Property development sector is more about people working under systems that give rise to physical assets. Its about daring entrepreneurs or out of the box thinking public officers taking up courage to seize opportunities created in the market in order to venture into real estate development with assistance of facilitators including relevant government officers and financiers.
The issue of supplying requisite stocks of affordable housing to Kigali city residents is a major challenge and opportunity in equal measure depending on how one looks at it. Kigali city needs at least 17,000 units affordable housing units annually according to Rwanda Development Board (RDB).
The biggest challenge it appears is lack of finance. If one looks at unit construction cost of US$30,000 for a basic unit say 75 sq metre decent home, then the property development sector needs to marshal at least US$1.0 billion to satisfy one year’s need.
This clearly is a huge amount of cash. The implication is that affordable housing is a dragon that will be very challenging to slay. However, the upswing is that affordable housing is actually the biggest investment opportunity in Rwanda’s property development sector for the next 2-3 years.
In the 9th edition The Property Magazine Rwanda uncovers the concerted efforts by stakeholders in provision of requisite stocks of affordable housing units. When one looks affordable housing ecosystem, there are approx.05 public offices that are participating in this pressing issue.
The first public office is ministry of finance and planning. Dr Uziel Ndagijimana the minister clearly has a huge task ahead to take leadership in tackling this huge challenging opportunity.
The second key public office is office of the mayor city of Kigali(CoK) which is the local authority tasked with offering all requisite permitting processing for all construction projects in Kigali in line with the city’s conception master plan.
When one talks about property development ecosystem a key public institution that works with all major stakeholders within public service to ensure formal investment registration and related forms of facilitation including issuing of incentives to developers is Rwanda Development Board (RDB).
The newly elected CoK mayor Marie-Chantal Rwakazina and RDB COO Emmanuel Hategeka are expected to exert significant influence on how property developers will take a position in supplying affordable housing stocks in the 2018-2020 fiscal year.
In that particular context, RDB’s and CoK’s work is expected to affect the development work by two key executing public institutions namely the Rwanda Social Security Board(RSSB) and the Rwanda Housing Authority(RHA).
RHA and RSSB are under intense pressure from stakeholders as relevant stakeholders to take a position in the provision of affordable housing units in Kigali and to some extent the secondary cities of Rwanda.
In this case, John Boscos Sebabi RSSB Deputy DG in charge of fund management and Eric Serubibi DG Rwanda Housing Authority (RHA) are expected to take the lead on this pressing issue.
Quick facts on Movers and shakers
Affordable housing provision is actually the biggest opportunity in the property development sector in the next 2-3 years. The opportunity offers developers a host of incentives including attractive margins worth over 20-30 percent, according to experts that The Property Magazine Rwanda talked to.
In order to supply one year’s worth of housing needed estimated at 34,000 units developers need to mobilize at least US$1.0 billion to fund construction excluding other costs.
Sinking US$1.0 billion in housing sector is a major challenge. Out of the box thinking is needed by key stakeholders especially public institutions to deliver the stocks needed since most developers don’t have this type of financial capacity. Given this context it is anticipated that the government of Rwanda will take the lead in the process.
Government’s intervention is expected to be executed through at least five public institutions including the ministry of finance and economic planning(minecofin), Rwanda Development Board(RDB), the City of Kigali(CoK), the Rwanda Social Security Board(RSSB) and Rwanda Housing Authority(RHA).
The minister of finance and economic planning (MINICOFIN).
Given the huge investment costs needed by developers to provide requisite stocks of affordable houses in the economy, minecofin is expected to play a key role in the challenging process through a numberof policy measures with Dr Ndagimjimana , holding a PhD and an msc in economics specializing in international trade, providing leadership and over sight of the process. The thinking by stakeholders over the last 5 years or so is that developers have previous perceived affordable housing sector as not particularly attractive. This type of perception highlighted through a number of public forums and meetings has necessitated the need by highest policy organs especially the cabinet of President Paul Kagame to develop a raft of new measures to attract more players into the sector.
The new policy measures passed by the highest levels of government has tasked minecofin to act as a central spoke driving the new process of incentive provision to affordable housing sector players.
