noted, DFCU was the only partner actively engaged in mortgage lending.
IN the absence of IFC funding, a comment should be made on the potential sources of funds for the partner banks and other banks that had interest in the program. DFCU was established in 1964 as a development finance agency and was supported by international donors and funds, most notably DFID (British Aid). At present, it sources funds from numerous international partners, including the European Investment Bank, FMO (Dutch Aid), NORFUND (Norwegian Investment Fund), Propoarco (Societe de Promocion et de Participation pour la Cooperatoin Economique), and well as other sources, including a previous loan from IFC. Thus, DFCU, unlike some of the other banks in Uganda was not nearly as hampered by lack of longer-term liquidity.
Stanbic’s involvement in the program was more limited. Stanbic has a major pan-Africa presence and tends to roll out its lending products at the same time to all the countries where it works. Although Stanbic does not lack long-term funds, and had sufficient core deposits to expand mortgage lending, the bank has generally taken a very conservative position in mortgage finance in most of its markets, and tends to lend to senior staff and major clients.
Finally, because Oreint bank lacked sufficient long-term funds, the bank did not enter the mortgage market during the programAlso, Orient was purchsed by PHB in Nigeria, a bank which suffered a severe setback. This situation fairly guaranteed that Orient could not successfully seek to source long-term funds form international sources.
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
The situation with Housing Finance Bank (HFB) is more complex. HFB stated during several interviews that it greatly assisted IFC in the program preparation stage and certainly had expected to become a member. However, IFC notes that it had informed HFB that it was not eligible because of the Government’s majority ownership stake in the bank. IFC made it clear that for HFB to be part of the UPMMI, it would need to undergo a restructuring to effectively remove government control by reducing government stake. HFB made the claim that even though the state owns 100% of the bank, it does not provide any budgetary support. (HFB shareholding is as follows: NSSF – 50.0%, Ministry of Finance – 49.2% and National Housing and Construction Company (NHCC) – 0.8%).
IFC and the WB Financial Sector Development team throughout the program’s life have held numerous discussions with the GOU on the privatization of HFB. The GOU made it clear that privatization was not on the cards for HFB. Secondly, IFC would have engaged with HFB if the bank had agreed to a restructuring plan – as it has been able to do with two state-owned banks in the region (BHBF in Burkina Faso and BHR in Rwanda). Finally, HFB could not have participated in the original UPMMI because it was an investment and advisory project and HFB in the current format was ineligible as an investment partner.
Table 3.1 Summary of Bank Involvement in UPMMI Bank/MDI Banking Status Participation
Original member of UPMMI: Active Mortgage Lender DFCU Active mortgage lender Active participant Stanbic Active mortgage lender Very limited participation Original member of UPMMI: No Mortgage Portfolio Orient Bank Active in TA and training No funds for lending Second Tender Member of UPMMI: No mortgage Portfolio Bank of Africa Active in TA and training No funds for lending Finca (MDI) New training in MFH Second Tender Banks with Needs Assessments that did not join UPMMI Diamond Trust Major regional bank No interest in mortgages Centenary Regional bank Interest in lower income lending, needs funds Ecobank Regional bank No interest in mortgages Other Banks Considered but not Assessed Housing Finance Bank The leading mortgage bank Not eligible to join Barclays International bank No interest in the training Equity Bank Major regional bank No interest Global Trust Regional bank No interest Standard Chartered International bank Little interest in mortgage United Bank of Africa Major regional bank No interest
The Second Tender for Partners. In an attempt to gain more bank partners, as noted above, a second tender was held in early 2009. This time it was made clear that no funds would accompany the TA and training. Diamond Trust, Centenary Bank, and Ecobank were assessed by UPMMI, but chose not to join the program. Diamond Trust indicated that the mortgage market in Uganda still looked somewhat limited and risky.
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
Centenary Bank indicated that it did not have long-term funds to dedicate to mortgage lending at present. Other banks, including UBA and Global Trust were not assessed.
Thus, Bank of Africa was the only potential mortgage lender that joined UPMMI. However, like Orient Bank, BOA participated in the mortgage training, but never entered the market, again for lack of long-term funds. Note, however, that BOA has been talking to both FMO and Proparco about lines of credit; both of these groups are shareholders.
Finally, Finca, an MFI transformed to an MDI under BoU’s recent regulations, is not a mortgage lender. However, its participation resulted in a training course in housing microfinance (HMF), which, as noted, should be included in any follow-on program, as the majority of Uganda’s households cannot now afford mortgage loans. Table 3.1 summarizes the role of these Ugandan banks.
The Mortgage Toolkit was the central focus of activities as each partner entered the UPMMI. The procedures of the partners were reviewed using the MT as the ultimate framework, just as for GPMMI. DFCU, Bank of Africa, and Orient were all left with Mortgage Operations Manuals that reflected the international best practice of the MT. In addition, as seen in Table A1 in the Annex, numerous other aspects of the mortgage process and mortgage management were provided to some or all of the three partners, including retail credit, asset-liability management, liquidity and interest rate risk management, fraud and liability management, servicing, arrears, MIS, and IT requirements and solutions. The ratings by participants indicated overall high scores, always between satisfactory and very satisfactory. Please refer to Annex IV for the ratings. )
In sum, however, fewer activities were undertaken for component A than were expected, as the number of partners, despite two solicitations, was ultimately very limited. More attention was able to be provided, therefore, to the other two components.
3.3 Component B: Improve Legal, Tax and Regulatory Framework for Mortgage Finance
Component B also had two key activities: • improving the enabling environment for mortgage finance, which concentrated on legislative and tax-related issues that had inhibited primary mortgage market development, and • spreading knowledge of housing finance among stakeholders and the general public.
Principle activities included recommending improvements to the draft Mortgage Bill prepared in 2007. Passed in 2009; this Bill is the successor to the Mortgage Act of 1974. In addition, UPMMI also worked on proposed changes to the Stamps Act, assisted with draft regulations to implement the new Mortgage Bill, and assisted CMA with ABS development. Table 3.2 lists the numerous Component B partners and stakeholders.
Mortgage Bill. UPMMI organized a workshop with the Uganda Bankers Association, the Mortgage Association of Uganda and the IFC, to review and discuss the provisions of the draft Mortgage Bill 2007. Some 60 Members of Parliament attended the
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
workshop, which gave the sponsors a chance to discuss needed revisions to the draft law. In 2009, after passage of the Mortgage Bill, UPMMI sponsored a workshop on the new law to discuss its effects, the need to draft implementing regulations and resolution of property disputes. Representatives of the Land Justice sector attended, including judges, magistrates, police and others. UPMMI also made a presentation on the mortgage industry in Uganda to 140 lawyers who attended a workshop sponsored by the Uganda Law Society in partnership with the Justice, Law and Order Sector of the Ministry of Justice and Constitutional Affairs.
Table 3.2 Component B Partners and Stakeholders Partner Status Participation
MMAK Private law firm legal experts Assisted with Mortgage Bill amendments Ugandan Law Society, Stakeholders Assisted with Mortgage Bill Ministry of Justice amendments MHLUD; Land Users Key Government stakeholder Assisted with Mortgage Act Committee regs & land act reforms Ministry of Finance Stakeholder Stamps Act MAU UPMMI assisted establishment Active partner in many areas including awareness CMA World Bank project partner ABS/securitization ACIST African NGO Land dispute resolution ESMID IFC Project ABS/securitization FinLit NGO Mortgage awareness Local press, trade Stakeholders Published UPMMI articles on publications mortgage finance MLHUD, Law Reform Government stakeholders Assisted with awareness Commission, BoU campaigns
Adoption of Amendment to the Stamps Act of 2009. The Stamps Act has previously levied a charge of 0.5 percent of the value of the property rather than adopting the flat rate that UPMMI proposed. This stamp duty can add substantially to the cost of obtaining a mortgage, and thus has been an impediment to mortgage market development.
UPMMI took the lead in organizing a group of stakeholders to raise awareness with the Parliamentary Counsel and the Ministry of Finance, Planning and Economic Development (MOFPED) about the inhibiting effect the high tax will continue to have on the development of the mortgage market. MOFPED agreed in principle to propose an amendment to lower the fee to a flat fee, and invited stakeholders to make their case for the lower fee after the budget was read in June, 2010. The Ugandan government has now agreed to UPMMI recommendations on the Stamp Duty Amendment Bill. Effective July 1, 2010, the Ministry of Finance confirmed they would apply a new maximum flat rate of UGX 100,000 on property valuations for mortgage deeds.
Enforcement. With the African Community Initiative for Social Transformation, UPMMI sponsored a workshop in March 2010 where recovery, enforcement and execution of orders relating to mortgage were discussed.
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
UPMMI also monitored changes in the Land Act (passed in November 2009), which dealt with several issues – primarily S.328, which provided that persons claiming an interest in land under customary tenure could also be evicted by the courts. In addition, UPMMI made sure that the Mortgage Bill provisions on mortgaging marital property or individually held customary land would not be in conflict with the Land Act prohibitions on mortgaging such property. For that purpose spousal and other co-owner rights were clarified in the Mortgage Bill.
Registration. UPMMI addressed certain problems in the land and title registration system in meetings with the Minister of State Housing and the Permanent Secretary. The purpose of these meetings was to enhance understanding of the importance of an efficient, transparent and complete registration system to the development of a mortgage market. Support was given to the World Bank land registry project for the same purpose.
Asset Backed Securities (ABS). In coordination with IFC’s Efficient Securities Market Institutional Development project (ESMID), UPMMI worked to prepare for a secondary mortgage market for Asset Backed Securities and/or securitization of mortgage loans. The UMPPI team attended the ABS workshop held by the Capital Market Authority (CMA) in November 2009, and subsequently met with the CMA how the project could support the development of the ABS market and improvement in the Ugandan ABS regulations. Comments were provided on the draft version of an ABS law and regulations prepared by CMA by an international expert engaged by UPMMI. In sum, UPMMI influenced the conditionalities required for the development of a secondary mortgage market framework.
Activities for Spreading Knowledge. Two key activities were undertaken under to support and spread knowledge of mortgage finance: assistance in establishing MAU and numerous outreach and educational activities.
• MAU. UPMMI assisted MAU in drafting its constitutional framework and operating rules, and in preparing a budget. MAU was established in June 2008; founding members include DFCU, Housing Finance, Stanbic, Standard Chartered, UIBFS, and Avarts Housing Ltd. MAU has been involved in numerous outreach and training activities undertaken by UPMMI. MAU is heading the effort to build a comprehensive real estate transactions database, and is coordinating a Database Working Group that includes MAU, AREA, and ISU.17 UPMMI has assisted MAU in engaging with African and international companies that develop such databases. In turn, MAU has assisted UPMMI with training and networking efforts that reach across all the components.
• Outreach. As seen in table 3.2, UPMMI engaged many groups, largely private, but also including government, to help increase knowledge of both mortgage finance and the broad set of activities that must support it. UPMMI used workshops and lectures, and a website to increase awareness. IFC owns the website and it has now been closed. However, AREA is leading the effort on a database for real state
17 See MAU, “Real Estate Transactions Database Proposal”, undated memorandum.
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
listings and they working with the World Bank on funding for the business plan for the database. The program also engaged the local press, and trade publications such as Estate and Home magazine, and the Ugandan Banker.
A guide on mortgages for potential mortgage borrowers was prepared to provide important information on the legal and institutional framework for mortgage lending, including borrowers rights and responsibilities. The booklet is being broadly distributed by member and non-member banks, MAU, AREA, ISU, the Law Society, and NGOs such as Finlit. Knowledge of mortgage finance, understandably, is extremely limited in Uganda. UPMMI’ conducted outreach and education activities from the outset of the program and engaged many partners in these efforts. As will be discussed in sections 4.0 and 5.0, outreach and networking were two of the most important activities under UPMMI.
3.4 Component C: Develop and Strengthen Institutions and Processes that Support Mortgage Lending.
As noted, Component C activities are a key beneficiary of the reduced time spent on Component A. Component C activities were also organized around two goals: • Develop and deliver appraisal standards, methodology, and an ethics regime for the appraisers; and • Provide assistance to real estate brokers in developing a database of listings and Sales transactions
An extensive set of activities under this component benefited the Association of Real Estate Agents-Uganda (AREA) and the Institution of Surveyors of Uganda (ISU). In both cases, the main goals of UPMMI activities were to strengthen the associations themselves, improve the technical capacities of the members, and begin the process of providing badly-needed databases, including an MLS, together with methodology for quantitative analyses. Numerous trainings and workshops as well as direct capacity building for the associations and their member professionals were provided.
Table 3.3 Component C Partners Partner Status Participation
AREA: Association of Very active partner Provide assistance in development Realtors of a real estate database, capacity building or AREA, and international assistance in preparing MLS ISU: Institution of Very active partner Provided assistance in Surveyors development of governing association, IVS appraisal methods, and ethics IRPF: International Real Licensed to provide future Future offerings of IVS training Property Foundation training to ISU
Workshops were also held on the Draft Code of Conduct for Real Estate Agents, co- sponsored with the Ministry of Lands, Housing and Urban Development. Recommendations coming out of the workshop included the establishment of a Real
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
Estate Agent Certification Board to adopt and enforce a Code of Conduct, and the initiation of work on a Real Estate Bill to cover related topics.
