While national income averages are widely used to measure affordability, they offer a limited reflection of households’ ability to invest in housing in reality. This is because traditional methods of calculating average incomes often exclude informal and non-declarable income sources. In an African context where majority of non-agricultural labour exists in the informal sector, there is need to urgently redress the ways in which we quantify (housing) affordability. Using formal income levels, only 4.4 percent of Uganda’s urban population have the purchasing power to afford the cheapest newly built house valued at US$ 20 00 ) (UGX 76 million). In 2010, however, there were an estimated 2.1 million people working in the informal sector in Uganda. This represented 59 percent of non-agriculture employment in the country and embodies a large percentage of the population with non declarable income. Incomes in the informal sector are hard, if not impossible to calculate effectively, and this leads to information asymmetries in how affordability is calculated and understood. There are also major data gaps in the way households earn, save and spend their incomes. This is primarily due to low levels of financial inclusion in terms of access to banking services. In 2014, only 17 percent of Ugandans aged 15 or older had access to a formal savings account, 16 percent had access to formal borrowing, and 44 percent had a bank account. A significant percentage of Ugandan households therefore draw on informal  financial instruments to manage their money and invest in housing.  The study sought to explore ways in which low and middle income households earn, save, and invest in housing. The study explores some of the key issues that underpin the housing investment decision-making processes of low and middle income households in the GKMA.

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