Some of the incentives and related financial resources being looked at by minecofin includes long term tax breaks needed to lower cost of inputs that has potential of triggering reduction in development costs in order to make it very attractive for developers to come on board.
In order to walk the talk, minecofin has taken the crucial steps through resource mobilization efforts. The ministry has put in place a funding mechanism meant to offer financial incentives to developers to come on board.
Late last year minecofin, announced that it had marshalled a chest of US$350 million easily East Africa’s first and biggest affordable housing fund to offer incentives to developers. It remains to be seen the other steps that minecofin will take in the next 2-3 years to further ensure that at least first batch of 10,000 units come to the market.
The Hon.Mayor-City of Kigali
The City of Kigali (CoK) has a newly elected mayor. Marie-Chantal Rwakazina was recently elected to highest office at city hall following the resignation of her predecessor Pascal Nyamulinda. The issue of rapid turn- over of previous holders of the office seems to point out to fact that being at the forefront of Kigali city’s administration is a challenging and sensitive task.
However , the new mayor exuded confidence during her swearing in to take charge of Kigali city hall by reiterating that property development that underscores the city’s construction program will be one of her top priorities. Of particular concern, she pointed out the need to further develop additional recreational facilities for city of Kigali residents and visitors.
There are several sites earmarked by CoK under the Kigali city conceptual master plan that investors can use to develop recreational facilities for the city dwellers. However, these sites are largely lying undeveloped. This clearly show the opportunities awaiting discerning investors.
The designated sites includes kimuhurura round about, Kimicanga entertainment hub and Nyabugogo bus terminus among others.
Rwakazina points out and correctly so, that the CoK must be seen to be a metropolitan administration that is cable of attracting upwardly mobile residents and forward looking visitors.
In order to do so , the mayor says that recreational development efforts has to be in line with aspirations to turn Kigali into a leading business destination. The objective of this sort of focus is meant to support the growing business tourism efforts currently underway.
Mayor Rwakazina’s agenda is already booked full with activities meant to ensure that the city’s governance is top notch as one way of ensuring growth through service delivery.
When one talks about service delivery what comes to mind are some of the pressing issues left undone by previous mayors-affordable housing of requisite scale to lower income segments of Kigali being top of the agenda. Statistics indicate that over 75 percent of Kigali residents live in unplanned dwellings. Closely related to affordable housing provision is the pressing issue of waste management in the city and to some extent provision of adequate water and power.
Mayor Rwakazina is a councilor from Nduba the location of the city waste damping site. The Nduba site can be described as an eye sore and an environmental night mare for its residents. During her investiture speech as mayor she assured city residents by saying; “When I had discussions with residents of Nduba , they cautioned me. They said I should show them a concrete plan on this matter, and a plan that must be implemented. They told me that they hope I will visit them more often and brief them about the matter of waste management. I know it is a heavy task I gave myself but I have decided to make my contribution”.
Another major item expected from the new mayor is good governance something that must have contributed to high turn over of holders of the office. From her previous experience working with top public institutions, she says that she fully appreciates how best to administer the city. She says; “One of the promises is to hold regular dialogue with people in order to learn about their problems as well as jointly identifying solutions”, adding that, “being very close to the people is something I feel I will totally dedicate time as the mayor. The other thing is the manner in which one collaborates and works with other leaders. All the things I have mentioned must be achieved but together with the leaders of all the three districts that make Kigali, we must ensure coordination and harmony in what we do”.
She says that she will definitely create a team to deliver on her promises. “But I won’t forget that most of the work will be done by the other staffers. I don’t separate the leaders from the staffers. When I talk about a team, I know there is a team of leaders but we work with these other employees.”
COO-Rwanda Development Board
Emmanuel Hategeka is Chief Operating Officer (COO) of Rwanda’s premier public agency-Rwanda Development Board (RDB).
RDB acknowledges the real estate sector’s importance to Rwanda’s economy by stating that the sector contributes more than 7 percent to Rwanda’s national GDP; in 2013/2014, the sector grew by 9.4 percent due to sustained expansion in private construction and public works.
RDB states that investment in the sector has grown from US$ 100 million to US$ 480 million annually in the last 10 years, driven by population growth, an emerging and growing middle class, increased diaspora investment into Rwandan property markets and the government investment in infrastructure expansion and modernization of urban and rural infrastructure.