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
4.0 PROGRAM RESULTS
Overview of Results. Table 4.1 lists UPMMI’s partners and/or stakeholders for all three components, their level of participation in UPMMI activities, and the key results. The limited number of active bank partners sits in contrast to the extensive number of other partners, including trade organizations, NGOs, and government organizations.
Table 4.1: Overview of UPMMI Partners and Associated Organizations Partner Status/Task Participation Level Results
Component A: Lending Institutions DFCU Original partner Active in training & TA Key mortgage lender Orient Original partner Active in training & TA Capacity but no lending Stanbic Original partner Very limited participation Key mortgage lender Bank of Africa Second tender Active in training & TA Capacity but no lending Finca (MDI) Second tender Late to join; HMF course Engage an MDI in HMF Component B: Legal and Regulatory Framework & Spreading Knowledge CMA Legal partner Liaised re mortgage bill Better securitization framework MMAK Legal assistance Active in legal issues Improved mortgage bill MLHUD Land use, real estate Some participation Improved public & private regulations cooperation MAU Assisted formation Very active partner Support to mortgage sector UIBFS Outreach partner Some assistance Some support to sector AMFIU Training partner New stakeholder Support to MFH FinLit Spread awareness Some participation Knowledge of mortgages ACIST Enforcement issues Some participation Broad-based networking ESMID Capital market Some participation Improved framework for improvement ABS, securitization Component C: Supporting Institutions AREA Assisted formation Very active: training & TA Much improved organization ISU Assisted formation Very active: training & TA Much improved organization IRPF Future IVS training Some participation Ongoing help to ISU
4.1 Results for Component A: Mortgage Market Capacity Building
Despite discussions with numerous banks, including all of Uganda’s main mortgage lenders, UPMMI did not succeed in bringing into the program the complement of lenders that had been desired. The first group of UPMMI bank partners as noted included only DFCU, Stanbic, and Orient Bank. Stanbic, however, never signed the technical assistance (TA) agreement. Only Bank of Africa joined the program in the second wave and together with DFCU and Orient, received considerable TA, despite not receiving the long-term local currency funds that had been promised under the program. Orient and
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
BoA, however, have never issued a mortgage loan due to lack of sufficient long-term funds. Table 4.2 summarizes the status of mortgage lending and program participation of banks contacted regarding UPMMI.
While the low participation rate had many causes, the most important by far was the lack of funding. In addition, other banks, such as Diamond Trust, decided that it had no current interest in mortgage lending as the market was not viewed favorably by their management. Centenary was focused on shorter-term downmarket lending, but also needed funds in order to participate, and decided that the training, without the funds, was not sufficiently worthwhile. Barclays, which had only limited interest in mortgages, most likely felt it did not need the training offered by UPMMI.
Housing Finance Bank was also interested in UPMMI. Indeed, Housing Finance management expressed rather strongly their sense of having been misled by IFC prior to launching the program. They felt that they had assisted IFC during the information gathering and planning phases of UPMMI, and assumed that they would be a participant. However, the bank was later told that it was ineligible because of government ownership. As Housing Finance Bank feels that it operates on a fully commercial basis, this explanation was not warmly accepted and should have been made clear from the beginning. As a result, the only active mortgage lender engaged in the program was DFCU
Lack of funds has also muted UPMMI’s capacity building efforts for two of the partner banks. Orient and Bank of Africa feel that their staff provided a great deal of time and attention to the training efforts and now have no way to make their increased capacity effective. Orient feels especially strongly about their outcome under UPMMI. Orient notes that its newly-trained staff are now moving on to other activities and other banks. Orient participated with two staff in the training of trainers course, one of whom has now let the bank. Also, Orient stated that the bank had prepared extensive procedural and mortgage marketing material: it is now gathering “dust”.
Table 4.2. UPMMI Program Participation Program Participation UPMMI Program Non-Participants and Status Participants Active Mortgage Lenders DFCU Housing Finance Bank; not pleased after being “courted”; Stanbic: limited participation Would-be lenders who never Orient Bank & Bank of Africa issued a mortgage loan very disappointed by lack of funds Interested in TA but only if Centenary Bank accompanied by funding Approached but were not Diamond Trust, Barclays interested in UPMMI Standard Chartered,
Table 4.3, previously presented in section 2.0, indicates that there was a reasonable growth in the mortgage market prior to the launch of UPMMI. The rate of growth during the implementation period slowed somewhat after 2007, but there was still positive movement. However, with regard to mortgage market growth, UPMMI had almost
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
nothing to do with it except via DFCU. What might the total mortgage book have been if UPMMI had provided the promised funding? Several factors are relevant: • At a minimum two more lenders - Orient and Bank of Africa - would have entered the mortgage market; • Stanbic would most likely have participated in UPMMI; • Additional banks such as Centenary and Diamond Trust might have entered the program to gain capacity and might have initiated mortgage lending • In addition, Centenary is interested in lending to lower income groups, with more modest loan sizes. As the average loan size in 2009 was about $40,000, the vast majority of Ugandans cannot participate, and thus no increase in affordability was achieved.
Table 4.3: Mortgage Lending in Uganda Indicator 2005 2006 2007 2008 2009
Total Mortgage Finance Book Outstanding: $60.32 74.73 100.5 122.95 $154.7 million of US$ Total Mortgage Finance Book Outstanding: 111.6 130.8 170.9 240.7 294.5 UGX billions Number of Loans 2176 2506 3028 3563 3795 Average Loan Size UGX millions 51.3 52.2 56.4 67.6 77.6 Average Term in years 13 14 13 14.75 14.75 Maximum LTV 80% 80% 80% 80% 90% Maximum PTI 35% 35% 55% 55% 55% NPLs (over 90 days) 2% 7% 14% 8% 4% Exchange Rate: UGX/$ 1850 1750 1700 1958 1904 Source: P. Hedstrom, UPMMI Draft Final Report
Conclusions. The good news: The training that was offered was extensive and covered many major aspects of the mortgage lending process. Thus, for those banks that did receive the training, significant capacity building based on international best practice was received UPMMI leaves behind a substantial body of training materials that can be utilized by organizations such as MAU, AREA, and UBA. Note also that the recipients were very satisfied with the training. Finally, when Finca (which has MDI status, a deposit-taking MFI, under Bank of Uganda regulations), joined, it sparked training in housing microfinance (HMF) and contact with AMFIU (Association of Micro Finance Institutions of Uganda). This should bode well for follow-on activities in HMF. . The bad news: the impact on mortgage lending was minimal. The lack of long- term local currency funds limited both program participation and the initiation of mortgage lending by two partners who lacked sufficient long-term-funds to begin. Of the three major mortgage lenders in Uganda, only DFCU was an active participant in UPMMI. No new lenders entered the market despite extensive training. The two banks that received training but did not begin lending during the program, period are concerned with the dissipation of the newly gained skills. The proposed TA on its own was apparently not sufficiently compelling. As discussed above, DFCU has been funded by international sources for many years, while some of the other banks in UPMMI may not have this access. And even if these banks could have gone shopping elsewhere for
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
long-term funds, it would have been difficult to obtain funds in the face of the global crisis.
4.2 Results for Component B: Changes to the Legal and Tax Framework
Mortgage Bill. As noted above, the UPMMI staff considers the improvements to the Mortgage Bill the most important achievements of the program. Comments provided by UPMMI experts on earlier drafts of the Bill were largely taken into account and adopted in the final version. The law, introduced as Mortgage Bill No. 2, 2007 was passed by Parliament in March 2009 and will come into effect soon, on a date to be designated by the Minister of Lands, Housing and Urban Development.
The Bill as adopted provides for mortgaging of a “matrimonial home,” avoiding complications under the Land Act’s concept of “family land” which was used in the earlier draft. Spousal consent is required. In addition, it is now possible to mortgage customary land if it is owned by an individual or a family (and, in the latter case, if there is family consent). By maintaining this approach, sponsors of the Bill were able to allow for mortgage over more customary land than in the past, and still could overcome much of the political resistance to the Bill which was based on fear that poor or uninformed sectors of the population might put their own rights or those of their community at risk if all customary land could be more freely mortgaged. In any case, any continuing minor restrictions on mortgage of customary land are not likely to impede the development of the mortgage market since there remains little appetite to among banks to make loans secured by such land since a large portion of it is untitled.
The original draft of the Bill allowed courts undue leeway to re-open execution after foreclosure and to change the terms of a mortgage contract if the borrower challenges the action to be taken by the lender in the event of default. The final version of the Bill accepted UPMMI’s recommendation to limit the power of the courts to intervene in proper actions taken by the lender. In addition, the Bill clarifies the procedures that may be used to sell property after foreclosure by auction or private sale. These provisions (as adopted in the final Bill) comport with market-based principles and should lead to a greater sense of security among banks in their ability to maintain the value of real estate collateral by selling quickly and efficiently after foreclosure, and decrease the likelihood of being forced to undergo lengthy and expensive litigation.
The Bill also accepted recommendation for disclosure of information to borrowers, to be certified by an independent advisor. Implementation of this provision will be addressed in future regulations.
To facilitate the development of a secondary market for mortgages, the Bill as adopted does not require that the mortgagee “confer with” the mortgagor before transferring the mortgage to a third party. This provision in and of itself would not result in arbitrary foreclosures. As the legal successor to the original lender, the subsequent FI/mortgagee would have to comply will all the legal provisions of the Mortgage Act and also the mortgage contract entered into by the original lender and the borrower. So it is highly unlikely that the successor would initiate a foreclosure except on the basis of events
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
(such as nonpayment by the borrower) that would occur after the transfer of the mortgage rights from the original lender to the successor.
Further fine-tuning of the Mortgage Bill may be advisable after more experience is gained with the changes it has brought about. See Comments on the draft Bill in Annex 5 to UPMMI Quarterly Report No. 2, 1 October – 31 December 2007. In addition, regulations are needed to implement certain provisions that are not spelled out in the law, such as the consumer protection provisions. This is discussed further in Section 6.
Stamps Act of 2009. In addition to the Mortgage Bill, UPMMI provided effective input into changes in the Stamps Act, adopted in 2009. The primary issue was the amount of tax or stamp duty charged on registration of a mortgage. The original amount – 0.5% of the value of the property – was a substantial increase in the cost of obtaining a mortgage, and thus an impediment to mortgage market development. UPMMI organized a group of stakeholders to lobby for an amendment to the Stamps Act that would set the tax at a flat rate, or ideally eliminate it. There finally was agreement between UPMMI and the Parliamentary Committee on Finance, Planning and Economic Development (MOFPED) to set a flat fee. UMPPI had requested a fee of UGX 50,000. The Ugandan government has now agreed to UPMMI recommendations Effective July 1, 2010, the Ministry of Finance confirmed they would apply a new maximum flat rate on property valuations for mortgage deeds; however, the flat rate has been set at UGX 100,000 rather than 50,000.
Results for Component B: Spreading Knowledge of Mortgage Finance.
MAU. The establishment of MAU is a certainly a positive step in trying to organizing a coherent “mortgage industry” in Uganda. However, there is concern about the future viability of the organization. Like AREA and ISU, this fledging organization may struggle to be financially viable. MAU’s goal to be the focus of ongoing training activities in mortgage finance have not yet borne fruit, as it has not been successful in retailing the UPMMI mortgage lending course with either UIBFS or the Ugandan Management Institute. Also, taking on the role of developing the real estate transactions database will be formidable, and it is not clear that the necessary financial support will be forthcoming.
Awareness of Mortgage Finance. It is difficult to assess the extent to which awareness of mortgage finance has been improved in Uganda. Certainly, as a result of strengthening the mortgage and housing sector support organizations this helped outreach and awareness. .The brochure was the first of its kind issued in Uganda and as such is quite innovative. Good consumer information does not exist in either Uganda or most of Africa and hence the brochure can make a difference. Finally, Finlit, an NGO dedicated to improving financial education, greatly appreciates the brochure but is also preparing a simpler version which they feel is more suited to the level of understanding of the majority of Ugandans
4.3 Results for Component C: Improvement in Supporting Institutions
As noted above, Component C activities were expanded to use UPMMI energies that might otherwise have been concentrated on Component A. Two important and related
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
accomplishments were made under Component C: (1) significant association building and (2) launching the concept of sector-wide networking, helping all stakeholders to see how working together can bring a greater understanding of their common problems. Activities under this component primarily benefited the Association of Real Estate Agents-Uganda (AREA) and the Institution of Surveyors of Uganda (ISU), and AREA in particular, was involved networking efforts across both the mortgage and housing markets.
AREA. UPMMI can take much of the responsibility for formalizing and building AREA. As indicated in section 2.0, the very numerous “real estate brokers” in Uganda were, by their own admission, untrained, unprofessional, and without the support of any real estate databases.18 AREA is now formally organized and boasts a strategic and business plan. . AREA was assisted in broker training, brokerage management, the code of conduct for real estate agents, technology in real estate, and the valuation process. And importantly, AREA was assisted in plans for development of an MLS (multiple listing service) and database, and was introduced to a number of international firms engaged in this development.
In sum, although very substantial progress was made, AREA’s resources still fall far short of its goals to support the organization. Also, without yet having an MLS in place, the benefits fall short of what they could be. As discussed in section 6.0, AREA would greatly benefit from a follow-on program.
