Assessing the extent to which poor credit cultures limit financing of affordable housing in Uganda.

Abstract

This study assessed the extent to which poor credit cultures limit financing of affordable housing in Uganda. There are many types of poor credit cultures but this study mainly focuses on two which include poor credit information systems and rigorous length scrutiny of borrowers. The objectives of this study were; to identify the various forms of poor credit cultures, to investigate the concept of housing with an emphasis on affordable housing and to establish the relationship between poor credit cultures and financing of affordable housing. To achieve these objectives, a structured questionnaire was used to collect quantitative data. The questionnaire was designed in line with the study objectives and research questions were delivered to the respondents. Both open and closed questions were used in the questionnaire. This research mainly focused on commercial banks. A commercial bank can be defined as a financial institution that takes in deposits from the general public and then grants loans for the roles of investment and consumption in order to make profit from interest rates charged. This research revealed that there is a strong relationship between poor credit cultures and limited financing of affordable housing. The recommendations included the government putting in place an efficient credit information system to broaden the information that credit institutions in Uganda use in the credit-risk assessment of potential borrowers. The government should work hand-in-hand with the various financial intermediaries in the country to come up with policies that stabilize the level of rigorousness in scrutinizing borrowers of housing loans.