RDB further states that given Rwanda’s high paced growth, the demand for real estate, especially affordable housing, is on the rise. Factors attributed to growth of affordable housing sector is in particular and property development in general is increased population growth and an emerging and growing middle class.
Hategeka became RDB COO after serving at upper echelons of management within private and public sector. The issue of providing requisite stocks of affordable housing units will require out of the box thinking and Hetegeka working with other senior technocrats in government is expected to provide this sort of thinking.
Deputy Director General Funds Management-Rwanda Social Security Board
Mr. Sebabi is the deputy director general in charge of funds management at the Rwanda Social Security Board (RSSB). RSSB is Rwanda’s integrated public scheme managing pensions, occupational hazards, medical community-based health insurance (CBHI) and maternity leave benefits. All these services and products are geared towards improving members quality of life, thus promoting a bright future and sound health of its members who are approx. 500,000 and growing.
RSSB says that in order to maintain the effective value of its members’ contributions, it invests its reserve funds in various profitable projects.
The office of directorate of funds management at RSSB with John Bosco Sebabi at its helm is one tasked by RSSB top management to ensure it sources and invests in projects with high returns. RSSB, according to Mr. Sebabi can be termed as Rwanda’s foremost real estate development firm given the fact that it changed the face of Rwandan cities over the years.
The institution has developed some of Rwanda’s leading and most extensive real estate development projects spanning commercial as well as residential properties. RSSB is the promoter of Rwanda’s largest real estate project the US$500 million Vision City estate. With respect to affordable housing povision, RSSB has a number of sites that can be put to use to deliver potentially huge stocks of homes to the public in Nyagatare, Rwamagana, Nyanza and Kigali.
In that context Sebabi says; “RSSB has Batsinda and Kinyinya sites as real estate development pipelines for delivering some housing stocks adding that, “between the two sites over 6,000 units can be brought to the market for Kigali residents in the next 3-5 years”. RSSB says that it is solidifying plans through its investment processes with other stakeholders including Rwanda Housing Authority (RHA) and notable co-financiers to construct stocks of homes that are urgently needed by city dwellers.
Of particular interest for stakeholders would be how RSSB would stimulate the value chains in mass housing provision. This is due to fact that it appears that one of the major challenges facing provision of mass housing is the need of strengthening value chains in the sector. When one talks about strengthening the value chains in mass housing what comes to mind is having in place proper funding mechanisms as well as provision of cost effective construction technology.
Mr Sebabi says that RSSB is very keen to tackle both issues head on. “We are working to liquidate our physical assets in order to have liquidity needed for us to take new positions in the provision of mass houses. We are putting up plans to raise additional financial resources for instance through the local capital markets in order to build capacities needed to construct and supply more stocks. In addition, we are forward thinking by embracing new forms of construction technology in the projects we are promoting”.
Prior to his current appointment , Sebabi a holder of an msc in international economics, banking and finance from Cardiff University, Cardiff, Wales (The United Kingdom) was the director general of the operations directorate at the central bank of Rwanda(BNR) where he had a successful career spanning 13 years.
Director General-Rwanda Housing Authority
Eric Serubibi is the newly appointed director general of Rwanda Housing Authority (RHA).
RHA is a public agency under the ministry of infrastructure tasked with organizing the construction sector. A key component of RHA’s mandate is national housing development. It is within provision of national housing development that construction of affordable housing falls.
RHA’s major role will be to act as public sector master land lord to developers .RHA will buy land from local owners with a view to scale down costs incurred by developers. Potential sites includes Busanza, Nyamirambo, Kinyinya and Ndera in Kigali.
For instance, RHA acquired a 22 hectare plot in Ndera that was later transferred to Morrocan investors who have plans to construct over 5,000 units.
Within the secondary cities of Rwanda RHA has acquired sites in Nyagatare and Rwamagana with a view to facilitate developers interested in the sector. RHA’s intervention is such that a private developer who is ready to construct affordable houses on requisite scale does not need to acquire sites from private landowners in the market.
All that a developer needs to do is to get in touch with RHA and strike a site acquisition deal in order to facilitate the developer to take a firm position in provision of affordable housing in the market.