ISU Similarly, ISU was assisted in both organizational and technical tasks. These included, first of all, a gap analysis of Ugandan valuation procedures relative to the international valuation standards (IVS). Methodology training included the market comparisons approach, income approach and cost approach. Other topics included real estate database development, highest and best use, basic statistics, advanced practices in real estate valuation, special issues in valuing land, and independent certification, and appraisal reports for residential and commercial real estate and apartments. Finally, UPMMI executed a licensing agreement with IRPF (International Real Property Foundation) for further training. As for AREA and MAU, the future viability of ISU is not clear.
4.4 Cross-Component Networking Results. Despite disappointing results for bank partners under Component A, UPMMI achieved significant results in Components B and C. In addition, there were numerous activities that do not fit neatly into component-by component which involved the following broad-based groups: • stakeholders from all the components • non-partner banks • Local and national government organizations • A variety of NGOs and non-member associations • Work Bank and IFC supported organizations
Importantly, a large amount of effective networking across all the components enabled many players in both the housing and mortgage markets to work in concert. Discussions
18 See AREA, Uganda Property Listing Service (UPLS Proposal, Background Information.
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
with stakeholders have made clear that a more coherent view of the inter-dependencies across the housing sector has been put in place. For example, workshops and seminars were held that included member banks, non-member banks, MLHUD (and specifically the Land Users Committee), realtors, valuers, bailiffs, advocates, and various police officials and local government commissioners. UPMMI worked with several World Bank programs and the PSFU, the apex body of private sector organizations in Uganda (funded by the World Bank). UPMMI utilized the services of local and regional NGOs such as ACIST with a particular focus on foreclosure and the implications of the new Lands Act Amendments. .
Three examples illustrate these cross-component activities: • A seminar co-sponsored with ACIST that involved mortgage finance activities and land dispute resolution included the legal and/or credit personnel from 16 banks – both partner and non-partner banks; the Land Division Commercial Court, Land Affairs of the President’s Office, RDCs, superintendents of police, bailiffs, lawyers, surveyors, Bank of Uganda ,AMFIU and others – for a total of 51 participants (March 2010); • A course on microfinance for housing included partner and non-partner banks, AMFIU, numerous MFIs, and research organizations and NGOs supporting microfinance (January 2010); and • PSFU, a World-Bank funded apex body of private sector associations in Uganda, includes MAU, which sponsored a housing finance training workshop at Kampala University that included UPMMI partners (DFCU, Orient, Bank of Africa, and Finca) as well as non-partners (Stanbic, Standard Chartered, HFB, Centenary, UIB, Post Bank, and Avarts Housing Limited.
In sum, UPMMI reached out to a broad group of stakeholders and organizations and presented activities that engaged many groups and non-partner banks across the substantive areas of all the components. . In sum, effective networking and viable public/private partnership were encouraged to improve the workings of the overall housing market. This networking, together with training that included non-members of UPMMI, will continue to impact the legal and procedural operations in support of housing. This may be one of the most important legacies of the program.
4.5 UPMMI Staffing
UPMMI Staffing. It is relevant to note that UPMMI hired its own local Ugandan staff, rather than having them on the staff of IFC. Thus, unlike GPMMI, where the local staff worked for IFC, the UPMMI staff identified fully with the program and helped shape its ongoing goals. All the UPMMI staff, including of course the resident advisor, received very high marks for their efforts. .
4.6 The Funding Strategy for UPMMI Lending Partners
4.6.1 Overview. UPMMI was designed to provide the bank partners with long-term funds from NSSF. The original proposal was the same as for Ghana – that funds would flow through the Mortgage Funding Trust (MFT), a type of quasi-secondary market intermediary. One advantage of the approach was that funds could come from multiple
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
sources in addition to NSSF, for example, FMO or AfDB. IFC would provide a partial guarantee. However, the MFT approach was complicated - “tough going”19 - and was ultimately scrapped, just as it was in Ghana.
In an effort to simplify the approach, it was decided that NSSF would deal individually with the banks under an IFC partial guarantee (PCG) structure. IFC would do the due diligence for NSSF and price the guarantee. Loan agreements with the banks would require that they base their lending on the Mortgage Toolkit. NSSF was to have lent long-term local currency funds to banks selected by IFC under specific loan agreements.
As noted, the funds never materialized. First, management failures and scandals ultimately rendered NSSF a wholly ineffective partner. Constant changes in NSSF management, in response to charges of corruption, made ongoing negotiations very difficult. Secondly, the pricing structure was both too complex and ultimately not cost- effective for the banks. The 182-day Treasury bill rate had been selected as the index rate; this rate was both volatile and too high at the time to provide the partner banks with funding that would have been competitive in the mortgage market. In addition, other issues complicated the scene, including the level of the IFC guarantee – at 25% - relative to an ultimate demand of 100%. Thus, in the end, no borrowing took place under UPMMI and no partner banks received the funding they had expected when signing up for UPMMI. As has been discussed, this was a major disappointment for UPMMI and left a number of banks dissatisfied, at least in part, with the program.
It should also be noted that the IFC team worked hard to find solutions to these problems. Different approaches emerged between “pragmatic” solutions which might have prevailed vs. theoretically preferable transparency, especially concerning the index rate. This is a particularly difficult problem that impacts the efforts of numerous donors in providing funds in “immature “financial and capital markets.
4.6.2 The Lending Structure. There were numerous problems with the funding structure, which, when taken together, rendered the approach to funding infeasible. These included 1. structural complexities in the design 2. serious management and corruption problems and management turnover within NSSF 3. use of the volatile T-bill rate as a reference rate, 4. assumptions about variable rate mortgage lending by the Ugandan banks, which was not (and still is not) customary in Uganda (and other emerging markets); 5. other complexities in the loan agreement with the banks; 6. achieving a cost-effective pricing level for the banks, using the T-bill reference rate; 7. demand for 100% credit enhancement sought by Uganda’s Solicitor General.
Treasury Bill Rates as an Index. Treasury bill rates were to be used as an index for pricing funds secured from NSSF. The 182-day rate was selected. As discussed in section 2.0, however, T-bill rates have historically been unstable in Uganda. Volatile
19 This was the opinion of Michael Bookstaber, the main author of the MFT concept.
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
rates and the expectation of variable rate lending, as discussed below, created a situation in which potential borrowing was neither stable nor cost effective. Table 4.4 describes the structure.
Given that mortgage lending rates ranged from 16.5% to 18%, the banks did not feel that this rate was viable for them. It is difficult to determine whether it should have been clear prior to beginning UPMMI that the pricing of the funds was not cost-effective for the banks.
IFC apparently searched for a pragmatic solution such as using another rate as the index, such as the 90-day T-bill rate, which is generally lower than the 182-day rate, or some rolling average of t-bill rates, but this was not put in place. NSSF wanted the higher rate. Note that NSSF had already provided DFCU with a line of credit to support mortgage lending.
It should also be noted that IFC already had a track record of lending to banks in Uganda. As noted above, DFCU has had a major line of credit from IFC for a number of years.
Table 4.4 Rate Structure for IFC Funds. Item Rate 0.75 Reference Rate (182 day T-bill) 12.710 0.25 Risk Adjusted Reference Rate for IFC portion (IFC portion is risk 10.710 adjusted by 200 basis points) Weighted Reference Rate 12.210 0.75 Credit spread for participating bank risk 0.400 0.75 credit spread for IFC risk 0.000 Weighted Credit Spread 0.300 Total Due to NSSF 12.510 IFC Guarantee Fee (charged over IFC exposure only) 2.500 Impact of IFC Guarantee fee over total loan 0.630 p.a. cost of 1% up front fee 0.080 p.a. cost of 0.5% commitment fee 0.120 Total Due to IFC 0.830 TOTAL 13.340 Source: NSSF, discussion with Francis Kajura
Complex Loan Agreement. There were several other problems with the loan agreement. IFC wanted the banks to use the T-bill rate as the reference rate for their mortgage lending, and utilize a variable lending rate methodology. The T-bill rate’s volatility makes it suspect as a reference rate. More importantly, mortgage lenders in Uganda do not yet conduct true variable rate lending. Although the mortgage contract may specify the right of the bank to change the mortgage rate, in practice the lenders change rates extremely infrequently. Ugandan banks simply did not want to re-price every 6 months for fear of losing their customers! (Indeed, this is the pattern in most all immature mortgage markets in emerging economies, whether they be in Africa or Asia.) The banks feel that consumers do not like rate changes; their preferred approach to borrowing is to know with as much certainly as possible what their monthly payment will be. (This seems to be even more the case the lower the income of the borrower.)
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
Secondly, the loan agreement was to specify that the MT be used as their lending guide. Apparently, bank lawyers indicated that the banks would have their own mortgage manuals, but that these would be “patterned” after the MT.
It should be noted that the Frankfurt School attempted to assist IFC in its negotiations with NSSF, contrasting details in the loan agreement with the IFC specifications, but this was obviously not successful.20
The Partial Guarantee Structure. IFC had earmarked about $24 million, equivalent to about UGX 50 billion. IFC’s partial guarantee of 25% was ultimately not satisfactory, however. Large contracts required the approval of the Solicitor General, who finally insisted that the guarantee be 100%. IFC feels that this was not a legal matter, but a purely commercial decision, especially given NSSF’s difficulties. IFC was not able to convince NSSF that the partial guarantee was adequate.
At one point in the negotiations, NSSF apparently indicated that the banks could pledge their well-performing mortgage book to supply the other 75% of the guarantee. However, this might have placed would-be bank partners who were depending on NSSF to enter the mortgage market, in an untenable -chicken and egg - situation. One of the major goals was to bring new lenders into the mortgage market. New lenders might have been able to secure the funds with government paper. However, at a desirable level of funding for entering the mortgage market, use of these assets to might well have put banks in non-compliance with Bank of Uganda’s liquidity requirements. (Note that the rules for securing funds from NSSF now require a 100% guarantee according to NSSF’s new investment guidelines.21 )
IFC tried to argue that NSSF already had deposits in some of the banks, so why was the IFC program so different. It was also the case that NSSF was not as familiar as it might have been with mortgage lending and the mortgage market, even though it has lines of credit to support mortgage lending with HFB and DFCU.
NSSF Management. During this period, NSSF management underwent a series of changes, in part due to various scandals. At one point, both the NSSF Board and the management were suspended. IFC suffered from having to negotiate with new management a number of times. In the end, the negotiation became political, and no resolution could be found. Conclusion. In sum, UPMMI (as well as GPMMI) failed to provide long-term funds to the bank partners and both thereby greatly limited the impact on capacity building and mortgage lending. New partners, or would-be partners, with no mortgage book, were the most negatively impacted. As a result, the total mortgage book in both countries is likely smaller that is would have been and competition was not increased.
20 Pam Hedstrom and Eugen Doce, “Issues for Further Consideration”, August – October 2007, IFC. 21 As indicated on a discussion with Francis Kajura of NSSF. He thinks that the Solicitor General will not approve a guarantee less than 100%.
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
It is encouraging to note that IFC is still addressing the funding issues for both GPMMI and UPMMI. In Ghana, one bank partner has received funds, as well as an equity infusion. However, the funding for Ghana is dollar-based, as there is much more dollar lending in Ghana, in part because of the extensive Diaspora. Uganda has less use for dollar lending. Thus, for Uganda, IFC is looking at the swap market and other options.
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
5.0 SUMMARY OF FINDINGS
5.1 Overview. UPMMI achieved a number of very relevant and sustainable results, especially in improvements to the legal framework and capacity building in supporting organizations. As regards networking and association building, UPMMI made important inroads into helping the sector’s players understand that coordinated improvements would gain them a whole greater that the sum of its parts.
To some extent the potential benefits to Uganda that would have stemmed from increased mortgage lending, and the economic activity that derives from it, were forfeited by failure to increase the number of mortgage lenders. To the extent that this would have been possible if the program had been funded, Uganda could have had a number of additional mortgage lenders and an infusion of new mortgages into the market.
Also, the association building was most likely limited by the continued small size of the mortgage market. However, the impact of developing MAU, AREA, and ISU is less sustainable because Uganda’s mortgage sector remains smaller than it could have been All the groups above suffer from the relatively small size of the market, and find it difficult to develop a business plan and garner the resources necessary to remain truly viable and effective, with ongoing programs. In sum, while there were certainly some good outcome, not all are necessarily sustainable, as the market expansion and association building jobs are not yet done.
5.2 Relevance, Sustainability, and Effectiveness. To what extent can UPMMI be deemed a success in the Ugandan context? The findings are noted below. They are organized according to the following criteria: Are the final outcomes relevant? sustainable? effective? What problems and challenges occurred?
Relevant, Sustainable, and Effective Results
• Legal Framework. UPMMI greatly improved the legal framework for mortgage lending. Passage of amendments to the Mortgage Bill is likely to be one of the most lasting and sustainable legacy of the program.
• Capacity Building in Training Materials Together with the Mortgage Toolkit (MT) and numerous training modules such as ALM, risk management, IT, IVS Valuation Standards, and many others, institutions such as AREA, ISU, MAU as well as Ugandan training institutions have excellent material with which to conduct further training.
• Adoption of Amendment to the Stamps Act of 2009. During the period of UPMMI operations, the Stamps Act retained the charge of 0.5 percent of the value of the property rather than adopting the flat rate of UGX 50,000 that UPMMI proposed. However, In July 2010 the Ugandan government agreed to UPMMI recommendations on the Stamp Duty Amendment Bill. Effective July 1, 2010, the
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
Ministry of Finance confirmed they would apply a new maximum flat rate of UGX 100,000 on property valuations for mortgage deeds.
• Sector-wide Networking. UPMMI effectively brought together supply side associations (AREA, ISU), partner and non-partner banks, banking associations (MAU),and public sector actors (especially various departments of MLHUD) to help form a vision of coherent mortgage and housing sectors.
Relevant Results yet to be Sustainable.
• Capacity Building in Associations. AREA, ISU, and MAU all gained significant capacity in organizational structure and definition of mission. However, they will need further support in order to become viable and in the case of AREA and ISU, to have the necessary technical capacity and database support.
• Regulations for the Mortgage Bill. As discussed in Section 4, UPMMI made many recommendations to improve the draft Mortgage Bill of 2007, most of which were followed in the final version passed by Parliament in 2009. However, the procedures for implementing some of the reforms in the Bill were not adequately spelled out and will need further elaboration in regulations to support the Bill.
• Land Act of 2009 and land use regulations. Since most land in Uganda is held as customary land rather than individually owned and titled, exclusion of this land from the mortgage market is a serious impediment to mortgage market development. Even persons with established legal rights (“Bibanja”) to use customary land do not have adequate security of tenure to qualify for mortgages. Creation of an intermediate title system or more clearly clarified rights should be considered to open up the mortgage system to these persons. In addition, for the real estate sector to develop in a manner that both gives maximum value to owners and also protects the interests of lenders by maintaining the value of collateral over time, land use regulations should be adopted that foster market-based growth. For example, regulations should be reviewed and improved, as needed, to provide for adequate infrastructure for residential growth and development and to separate residential from industrial areas.
• Legal framework for Asset Backed Securities and securitization. As the mortgage market grows, the ability of lenders to access funds to use for making mortgage loans will become increasingly important. It will be necessary to develop a legal framework for using mortgage loans in the capital markets.
• Adoption of Amendment to the Stamps Act of 2009. The Stamps Act retains the charge of 0.5 percent of the value of the property rather than adopting the flat rate of UGX 50,000 that UPMMI proposed. The stamp duty can add substantially to the cost of obtaining a mortgage, and thus is an impediment to mortgage market development. UPMMI organized a group of stakeholders to lobby for an amendment to the Stamps Act, and while eventually an agreement in principle was reached with
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
MOFPED to propose an amendment to set the tax at a flat rate, or ideally to eliminate the tax, a conclusion of this issue has not yet been successfully reached.
• Spreading Knowledge of Foreclosure Resolution. One important change in the Mortgage Bill is to increase the ability of lenders to take control of collateral and sell it in the marketplace as efficiently as possible. In order for the system to remain equitable, however, it is necessary for borrowers and potential borrowers to understand the significance of the contract they are entering into, and how noncompliance with its terms can result in the loss of their property. Public information campaigns will be needed and both the benefits and the risks of mortgage borrowing. In addition, regulations are needed to implement the provisions of the Mortgage Bill relating to informed consent and certification by an “independent advisor” that the borrower understand the terms of the loan documents.
• Spreading Knowledge of Mortgage Finance. This will require a long-term effort. Although NGOs, such as FinLit and ACIST, as well as efforts undertaken by MAU, AREA, and others, are promoting mortgage finance, it is a new concept to the vast majority. FinLit, for one, feels that the booklet prepared by UPMMI, despite editing, remains too complex for most. Note, however, that only a handful of Ugandans will be able to afford a mortgage in the new future, so that increased knowledge of HMF, as noted below, may be more relevant.
• MAU. As noted in section 4.0, the establishment of MAU is a certainly a positive step in trying to organizing a coherent “mortgage industry” in Uganda. However, MAU is still struggling as an organization. It needs a larger membership to be viable and given the limited number of banks now lending for mortgage finance, this will not be easy. MAU is spearheading the effort to
• Housing Microfinance (HMF). When Finca expressed interest in UPMMI during the second wave of applications, UPMMI developed a MFH training course and engaged MFIU. Many MFIU members attended, as well as other lenders. This is a very important first for Uganda. Although HMF is widespread in Latin America, and growing in Asia, it is only now being addressed in some African countries.
Lack of Effectiveness and/or Sustainability
• Mortgage Lenders. UPMMI provided training to 3 partners, but 2 of the partners have yet to enter the mortgage market. Orient Bank and Bank of Africa were left with trained staff (and even trained trainers). This is now being squandered as no mortgages were ever made. The staff are gradually seeking other avenues
• Lack of Long-term Funds. As discussed, the major shortfall under UPMMI was the failure to provide the bank partners with the promised long-term, local currency funds. IFC concurs that this part of the program was not successful. As noted above, this has resulted in Orient and Bank of Africa failing to enter the mortgage market, and may have constrained DFCU’s portfolio growth.
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
• Expanded Mortgage Market and Increased Competition. While competition exists among the three mortgage lenders, much more competition, and expanded mortgage lending could have been introduced into the market had more players entered. IFC’s reputation has not been helped. HFB was quite disappointed not to become a partner bank when that was the impression left to them by IFC. Toe some extent, Orient and BoA are disappointed that the efforts they expended in training were not put to use in mortgage lending.
• NSSF and the Ugandan Capital Market. Both NSSF and IFC bear responsibility for failure to deliver finding for UPMMI partners. Management failures at NSSF, symptomatic in part of the immaturity of the capital market and delay in enacting pension reform, continued to bar progress in developing a framework for delivering long-term funds. However, the complexity of the IFC’s loan agreements, and the choice and volatility of chosen index, also stymied a cost-effective deal.
• National Counterpart “Ownership”. UPMMI did not have a national counterpart that “owned” this program: a key principle of the Paris Declaration. As discussed, NSSF was not a viable partner. However, UPMMI did not deal with an alternative counterpart such as BoU. While the Ministry of Lands and Housing participated in some activities, it did not serve as an overall champion
• Affordability. Average mortgage loan sizes are large relative to income in Uganda: about $40,000 in 2009. Outstanding loans primarily serve very high net worth Ugandans. However, Housing Finance Bank and DFCU have pushed somewhat downmarket, and had Centenary joined, this was to be the focus.
• Bankable and Affordable Housing. Hand-in-hand with affordability, the definition of “bankable” housing needs to be clarified and expanded, so that more affordable units, including starter homes, town houses, and even incrementally built homes can be bankable. A developers association is only just now being formed, so was not part of the TA program; it should be strengthened and assist in future affordable housing efforts.
5.3 Long-term Results. As noted in section 1.0, the following long-term goals for UPMMI were stated in the Inception Report:22 Table 5.1 notes the results and findings for UPMMI.
These are the same goals that were stated for GPMMI, the results for which are discussed in section 7.0. For two of these goals – highlighted in the table - no activities took place. IFC should not include this goal statement if no activities are to be assigned to a number of goals important to improvement in low income markets.
22 See Pamela Hedstrom and Eugen Doce, Inception Phase Report, August-September 2007.
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
Table 5.1 Long-term UPMMI Goals and the Results for the Goals. Long-term Goals for UPMMI Results and Findings under UPMMI Creation of long term high quality mortgage For 3 banks only, and for two of the three lending operations (Orient and BoA) the increased capacity is being dissipated from lack of lending. Not a highly effective outcome. Availability of long term local currency funding Failed Ability of lenders to serve consumers with For 3 banks only, and for two of the three, as efficiency and honesty noted, the increased mortgage lending capacity is not now being utilized. However, overall bank operations, such as marketing and credit, are also likely to have been improved. Fostering competitive forces operating in an Not effective: no new lenders entered the open and unfettered market place market and thus competition has not increased. Increasing provision of bankable and affordable There was no activity on the supply side and housing no focus on affordable housing Increased economic activity Not effective: any increase in mortgage lending cannot be said to be due to UPMMI Expansion of mortgage lending and There was no activity in provision of construction finance”. construction finance
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
6.0 RECOMMENDATIONS
Uganda’s mortgage and housing markets continue to face a host of challenges. Thus it is recommended that a follow-on project be developed for Uganda. Further activities should be undertaken in all three components of the program. These activities would include both consolidation of efforts under UPMMI and introduction of new and complementary efforts, especially with regard to supply side issues for more affordable housing.
6.1 Follow-on Activities for UPMMI Components
Component A. Activities under Component A should not be included unless a successful approach to IFC funding can be developed – prior to launching a follow-on. Without this funding, efforts to train some of the banks not already in the market can be “wasted” unless such banks have access to long-term funds. Provided that funding can be obtained, Component A should once again seek new partners and continue training via the Mortgage Toolkit and the other topics that have been introduced. This would include the original partners that did not enter the market: Orient and Bank of Africa. It is likely that other partners will join if funding is linked with the TA.
Component A and Housing Finance Bank. IFC should consider the eligibility of Housing Finance Bank, perhaps combined with assisting with a framework for some degree of privatization. As noted, HFB felt that IFC had taken some advantage of its expertise on the mortgage market. HFB had expected to be in the program, and were chagrined to learn that they were not eligible. Despite their public ownership, they claim to operate in a fully commercial manner. This issue would need to be revisited in a follow-on, which might include assistance with a partial or full privatization.
Component B. A follow-on project should also build on the gains made by UPMMI with regard to the legal framework.
In particular, regulations to support the implementation of the Mortgage Bill are still needed. Standardized forms of loans documents (or at least for what provisions are included in land documents) should be prepared and circulated to facilitate the development of a secondary market.
In addition, as noted above, the Mortgage Bill contains provisions for consumer protection (such as certification of independent advice to the borrowers about the contents and significance of the loan documents), but there are no regulations or procedures in place for implementing the protections. These are extremely important for building trust in the marketplace, and to balance the new rights of lenders to exercise foreclosure and sale of collateral more expeditiously.
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
MLHUD and especially the Land Users Committee should continue to assist with training and development of regulations for the Land Act amendments and other issues. In conjunction with reforms adopted in the Mortgage Bill, increasing security of tenure through certification or an intermediate title system for persons with established legal rights to use customary land should open up the mortgage market to a much larger portion of the population.
To increase mortgage affordability, work should continue to amend the Stamps Act of 2009 to set the tax on mortgage registration at a flat rate, or ideally to eliminate the tax.
Component C. A follow-on should continue to support the association building, especially for AREA, ISU, and MAU. Continuing with the consolidation and computerization of real estate and valuer information --both the multiple listing database and valuers’ databases and modeling capability—is crucial. Also, as noted, supply side assistance for affordable housing is badly needed: This might include assistance to the developer’s organization, TA for developer capacity building (such as the NAHB assistance under GPMMI).
6.2 New Activities.
National Champion(s) Needed. Uganda’s public sector should be more engaged with any future efforts. One or more national “champions” should help develop and undertake a follow-on. Not only should Uganda should “own” the activities described here, some of them cannot succeed without the support of the relevant national institution. Since both long-term funding and mortgage market regulation will be increasingly important, BoU is one logical champion. BoU is expected to continue its efforts in issuing longer-term paper in order to build liquidity into the long-term debt market and thus yield pricing points for a yield curve. Thus, the choice of an appropriate index should be more feasible. The course and timing of pension reform is not yet clear. In any event, as funding for a future program is likely to involve NSSF, whether or not pension reform is underway, BoU or the Ministry of Finance may be able to assist the funding process. Other institutions will need to be involved. IN addition to land issues, MLHUD could assist with supply-side activities such as physical infrastructure development. Thus, as the recommendations touch on both the financial sector and the housing market, it may be appropriate to have more than one champion.
Mortgage Market Regulation and Consumer Protection. As the mortgage market grows, it will be increasingly important to engage BoU in a regulatory structure for mortgage finance. The MT was proposed as a starting point for a regulatory structure under GPMMI, and although it was not implemented during the program, it is recommended as part of GPMMIs follow-on. So too in Uganda, where other efforts such as reporting on mortgage statistics, consumer protection, and supervision of BoU liquidity regulations would assist market regulation.23
Downmarket Lending and Housing Microfinance. Given the low levels of income in Uganda, alternative products such as home improvement loans would complement the
23 See Richard Ketley, Jessica Kramer, op. cit.
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
formal mortgage market well, specifically addressing the needs of the low income segment until some of the constraints to the formal mortgage market are addressed. Thus, HMF should be a mainstay in any follow-on activities. The interest of Finca in housing microfinance (HMF) was a fortuitous occurrence in UPMMI, and one that did not happen under GPMMI. AMFIU should be encouraged to support its members in introducing HMF into their product mix. So too should banks be encouraged to introduce both HMF and downmarket (modest income) lending. Centenary Bank, as one example, would like to expand its downmarket housing lending. As the vast majority of Ugandan households will never be able to afford conventional mortgages, this product can be well suited to the market. Note, however, that some flow of liquidity to those offering HMF – whether they be MFIs, MDIs, or banks – should be included in an attempt to bring this product to a more appropriate scale. (And note that World Bank plans for Tanzania include a liquidity facility specifically for HMF)
Supply-side Efforts for Affordable Housing. Affordable housing production must go hand-in-hand with the provision of complementary supply side issues. These include assisting the developers in association building and management skills, efforts to encourage more affordable housing, and physical infrastructure provision together with better land use planning. Builders are generally reluctant to focus on mass housing for modest income households. However, linking directly with the banks, MDIs, and MFIs who would provide affordable loans should help make modest housing (including starter homes, and home expansion and improvement) a more cost-effective proposition for builders and developers. Although neither UPMMI nor GPMMI addressed ways to reduce the price of building materials, this could be an additional feature. And as noted, MLHUD could assist with land use planning and infrastructure linked to mass production of modest housing.
Construction Finance. As noted, provision of construction finance was stated as a long-term goal for UPMMI. Assistance in developing lending criteria and quality control for construction should be included in a follow-on.
For construction finance, both the Mortgage Bill and the law on property registration must be clear on how a mortgage can be taken that is secured by unbuilt land, and how the property as constructed comes under the terms of the mortgage. This should be done for commercial, residential and mixed use property. Particular provisions are also needed to apply when individual residential or commercial units in multi-unit property are to be sold in the condominium form of ownership. A condominium law may also be needed for management and maintenance of such property after the development phase is complete.
Long-term Liquidity. Providing long-term funds for partner banks, as noted above, should be conditionality for a follow-on program. Coordination with ongoing World Bank programs should continue. The Bank’s “Making Finance Work for Uganda”24 encompasses both improved access to finance and improving the supply of longer-term
24 See “Making Finance Work for Uganda, World Bank, Financial and Private Sector Development, Africa Region, December 2009, Final Draft
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
finance, which clearly has important overlaps with many of the other recommendations for future efforts
6.3 Next Steps in Funding Design.
Index. It is difficult in hindsight to determine what should have been done to avoid the crisis in funding. With regard to the index, IFC searched for a pragmatic solution such as using another rate as the index, such as the prime rate, or using some rolling average of T-bill rates. It is not clear why an alternative rate was not developed.
BoU’s 5 year plan aims for two major improvements: to reduce volatility. And, as noted, BoU continues to work toward development of a long-term yield curve by gradually introducing longer-term government debt in a variety of terms and increased volumes. . Table 2.1, in section 2.0, illustrated interest rates from April 2010. Although the yield curve may not yet be ideal, progress is being made. For example, if the rate for 5 year bonds were to be used in an index, a cost-effective pricing would be possible for mortgage lending.
Loan Agreement Structure. The loan agreement structure – and the process - was complex - probably too complicated for most Ugandan banks. As noted, the consultants prepared as issues paper which included an analysis of the differences between Ugandan mortgage market terms and processes and IFC criteria. And this author suggests in addition that the variable rate lending expectations seem too complex for such an immature mortgage market. Discussions with NSSF should resume. It would seem necessary to address the 100% guarantee issue with NSF. This should be modified in order to permit new lenders into the program.
IFC has no local currency lines of credit. There is of course the fundamental issue that IFC had no long-term lines of credit in Ugandan shillings. Lines of credit in dollars, for example, only serve potential mortgage borrowers who have a dollar source of income for repayment. While dollar lines of credit were acceptable to some of the partners under GPMMI, this was apparently not the case for Uganda. This issue could be revisited. As noted in section 5.0, IFC is investigating alternative approaches to both the index and to obtaining UGX, for example, via the swap market.
NSSF’s Revised Investment Policies. NSSF has revised its investment rules as of March 2010. Loans to qualifying institutions must follow guidelines that include 100% security, an upper limit of less that 50% of total capital; and a debt/equity ratio must not exceed 200%. As discussed, these criteria may prevent some banks from becoming partners under an UPMMI follow-on.; these issues should be negotiated with NSSF.
Pension Reform. Pension reform has been on the agenda in Uganda for a considerable time. The NSSF Act is due for amendment. However, it may not happen yet again, if only because 2011 is an election year. In any event, NSSF would still be the major source of long-term funds.
Long-term Consideration: Liquidity Facility for Funding Assistance. Liquidity facilities, under the right circumstances, can assist countries to utilize the capital markets
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
in providing long-term local currency funding for mortgage finance as well as for infrastructure and other needs. The banks, MDIs, and MFIs most likely to lend to the modest and lower income groups are currently those with the least liquidity.25 Thus, among other findings, the results support the need to provide enhanced liquidity for low and modest income housing, and including these lenders in a housing finance liquidity facility is recommended as a long-term goal.
The World Bank is helping to introduce a facility in Tanzania, which will be owned by the commercial banks. In addition, Tanzania may develop a separate liquidity facility for HMF. This should be carefully watched. It is likely, as Uganda continues with its efforts in capital market development, pension reform, and a more favorable interest rate structure, that a liquidity facility could assist the country in bringing needed liquidity into the market without continued donor support. In addition, Tanzania is investigating formation of a liquidity facility specifically to support housing microfinance.
6.4 Summary of Recommended Next Steps. Al follow-on project should again be fairly broad-based. In addition, there should be a relative concentration on liquidity, housing supply and affordability, and lending down-market with affordable loan products.
In sum, the follow-on should: • revamp proposals to bring long-term funds into mortgage and construction finance, and hopefully open the doors to interest by more lenders • work with BoU in its efforts to reduce interest rates and develop a long-term yield curve in order to design an appropriate index for funding • Work with NSSF to develop a viable funding design, as no other capital market institutions are likely partners until some time following pension reform. Also, a 100% guarantee should not be necessary for NSSF, another area for negotiation; • extend the initiatives begun with supply side institutions: AREA, and ISU; • assist developers formalize and strengthen their nascent association • begin a new “linked supply and demand” effort to join affordable housing production at scale with loan products and underwriting procedures aimed at middle class, but bankable Ugandans; should finally bring a boost to mass market housing development; • secure one or more dedicated “champions” from the public and private sectors, such as BoU and MLHUD; • consider development of a liquidity facility as a medium-term goal.
25 See Richard Ketley and Jessica Kramer, op. cit.
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
7.0 COMPARISON OF UPMMI AND GPMMI AND RECOMMENDED FOLLOW-ON PROGRAMS
7.1 Comparison of Findings for UPMMI and GPMMI
Context. UPMMI and GPMMI were designed as sister programs so it is hardly surprising that there are many parallels in outcomes. Both programs relied on the combination of training, technical assistance, and provision of long-term funds for the bank partners. Both programs utilized the same three component structure to organize activities. Supply side problems and land constraints plague both countries. The market contexts for lending were somewhat similar when GPMMI began, but interest rates soon soared to levels infeasible for mortgage lending. For UPMMI, interest rates were volatile, but never nearly as high as in Ghana.
Funding. The major failure in both programs was not providing the promised funds to their bank partners. These reasons are parallel only in part, however. In the early stages of program design, both programs were to address long-term funding via a “Mortgage Funding Trust”, an intermediary conduit between with the pension fund and the banks, supported by a partial IFC guarantee for the on-lending. In essence, this involved the creation of a quasi secondary market institution, and in both countries this approach collapsed. The reasons are again similar. First, the approach was inherently complex for markets with hardly any experience in capital market funding. Second, both programs faced difficulties in dealing with the problematic sources of loan capital: SSNIT in Ghana and NSSF in Uganda. However, while NSSF’s management and corruption problems precluded cooperation, it is less clear why work with SSNIT was not successful.26
Efforts had shifted in both countries from the MFT to dealing with each bank separately. However, while efforts to fund partner banks continued in Ghana, and are apparently still ongoing, attempts to provide funding in Uganda ceased abruptly. The funding terms were deemed not cost-effective by the banks and IFC made no further attempts to modify the index for pricing funds. In contrast, in Ghana, one partner bank has now received a (post-program) line of credit, and apparently negotiations with other partners continue. There are two problems in Ghana, however. The line of credit is in dollars, which is almost the only lending taking place in the current high interest rate environment. Needing to have dollar-based income certainly excludes most middle- class Ghanaians. Also, financial uncertainties in at least one bank partner continue to preclude the award of funds; this raised the questions of whether IFC due diligence was adequate at the start of the program. .
26 The IFC staff member who designed the MFT indicated that SSNIT was initially on board, with a management that understood the concept. Following a change in SSNIT management, however, the negotiations ended
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
In any event, across both programs, with the sole exception of one equity investment and one line of credit late in the program in Ghana, partner financial institutions received no funds. The obvious result of this is that efforts under Component A had far less of an impact on the mortgage market than hoped for in both Ghana and Uganda.
Technical Assistance. Both programs readjusted the focus of their TA to try to maximize impact in other areas of the development of the housing sector. Improvements to the legal framework for mortgages under Component B proceeded with success in both countries. GPMMI also made valiant efforts to improve mortgage regulation by BoG (not completed, however).
Both Uganda and Ghana appeared to devote greater attention to Component C than might have been the case if mortgage market activity had increased and brought new players into the market. Thus, the professional associations of stakeholders were supported: The professional associations in Ghana were already in existence, which was not the case in Uganda. In Uganda, association-building was the focus for the realtors (AREA), the surveyors, valuers (ISU), and the association of mortgage lenders (MAU). In Ghana, the existing associations of valuers (GhIS) and particularly the developers (GREDA) received assistance. Notably, both programs provided cross- component networking, but perhaps UPMMI focused on this more than GPMMI.
An overall summary of activities under the three components is provided in table 7.1, which highlights the key elements of success.
Table 7.1 Component UPMMI GPMMI
A Only vary partially successful. Somewhat successful. More partners Because no funding was available, than in UPMMI. Somewhat successful in there were only 3 partners, and two expanding dollar lending but not local did not lend. These partners were currency. Five partners were assisted helped in MT methods, but the significantly in MT methods. trained staff are moving on. B Significant success in improving Significant success in improving legal legal framework and stamp tax framework. Some work with BoG on policy. No work on regulation with regulation, although it was not complete. BoU. C Very successful in both Relatively less networking here, but good association building and work with the already established networking. associations.
Long-term Goals. Both programs were to address a set of long-term goals specified by IFC. Table 7.2 summarizes the successes or failures relative to these goals. As suggested by the table the list of list of long-term goals were not fully aligned with the activities that were planned or funded in either UPMMI or GPMMI.
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
Table 7.2 Long-term Program Goals and Results under UPMMI and GPMMI Long-term Program Goal UPMMI GPMMI
Creation of long term high Three lenders significantly Five lenders significantly quality mortgage lending capacitated. Only one active capacitated. Active lenders operations lender joined. joined the program. Availability of long term local No funding was provided. Late in the program, only one currency funding equity investment & one line of credit after program end; funding options still open Ability of lenders to serve 3 banks stated that they had 5 banks stated that they had consumers with efficiency & improved their efficiency; two improved their efficiency but honesty did not enter the mortgage two did not enter the market. market due to lack of funds Fostering competitive forces No increase in competition Increased competition operating in an open and unfettered market place Increasing provision of Activity only for HMF; no No activity for this goal; no bankable & affordable housing affordable housing impact affordable housing impact Increased economic activity Increased lending not due to Increased lending for only one the program partner could be ascribed to the program Expansion of mortgage Little was accomplished as Mortgage lending grew but not lending & construction finance only one active mortgage attributable directly to the lender participated. No program. No construction construction finance activities finance activities
7.2 Recommended Follow-on Activities.
It is recommended that both Ghana and Uganda have follow-on programs. All three components would be addressed, and the recommendations for follow-on activities are similar in many ways. However, because the results for Uganda and Ghana differ by component, there would be a different emphasis across components and the weight given to various within component activities.
It is also important to note what might hinder the success – even the initiation - of a future projects. These factors are constraining: they have been labeled “deal killers” in table 7.3. Thus, the activities summarized in table 7.3 assume that the “deal killers” can be overcome and that long-term funding in local currency will be a viable part of any program that includes Component A. In both Uganda and Ghana, if the programs are designed for funding to accompany the TA, they should not be initiated unless the funding modalities are securely in place. In Ghana, in addition, it will not be possible to begin a demand side effort to expand lending in cedis until interest rates fall considerably and more effective control is bought over the monetary volatility.
For Ghana, training via the MT was more widespread more than in Uganda. Thus, although a follow-on project could again be fairly broad-based, there should be a relative concentration on housing supply, housing affordability, and lending down-market with affordable loan products. Other donor and government programs will no doubt continue
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
to address land issues. In Uganda, more would-be mortgage lenders should be brought into the program. Coupled with a renewed approach to obtaining long-term funding - whether local, international or both – such efforts could finally bring a boost to mass market housing development. Follow-on projects should also build on and consolidate the gains made by GPMMI with regard to mortgage procedures and the legal framework and complete unfinished efforts, especially regarding Bank of Ghana Supervision.
The programs should seek national counterparts to support both financial and supply side progress. The Governments should be encouraged to address physical planning and infrastructure provision so that efforts to encourage affordable housing development can be supported and maximized. And both should encourage finding ways develop affordable loan products – the HMF effort was initiated in Uganda but not in Ghana.
Finally, both markets will continue to be constrained by limited liquidity. IFC should watch the progress of the World Bank’s efforts to establish a liquidity facility in Tanzania, including possibly a separate liquidity facility for HMF. This approach may prove viable for Uganda and Ghana in the medium term.
Table 7.3 Summary of Recommended Follow-on Activities Activity Uganda Follow-on Ghana Follow-on
Deal Killers? No funding or funding No funding or funding framework framework No long-term UGX funding Ongoing high interest rates No National Champion No long-term cedi funding National Champions BoU should be on board. Also BoG already on board but Ministry of Finance? MLHUD? should be more pro-active. Also Ministry of Finance? Housing? Funding Framework Need NSSF cooperation; Need SSNIT cooperation and viable index should now be Ministry of Finance, BoG possible given BoU actions in efforts to curtail inflation & developing yield curve interest rates Mortgage Lenders Bring more into market; focus More lenders not as urgent, on local & regional lenders but focus on local & regional Mortgage lending training Crucial for new lenders Relatively less emphasis Legal framework Build on existing successes Build on existing successes Tax policy Finalize Stamp Act reform no emphasis here Mortgage Market Regulation Very important to begin Help BoG implement existing supervision work with BoU proposals from GPMMI Supply side activities Much greater emphasis Much greater emphasis Association Building Consolidate UPMMI gains Consolidate GPMMI gains Developers Begin Association building, TA Ongoing TA important Construction finance Add to Component A Add to Component A Housing Microfinance Continue initial efforts Introduce HMF Affordable Housing Important to introduce Important to introduce Urban physical planning and Important to encourage Important to encourage infrastructure Government action Government action Liquidity Facility Medium-term goal Medium-term goal
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
In summary, the recommendations are as follows:
Funding: • the funding framework and all accompanying due diligence for potential partner banks should be successfully in place prior to beginning the program; • Component A should not take place unless funding approach is vetted and ready to go; • if there is no funding, do not undertake Component A activities, as banks not yet in the mortgage market generally do not think the TA is worth it without funding. If the partner banks do not have long-term funds of their own to commit, but receive TA, the f\value of the TA is dissipated if no lending begins as the staff gain no practical experience;
Supply-side Activities: • in any event, a relative emphasis should be placed on supply side activities in both Ghana and Uganda. The supply side context should definitely include bankable, affordable housing;
Institutional Support and Capacity Building • Activities in Component B should continue to address the unfinished activities on Component B; • the organizations supported in Component C should continue to be strengthened, including work with the developers association in Uganda; • efforts should continue with regard to the real esate listing database andn certification of real estate agencies and surveyors;
National Champions • one or more “national champions” should be in place to assist the programs;
Mortgage Market Regulation and Consumer Awareness and Protection • BoU and BoG should address regulation of mortgage finance and consumer protection. In Ghana, this will require a concerted effort on the part of BoG. In Uganda, given the efforts by BoU under its Five Year Plan to develop more liquidity in the market and an extended yield curve, finding a suitable index for funding should be feasible. However, BoU should now also address regulation of the mortgage market
Microfinance for Housing • the affordable housing focus should be combined with development of down market lending products, including housing microfinance; • Together with strengthening the mortgage market, initiatives should be taken to introduce and strengthen microfinance for housing. Given the income distributions in Uganda and Ghana, this thype of finance - i.e. upgrading, expansion, starter units - will touch many more households than formal mortgage finance.
Finally, there are many land and other supply side activities that have a critical inmpact on enabling the housing market and housing finance to function. Most notable are land
THE Evaluation of the Uganda Primary Mortgage Market Initiative URBAN INSTITUTE
use regulations, land use planning, and simple and efficient title registration. These activities are being addressed oin both countries by the World Bank and other sponsors and any follow-on to the mortgage market programs should coordinate closely with thse ongoing efforts.
THE ANNEXES URBAN INSTITUTE
ANNEX I: ACRONYMS
ABS Asset-Backed Securities ACIST African Community Initiative for Social Transformation AMFIU Association of Micro Finance Institutions of Uganda AREA Association of Real Estate Agents BOA Bank of Africa BOU Bank of Uganda CMA Capital Markets Authority DFCU Development Finance Company of Uganda ESAMI Eastern and Southern Management Institute ESMID Efficient Securities Market Institutional Development GPMMI Ghana Primary Mortgage Market Initiative Frankfurt School Frankfurt School of Finance & Management
HMF Housing Micro Finance IFC International Finance Corporation ISU Institution of Surveyors in Uganda IT Information Technology IVS International Valuation Standards LTV Loan-to-Value Ratio MAU Mortgage Association of Uganda MDI Microfinance Deposit Taking Institution MFI Microfinance Institution MLHUD Ministry of Lands, Housing, and Urban Development MLS Multiple Listing Service MLT Mortgage Lending Toolkit
PEP Africa Private Enterprise Partnership for Africa PTI Payment-to-Income Ratio PSCP II Private Sector Competitiveness Project II PSFU Private Sector Foundation of Uganda
TA Technical Assistance TB Treasury Bill ToT Trainer of Trainers UBA Uganda Bankers Association UGX Uganda Shillings ULRC Uganda Law Reform Commission UMI Uganda Management Institute UPMMI Uganda Primary Mortgage Market Initiative
THE ANNEXES URBAN INSTITUTE
ANNEX II: SUMMARY OF INDICATORS
Access to Finance (A2F) Core Indicators Definitions / Clarifications / Examples Comments for Decision
Measures the number of unique entities IFC is providing broad advisory services (AS) in general: Banks: 4 (DFCU, Orient, BOA, counts banks, non-bank finance institutions, NGOs, EcoBank); Associations: 3 (ISU, and government entities, in which follow-on, in-depth MAU, AREA); Government: assistance may result. For example: regional Number of entities receiving ULRC, Advisory on Mortgage Bill PEP/facility model for a bank advisory or leasing advisory services to Members of Parliament; development program in which IFC provides broad, Private institutions and Ministry of comprehensive advice to multiple public and private Water, Lands and Environment: institutions, from which IFC may then provide in- SionaPros (real estate database) depth assistance to a few private banks or leasing companies.
Measures the number of unique entities IFC is providing tailored, in-depth AS --such as institution Banks: 4 (DFCU, Orient, BOA, building/capacity building AS components: counts EcoBank); Associations: 3 (ISU, banks, non-bank finance institutions, NGOs, and MAU, AREA); Government: government entities which received in-depth AS. For Number of entities receiving ULRC, Advisory on Mortgage Bill example: IFC may subsequently provide in-depth in-depth advisory services to Members of Parliament; assistance to a few private banks or leasing Private institutions and Ministry of companies, as a result of a broad, comprehensive Water, Lands and Environment: regional PEP/facility bank advisory or leasing SionaPros (real estate database)
OUTPUTS development program for multiple public and private institutions.
Measures the number of unique legal/regulatory Number of new laws / Mortgage Bill 2007, Uganda Law recommendations provided by IFC or third party regulations / amendments Reform Commission (ULRC) consultants. A judgement call will have to be made drafted or contributed to TBD, Regulations on Real Estate as to what is counted as a unique recommendation drafting Agents (TBD) provided.
Mortgage operations, training and risk management manuals for banks, TA to Banks to manage Measures the number of unique institution-specific risk and ALM in mortgage lending recommendations provided by IFC or third party operations, TA to Banks for Number of procedures / consultants. These outputs are typical for institution strategic marketing of mortgage policies / practices / capacity building AS in which operations manuals products; Trainings for Real recommended for or procedures are developed to help improve an Estate Brokers (AREA); improvement or elimination institutions' ALM, credit/risk assessment, etc., and Development of database in the hence overall operational efficiency. form of a joint venture between SionaPros a private sector company and AREA, the Real Estate Association
THE ANNEXES URBAN INSTITUTE
Access to Finance (A2F) Core Indicators Definitions / Clarifications / Examples Comments for Decision
MP Workshop (Number = 1); Valuation Trainings (Number = Measures the number of workshops, training events, 5); Training of Trainers (Number seminars conferences provided by IFC, including = 1); Housing Finance Course public awareness events. For example, in trade (Number = 2); Real Estate Number of workshops, finance, training is provided to a broad number of Brokerage and Sales Training training events, seminars, banks, from which a subset of banks may further (Number = 1); Marketing conferences, etc. become IFC clients in the Global Trade Finance Trainings for Banks (Number = Program, or issuing banks that issue trade finance 3); Risk Management Trainings instruments and guarantee risk. (Number TBD); General lectures on housing finance topics (Number = 3+) MP Workshop (Number of attendees = 63); Training of Trainers (Number of attendees = 23); Housing Finance Course (Number of attendees = 25); IFC Lecture on Housing Finance (Number of attendees = 132); NHBC Lecture on Risk in Housing (Number of attendees = 66); Microhousing Lecture (Number of attendees = 21); Presentation on Valuation Standards (Number of attendees = 18); Seminar of Appraisal Report Review (Number of attendees = 10); Talk on Importance of Valuation Measures the number of people trained per unique Number of participants in Standards (Number of attendees training AS: counts formal training sessions, consultative workshops, = 78); International Valuation seminars, workshops, other organized events, also training events, seminars, Standards Training (Number of training of trainers; includes public awareness conferences attendees = 139); Advanced events. Practice in Real Estate Valuation Training (Number of attendees = TBD); Real Estate Brokerage and Sales Training (Number of attendees = xx); MLS/Real Estate Database workshop (Number of attendees = 19); Workshop for launch of Real Estate Database (TBD); Marketing Training for DFCU (Number of attendees = 15); Marketing Training for Bank of Africa; (Number of attendees = TBD); Marketing Training for Ecobank (Number of attendees = TBD); Housing Finance Course 2 (TBD); Risk Management Trainings (TBD);
THE ANNEXES URBAN INSTITUTE
Access to Finance (A2F) Core Indicators Definitions / Clarifications / Examples Comments for Decision
MP Workshop (Number of females = 18); Training of Trainers (Number of Females = 10); Housing Finance Course (Number of females = 9); IFC Lecture on Housing Finance (Number of females = 48); NHBC Lecture on Risk in Housing (Number of females = 16); Microhousing Lecture (Number of females = 7); Presentation on Valuation Standards (Number of females = 3); Seminar of Appraisal Report Review (Number of females = 2); Talk on Importance of International Valuation Standards Lecture Measures the number of female trainees per unique (Number of females = 24); Number of women training AS: counts number of female participants in International Valuation Standards participants in consultative formal training sessions, seminars, workshops, other (IVS) Training (Number of workshops, training events, organized events, also training of trainers; includes females = 46); Advanced seminars, conferences public awareness events. Practice in Real Estate Valuation Training (Number of females = TBD); Real Estate Brokerage and Sales Training (Number of females = xx); Focus group on MLS/Real Estate Database (Number of females = 7); Workshop for launch of Real Estate Database (TBD); Marketing Training for DFCU (Number of females = 5); Marketing Training for Bank of Africa; (Number of females = TBD); Marketing Training for Ecobank (Number of females = TBD); Housing Finance Course 2 (TBD); Risk Management Trainings (TBD); IVS Valuation Training (95% Satisfied); Advanced Practices Valuation Training (xx% Measures the effectiveness of training provided. Satisfied); Housing Finance Requires that a standard evaluation form be used for Course (96% Satisfied); Real each training AS. This value is the denominator Number of participants Estate Brokerage and Sales used in calculating the percent (%) of training providing feedback on Training (xx % Satisfied); "participants rating IFC a 4 or 5 (satisfied/very satisfaction Marketing Trainings for DFCU satisfied) out of the "total number of training (84% Satisfied); Marketing participants providing feedback on satisfaction" with Trainings for Bank of Africa (xx % IFC's training AS. Satisfied); Marketing Trainings for Ecobank (xx % Satisfied); Risk Management Trainings (TBD)
THE ANNEXES URBAN INSTITUTE
Access to Finance (A2F) Core Indicators Definitions / Clarifications / Examples Comments for Decision
IVS Valuation Training (Very Satisfied = 83, Satisfied = 4); Advanced Practices Valuation Training 2 (Very Satisfied = xx, Satisfied = xx); Housing Finance Course (Very Satisfied = 22, Number of participants reporting being satisfied or Satisfied = 1); Real Estate Number of participants very satisfied with workshops, training, seminars, Brokerage and Sales Training reporting satisfied or very conferences, etc. on a scale of 1 to 5 where 1 is (Very Satisfied = xx, Satisfied = satisfied with workshops, Very Dissatisfied, 2 is Dissatisfied, 3 is Neither xx); Marketing Trainings for training, seminars, Satisfied no Dissatisfied, 4 is Satisfied, and 5 is Very DFCU (Very Satisfied = 3, conferences, etc. Satisfied. This data must be collected using Satisfied = 2); Marketing standard evaluation forms at the end of every event. Trainings for Bank of Africa (Very Satisfied = xx, Satisfied = xx); Marketing Trainings for Ecobank (Very Satisfied = xx, Satisfied = xx); Risk Management Trainings (TBD)
Measures the number of reports completed by IFC or third party consultants: counts feasibility studies, Gap Analyses (Number = xx); Number of reports sector or market studies, diagnostic assessments, Business Planning (Number = 1); (assessments, surveys, business plan/strategy and implementation plans, Operations Manuals (Number = manuals) completed operations manuals; includes knowledge xx) management publications.
Number of recommended Measures the number of new / amended laws / Mortgage Bill 2007; Regulations laws / regulations / regulations / codes enacted by the entity(ies) which of Real Estate Agents (TBD); amendments / codes received broad and/or in-depth AS. Securitization (TBD) enacted
xx Banks expanded product mix by introducing mortgage product Measures the number of entities that were using set of recommendations; established and/or implemented recommendations xx Banks improved mortgage as a result of IFC's AS project: for MSME banking, product using set of Number of entities that MFIs, housing, leasing, counts number of recommendations; xx implemented recommended departments, branch operations created, improved Associations supporting the changes and/or expanded. For example, for energy mortgage sector were created efficiency and sustainable finance, counts the based upon recommendations;
OUTCOMES number of firms adopting energy efficiency or xx Associations supporting the sustainable practices based on IFC AS. mortgage sector were strengthened based upon recommendations
Core indicator which counts the number of new entities created as a result of IFC's AS. Relevant for Number of new entities new/greenfield microfinance institutions created, Not sure about this…MAU? created collateral registries / secured transactions projects. AREA? We can ask Wambui For SME banking, counts new branch entities created.
THE ANNEXES URBAN INSTITUTE
Access to Finance (A2F) Core Indicators Definitions / Clarifications / Examples Comments for Decision
Counts the number of all outstanding principal for all outstanding client loans, including current, To be entered in PSRs as a total delinquent, and restructured loans, but not loans that number as of end of the reporting have been written off. It does not include interest period. Baseline = existing loan receivable. It does not include employee loans. For portfolio for the specific asset Number ofall outstanding MFIs using a group lending methodology this term class A2F AS is being provided, loans includes every individual who is responsible for rather than the bank's overall repaying a portion of a group loan, unless otherwise loan portfolio. Target = same specified by the MFI. Measures supply of credit as of definition, but loan portfolio at the current period-ended; represents a stock figure; end of A2F AS project. also referred to as gross loan portfolio or loan portfolio.
To be entered in PSRs as a Volume (US$) of all outstanding principal for all cumulative number as of end of outstanding client loans, including current, the reporting period. Baseline = delinquent, and restructured loans, but not loans that existing loan portfolio for the Value of all outstanding have been written off. It does not include interest specific asset class A2F AS is loans (US$) receivable. It does not include employee loans. being provided, rather than the Measures supply of credit (US$) as of the end of the bank's overall loan portfolio. reporting period; represents a stock figure; also Targets = same definition, but referred to as gross loan portfolio or loan portfolio. loan portfolio at end of A2F AS.
Counts the number of all loans disbursed during the period, regardless of whether they are performing, non-performing, or written-off. This should not be confused with loans outstanding (or gross loan To be entered as new loans portfolio) which can be less than several times the disbursed over the reporting Number of value disbursed. For MFIs using a group-lending period. Baseline is always zero. all loans disbursed methodology, the number of loans should refer to Targets include baseline + the number of individuals receiving part of a group incremental change over loan, unless otherwise specified by the MFI. implementation. Measures supply of credit during a given period; represents a flow figure over the reporting period (data for the last 6-months ended at Jun/Dec).
The value of all loans disbursed during the period, regardless of whether they are performing, non- To be entered as new loans performing, or written-off. This value should not be disbursed over the reporting Value of all loans disbursed confused with loans outstanding (or gross loan period. Baseline is always zero. (US$) portfolio) which can be less than several times the Targets include baseline + value disbursed. Measures supply of credit; incremental change over represents a flow figure over the reporting period implementation. (data for the last 6-months ended at Jun/Dec). OUTCOMES (continued) (continued) OUTCOMES
THE ANNEXES URBAN INSTITUTE
Access to Finance (A2F) Core Indicators Definitions / Clarifications / Examples Comments for Decision
The value (US$) of all loans outstanding that have one or more installments of principal past due more than 90 days. This includes the entire unpaid principal balance, including both the past due and Why not report on 30 days for future installments, but not accrued interest. It does everything? Or maintain 90 day Value of loans > 90 days not include loans that have been restructured or cut-off for SME banking, 30 day overdue (US $) rescheduled. Measures quality of portfolio for the cut-off for MFIs (consistent with last 6 months ended at Jun/Dec). For SMEs, 90 IS reporting). days overdue is applied; for microfinance institutions, 30 days should be applied instead of 90 days (given higher turnover of microloans as compared to SME banking).
Core indicator for banking and microfinance projects. Measures savings mobilization. Counts the number of new deposit accounts opened over Need to agree: (1) that we the reporting period (during the last 6 months ended capture number of new deposit at Jun/Dec). Deposits are defined as the total value accounts or outstanding deposit Number of of funds placed in an account with a financial accounts; (2) suggest to define deposit accounts opened institution that are payable on demand to a the indicator according to MIX, as depositor. Deposits include any current, checking or "number of savers" and "value savings accounts that are payable on demand. It (US$) of savings balance". also includes time deposits which have a fixed maturity rate.
Core indicator for banking and microfinance projects. Measures savings mobilization (US$ volume) of new deposit accounts opened during the last 6 months ended at Jun/Dec. Deposits are Value of deposit accounts defined as the total value of funds placed in an Not Applicable opened (US$) account with a financial institution that are payable on demand to a depositor. Deposits include any current, checking or savings accounts that are payable on demand. It also includes time deposits which have a fixed maturity rate.
Core indicator for secondary market projects in housing finance. This value is the numerator used Value (US$) of mortgage- to calculate: mobilization rate (%) = "value (US$) of backed securitizations Not Applicable mortgage-backed securitizations (MBS) issued as a issued result of AS" / "value (US$) of IFC's secondary market transactions as a result of AS".
THE ANNEXES URBAN INSTITUTE
Access to Finance (A2F) Core Indicators Definitions / Clarifications / Examples Comments for Decision
Core indicator for secondary market projects in Value of IFC secondary housing finance. This value is the denominator used mortgage market to calculate: mobilization rate (%) = "value (US$) of Not Applicable transactions completed (US mortgage-backed securitizations (MBS) issued as a $) result of AS" / "value (US$) of IFC's secondary market transactions as a result of AS".
Counts the number of queries received by the credit Number of inquiries bureau system over the reporting period. This is a Not Applicable received by credit bureau key measure of demand for credit bureau services.
Number of financial Counts the number of firm borrowers with credit institutions/lenders records in the credit bureau system at the end of the Not Applicable participating in bureau reporting period.
A key output measure for the credit bureau, counts the number of credit reports sold by the credit Number of credit reports bureau. It can also be tracked at the product level, Not Applicable sold by credit bureau for example how many basic reports are sold, how many reports with credit scores are sold.
The index is produced by the World Bank, Doing Business Report -- this measures the timeliness of Score on Credit Information service. Key indicators for the timeliness of service Not Applicable Index may include: (1) time between obtaining the query and issuing the report; (2) time to assimilate information, update records and rectify reports.
The score is produced by the World Bank, Doing Business Report -- this measures the depth of coverage by private credit bureaus at the country level. The indicator used in this case is the number Score on Private Credit of borrowers covered by the system. A bureau's Not Applicable Bureau Coverage objective is to simultaneously increase its coverage ratio, defined as the number of borrowers in the system divided by the active population, and the hit ratio.
Core indicator for collateral registries projects - Number of new registrations counted under "number of clients of the financial Not Applicable institution that received AS"
Number of searches made Core indicator for collateral registries projects. Not Applicable
THE ANNEXES URBAN INSTITUTE
Access to Finance (A2F) Core Indicators Definitions / Clarifications / Examples Comments for Decision
Value (US$) of trade finance guarantee Core indicator for trade finance projects. Not Applicable transactions
Core indicator for trade finance projects. This value Number of trade finance is also the same indicator as "number of clients of Not Applicable guarantee transactions the financial institution that received AS".
Number of trade finance Core indicator for trade finance projects. A subset of transactions that are SME Not Applicable "number of trade finance guarantee transactions". transactions
Value of insurance Core indicator for insurance projects. Not Applicable contracts issued (US$)
Core indicator for securities markets projects: measures the volume of transactions enabled by Value of securities IFC through the securities firm(s) in which IFC Not Applicable transactions (US$) provided securities markets advice. Such transactions may or may not involve and IFC investment and or may involve only stand-alone AS.
Core indicator for securities markets projects: Total trading value (US$) Not Applicable measures liquidity.
Core indicator for securities markets projects: measures the number of new issuers, securities Number of securities market markets professionals, investment banks and other Not Applicable participants securities firms that entered the market as a result of AS.
Core indicator for payment systems and remittances projects. Measures the number of domestic non- cash/electronic transactions via direct credit, pre- paid cards, credit cards, m-banking, direct debit transactions within a given country and/or firm (as Number of non-cash retail representative average). Non-cash payment Not Applicable transactions transactions in a given country is measured per person/capita in a given country; see Global Payment System Survey for this data. Impact data not applicable at current stage of product development.
THE ANNEXES URBAN INSTITUTE
Access to Finance (A2F) Core Indicators Definitions / Clarifications / Examples Comments for Decision
Core indicator for payment systems and remittances projects. Measures non-retail transactions typically Value (US$) of non-cash made through large firms, i.e. Fed wire transactions. Not Applicable retail payments See Global Payment System Survey for this data. Impact data not applicable at current stage of product development.
Core indicator for payment systems and remittances projects: remittance transactions are typically at a cost, charged at a small % of the total remittance payment in that country and in the respective currency denomination (this data is currently to be collected for about 200 corridors as part of the Cost of sending remittances Remittance Price Database project). Since iDesk Not Applicable (%) documents (AS-supervision) is limited to aggregating or calculating only the sum (by product, region, BL, etc.), this entry will be mainly for collecting the raw data (in % terms), and manual averages of the percentages will be calculated by the BL for a more meaningful analysis of the data. OUTCOMES (continued) (continued) OUTCOMES
Measures the number of unique institution-specific recommendations (procedures, policies, practices) that were improved and implemented; includes new products developed within the institution. For example, new AML/credit policies improved and Mortgage Product (procedures, implemented as a result of IFC AS; or a new group Number of recommended policies, practices) for xx Banks lending product for a microfinance institution; or procedures/policies/practice were developed; Mortgage SME lending product for a bank. s that were Product (procedures, policies,
improved/eliminated practices) for xx Banks were *Note: This indicator may be added at the TL's enhanced discretion where it is discernible that such individual policies/procedures were implemented/improved as a result of IFC's AS. Such improvements are further captured in portfolio performance of the client financial institution.
THE ANNEXES URBAN INSTITUTE
Access to Finance (A2F) Core Indicators Definitions / Clarifications / Examples Comments for Decision
Measures the number of new clients of the financial institution that received IFC's AS. Counts number of new active borrowers and depositors or both; an active borrower is defined as the number of individuals who have currently an outstanding loan balance with the FI or are primarily responsible for repaying any portion of loans outstanding (gross Number of clients of the loan portfolio); this number is based on the number financial institution that Not Applicable of individual borrowers rather than the number of received AS groups. For insurance, counts number of insurance contracts. For collateral registries, counts number of new registrations as per data collected from the registry. For trade finance, counts the number of trade finance guarantees made by issuing banks participating in the Global Trade Finance Program (GTFP).
Counts the number of individual women borrowers who currently have an outstanding loan balance with the financial institution or are responsible for Number of active women repaying any portion of the gross loan portfolio. Not Applicable borrowers Measures supply of credit for female borrowers in projects where GEM/gender component is involved. For MFI projects, this indicator is most commonly reported and for which data is typically available.
Counts the number of individual women savers who currently have funds on deposit with a financial institution, which the financial institution is liable to repay; the number applies only to deposits that are held by the financial institution, not to those deposits Number of active women held in other institutions by the financial institution's Not Applicable depositors clients. Measures supply of savings/deposits for female clients in projects where GEM/gender component is involved. For MFI projects, this indicator is most commonly reported and for which data is typically available.
THE ANNEXES URBAN INSTITUTE
Access to Finance (A2F) Core Indicators Definitions / Clarifications / Examples Comments for Decision
The A2F business line has identified “value of investment/financing facilitated by advisory services (US$)” as a minimum impact indicator. Additional Value of impact indicators may be tracked and monitored at investment/financing IFC to conduct impact the discretion of the transaction leader. Impact facilitated by advisory assessment after project results for financial institutions and financial services (US$) infrastructure AS projects/programs are calculated as accordingly, see A2F M&E Guidelines, Section V. Calculating Impact. IMPACTS
Core indicator for energy efficiency and sustainable finance projects. Measures greenhouse gas CO2 emissions reduced emissions (GHG) in tons of CO2 equivalent per year, Not Applicable (tons/year) as calculated by the Environmental Specialist. This indicator applicable for energy efficiency and cleaner production, recycling and renewables technologies.
THE ANNEXES URBAN INSTITUTE
ANNEX III: SUMMARY OF TRAINING EVENTS No. of No. of No. of Date Event Days Participants Organizations
COMPONENT A June 6 - 7, 2008 Marketing Training for DFCU Bank 2 22 1 September 15 - 19, 2008 Housing Finance Training 5 25 14 August 10 - 14, 2009 Mortgage Lending Training 5 30 9 September 3/4 & 10/11, DFCU Credit Retail Training 4 38 1 2009 November 24 - 27, 2009 Housing Microfinance Training 4 30 17 January 18 - 20, 2010 Asset-Liability Management Training 3 15 3 March 10 - 11, 2010 Marketing Training for Orient Bank Bank 2 30 1 March 12 - 13, 2010 Marketing Training for DFCU Bank 2 24 1 March 18 - 19, 2010 Marketing Training for Bank of Africa Uganda 2 31 1 TOTAL 29 245 COMPONENT B Educative talk on Mortgage Housing Finance April 18, 2008 0.5 132 47 by Dr. Friedemann Roy Presentation by Imtiaz Farookhi on NHBC: July 29, 2008 0.5 66 Raising Standards, Protecting Homeowners Presentation by Victoria Stefaniuk; Key September 23, 2008 Objectives and Components of Housing 0.5 21 Microfinance MP Workshop on the Mortgage Bill 2007: November 11, 2008 Presentations by Phillip Karugaba & 0.5 63 28 Friedemann Roy Presentation by Gheorghe Badescu: Valuation November 25, 2008 0.5 78 in Emerging Market Based Economy Presentation by Kyeyune Sewagya: July 23, 2009 Discussion on the Draft Code of Conduct for 0.5 53 28 Estate Agents in Uganda Presentation by Victor Agaba on Mortgage Act December 11, 2009 2009: Effect on Lending Business to the Land 0.5 63 20 Users Group Presentation by Victor Agaba on The March 5, 2010 Mortgage Industry in Uganda: Trends and 0.5 104 Setting Priorities to Uganda Law Society Sensitization Workshop: Enforcement and March 23, 2010 Execution of Orders Related to Mortgages – 1 61 35 ACIST Mortgage Regulations Meetings Capital Markets Authority Asset-Backed June 8, 2010 1 100 Securities Regulations (ABS) Workshop TOTAL 6 741
THE ANNEXES URBAN INSTITUTE
COMPONENT C International Valuation Standards: Comparison of Uganda vs. International March 18, 2008 0.5 18 10 Practices - Institution of Surveyors Uganda (ISU) Analyzing the Valuation Report Workshop for March 19, 2008 0.5 10 9 Banks Importance of Independent Certification and March 2008 0.5 11 9 Valuation Standards Meeting - ISU International Valuation Standards Training - November 27 - 28, 2008 2 140 ISU Real Estate Listing Database Focus Group December 2, 2008 0.5 11 4 (Gheorghe Badescu & Uwe Brobeil) Workshop on Multiple Listing Services - February 6, 2009 Association of the Real Estate Agents - 0.5 20 13 Uganda (AREA) Real Estate Broker Management & Sales March 17 - 19, 2009 3 41 24 Training - AREA Advanced Practice in Real Estate Valuation June 8 - 12, 2009 5 22 13 Training - ISU June 10, 2009 Presentation on Real Estate Valuation - AREA 0.5 27 17 Real Estate Brokerage Management Course November 16 - 18, 2009 3 17 12 (Uganda Management Institute & AREA) Basic Skills Mortgage Finance for Real Estate April 21 - 23, 2010 3 7 7 Practitioners - AREA TOTAL 19 324 TOTAL – UPMMI PROJECT 54 1,310
THE ANNEXES URBAN INSTITUTE
ANNEX IV: SUMMARY OF TRAINEE RATINGS
THE ANNEXES URBAN INSTITUTE
ANNEX V: PERSONS INTERVIEWED
UGANDA PRIMARY MORTGAGE MARKET INITIATIVE (UPMMI) MEETING SCHEDULE, APRIL 12 – 23, 2010
Institution Name Email Address/Mobile Venue Time UPMMI Pamela Hedstrom, Victor [email protected] , Rwenzori House, TBD Agaba [email protected] floor 0 Association of Real Vincent Agaba [email protected] ESAMI Building 9:30 am Estate Agents President 0774246276 Bombo Road Uganda Plot 66 Kenneth Dale Drive, Catherine Nanteza [email protected] Administrator 0772637525 ESAMI Building Stanbic Bank Phillip Odera [email protected] Crested Towers 11:00 am Managing Director 0312224427 (Assistant - Building 17 Hannington Road, Crested Brenda Nerima) second floor short Towers, Kampala tower crested Tom Newton King [email protected] towers building Product Manager 0772225900 / 0312224372 17 Hannington Road, Crested Towers, Kampala Damalie Kairumba [email protected] Head of Retail Mortgages 0772538733 / 0312224378 17 Hannington Road, Crested Towers, Kampala Institution of Nathan Behangana [email protected] / ISU offices 12:30 pm Surveyors of President, c/o Survecon 0772502402 / 0414540107 Cresteve House Uganda Associates, Plot 37 Kiira Road Solomon Alinaitwe [email protected] President, Valuation Chapter 0704022758 c/o CBRE, 4 Nile Avenue, 2nd Floor, Kampala Joseph Muhumuza [email protected] Former President Valuation m Chapter 0712221712 FinLit Foundation Ali Taha [email protected] Insurers House, 3:00pm Coordinator 0752879220 / 0414500945 Plot 24A. Acacia Insurers House, Plot 24A Avenue Acacia Avenue, Kampala World Bank Moses Kibirige [email protected] Rwenzori House, 5 – 6pm Sr. Private Sector 0772890036 / 0414302263 4th Floor Development Specialist Javier Suarez [email protected] Kundhavi Kadiresan [email protected] Country Manager 0752760083 / 0414302214 (Assistant – Mary .Babirye) Bank of Africa Edigold Monday Edigold.Monday@boa- BOA Office - Jinja 10:00am Managing Director uganda.com Road, plot 45, Plot 45 Jinja Road, Kampala 0772787641 / 414253937 Kampala
THE ANNEXES URBAN INSTITUTE
Institution Name Email Address/Mobile Venue Time Don Twine Don.twine@boa- Ag Head of Commercial Division uganda.com Plot 45 Jinja Road, Kampala 0712212255 / 414302138 Jude Kansiime Jude.kansiime@boa- Marketing Manager uganda.com Plot 45 Jinja Road, Kampala 0712599780 / 414302137 Orient Bank Maxwell Ibeanusi Maxwell.ibeanusi@orient- Orient Bank office 4:30 pm MD/CEO bank.com - Plot 6/6A Plot 6/6A Kampala Road, 0752755562 / 0417719320 Kampala Road Claver Serumaga Claver.serumaga@orient- Wed 14 Head of Retail Banking bank.com Plot 6/6A Kampala Road, 0712771800 / 0417719125 Ministry of Lands, Sarah Kulata [email protected] Plot 13/15 8:00am Housing & Urban Ag. Commissioner Land 0752758606 / 0414341667 Parliament Avenue Development Registration Plot 13/15 Parliament Avenue P.O. Box 7096 Kampala Mortgage David Ninyikiriza [email protected] Housing Finance 11:00am Association of Chairman .ug Bank Uganda / Housing c/o Housing Finance Bank, 0772919122 / 0312262615 Nakasero Plot 34A Finance Bank Nakasero Plot 34A \Ministry of Lands, Sewajjwa M. Kyenune [email protected] Old Portbell, near 2:00 pm Housing & Urban Ag. Asst. Commissioner 0772571675 / 0414345077 Zain – Ministry of Development Estates Management works Housing Finance Michael Mugabi [email protected] Nakasero Plot 34A 4:00pm Bank Head of Legal, Nakasero Plot o.ug Finca 34AFabian Kasi [email protected] 504 707/0414 236 677 Plot 22 Ben 5:00pm CEO, Plot 22 Ben Kiwanuka 0772 791541 / 0414 231 134 Kiwanuka Street Mortgage James Kanagwa [email protected] Eco Bank 9:00am Association of Education Chair 0776080002 Parliament Avenue Uganda / Eco Bank Ecobank – also chose not to join UPMMI Capital Markets Eric Lokolong [email protected] 14 Parliament 11:00am Authority Senior Compliance Officer g Avenue, 8th Floor, 14 Parliament Avenue, 8th 0712833746 / 0312264950 Kampala Floor, Kampala Ann Mpendo Director Market Research & Development Capital Markets Authority Jubilee Insurance Centre, 8th Floor 14 Parliament Avenue AMFIU David Baguma [email protected] Plot 679 Wamala 10:00am Executive Director, Plot 679 0772447387 / 0414259176 Road, Wamala Road, Najjanankumbi Najjanankumbi National Social Francis Kajura [email protected] Workers House 12:00pm Security Fund 0755 500519
THE ANNEXES URBAN INSTITUTE
Institution Name Email Address/Mobile Venue Time Centenary Bank Joseph Lutwama Joseph.lutwama@centenar Centenary Bank 2:00pm General Manager, Credit ybank.co.ug Diamond Trust Maina Kariuki [email protected] Diamond Trust 4:00pm Bank Head of Finance and g Bank V.S Ravi [email protected] Head – Corporate Banking 0752759332 / 414 387155 Varghese Thambi [email protected] Chief Executive Officer 0711222223 / 414387151 George Mashashi [email protected] Executive Director .ug ACIST Lazarus Owakubariho [email protected] Block 661F 9:00 am Executive Director 0772517278 / 0392200789 Buganda Road Block 661F Buganda Road Flats Flats, 3rd Floor, Flat F, Stromme KlPaul Mayanja [email protected] Plot 25, Block 11:00 am Microfinance East Chief Executive Officer 0782358207 / 0414532842 / LRV 235, Folio3, Africa Plot 25, Block LRV 235, Folio3, Bukoto Street, Bukoto Street, Kampala Kampala Formerly Orient Fred Mutanje [email protected] Makerere High 2:00 pm Bank Diamond Trust 0772445596 School Building, Formerly DFCU Elizabeth Kabugo [email protected] 4:00pm Housing Finance Bank .ug Land Reform Richard Oput [email protected] Parliament Ave. 6:00pm Project - MLHUD Plot 13/15 Parliament Avenue 0772412702 Ministry of lands P.O. Box 7096 Kampala MMAKS Advocates Phillip Karugaba [email protected] 3rd Fl. Diamond 9:30am Partner, 3rd Fl. Diamond Trust 0414251388 / 0772785332 Trust Bld. Bld. P. O. Box 7166 DFCU Juma Kisaame [email protected] MD’s (DFCU) 12:00 pm Managing Director Assistant – 0312300399 Office - Plot 2, Plot 2 Jinja Road, Kampala Jinja Road, Christine Kawooya [email protected] Kampala Head of Retail Sales 0772760205 / Plot 2 Jinja Road, Kampala 0312300205/374 Myrae Namuyimba [email protected] Ag Business Development om Manager – Mortgages 0772760555 / 0312300388 Plot 2 Jinja Road, Kampala National Housing Joseph Kitamirike 2:30 pm (NHCC) MD, 414 330002 (general line) Elizabeth Rumayika Charity Robert Canwat [email protected] Between St. 10:00pm Microfinance MD, Nakawa 0772550193 / 0782854524 Peters Church & Nakawa Division PSFU John-Marie Kyewalabye [email protected] Plot 43 Nakasero 2:00pm Plot 43 Nakasero Road, .ug Road, Kampala Kampala 0772447393 / 0414230956
THE ANNEXES URBAN INSTITUTE
TELEPHONE INTERVIEWS
IFC Mary Wan [email protected] World Bank, Friedemann Roy [email protected] Formerly IFC Formerly IFC Michael Bookstaber IFC Manuel Moses [email protected]
IFC Douglas Grayson [email protected]
THE ANNEXES URBAN INSTITUTE
ANNEX VI: REFERENCES
UPMMI Reports
Comments On Draft Mortgage Regulations.
Concept Note on Continued Activities with the Banks.
IFC key recommendations on the Mortgage Bill 2007.
Hedstrom, Pam, UPMMI Final Report, Draft, April 2010.
Hedstrom, Pamela, and Eugene Doce, Inception Phase Report, August- September 2007
Hedstrom, Pamela, and Eugene Doce, Issues for Further Consideration, August – September, 2007.
UPMMI Quarterly Reports: Fourth Quarter 2007 through First Quarter 2010.
Various UPMMI Reports and Correspondence:
• Training Presentations; Training Evaluations, Power Point Presentations • Mortgage Market Product Needs Assessments: Potential New Banks in UPMMI • Schedule for Selection of New Partner Financial Institutions • Banks Visit Report, Bank Reviews and Assessments (BOA, DFCU, Orient), Bank GAP Analyses • UPMMI correspondence and e-mails concerning funding issues
Housing and Mortgage Market Studies
AREA, “Uganda Property Listing Service (UPLS) Proposal, Background Information”, submitted to UPMMI, 2009
Boleat, Mark, Housing Finance in Uganda, IFC, 2005
THE ANNEXES URBAN INSTITUTE
Hassler, Olivier. & Walley, Simon, Mortgage Liquidity Facilities. World Bank, 2007.
Kayiira, Duncan, William Kalema, and Sally Merrill, Business and Sustainability Plan for the Low Income Pilots, Urban Institute and UMACIS for the FIRST Initiative in Uganda, May 2009.
Ketley, Richard, Jessica Kramer, Michel Hanouch, Christo Wiese, Expanding Housing Finance in Uganda: Task 2, Study to Examine the Use of Retail Funds for Mortgage Lending, Genesis –Analytics for the Urban Institute, FIRST Initiative in Uganda, April 2009.
Kalema, William and Duncan Kayiira, Access to Housing Finance in Africa: Exploring the issues, No.4 Uganda. FinMark Trust, 2008.
MAU, (Mortgage Association of Uganda), “Real Estate Transactions Database Proposal”
Merrill, Sally “End of Project Evaluation of Ghana Primary Mortgage Market Initiative (GPMMI)”, Urban Institute, December 2009.
Merrill, Sally, William Kalema, and Duncan Kayiira, “Expanding Access to Housing Finance: Task 1: Design of Pilot Projects for Low and Modest Income Households” Urban Institute for the FIRST Initiative in Uganda, May 2009.
Merrill, Sally, Tanzania: Action Plan for Development the Mortgage Market: Report on the Development of a Liquidity Facility, FIRST INITIATIVE, 2007
Mortgage Association of Uganda (MAU), “Real Estate Transaction Database Proposal”, submitted to UPMMI, 2009.
World Bank, “Making Finance Work”, Financial and Private Sector Development, Africa Region, Final Draft, December 2009.