Rwanda Social Security Board (RSSB) is asserting its leadership position in the local property development sector by crafting and leading an investment consortium created to build 10,000 homes in kinyinya sector Gasabo district city of Kigali.
RSSB says that the Kinyinya mixed use development project consortium is created to offer sustainable solutions needed in the sector in bridging the huge gap between huge demand for homes and falling supply in the market.
RSSB says that the Kinyinya mixed use development project estimated to cost US$200 million is partly focused on provision of affordable housing. The consortium that signed an MOU for the project in September 2018 is composed of China’s broad homes industrial international, Rwanda Development Bank, B smart technology – a research and design firm – and the International Finance Cooperation (IFC).
Jonathan Gatera, RSSB DG says that the deal signed is result of protracted negotiations with consortium members that lasted over 12 months following 24 months of project concept development by RSSB.
“It’s an outcome of wider stakeholder engagement following concept development by RSSB. The project is meant to enable RSSB to cement its role in project development sector by taking a lead in its creation and development”,
says Mr Gatera.
Experts contend that in order to deliver on aspirations of delivering bigger and cheaper forms of affordable housing units in Rwanda there is need to strengthen value chain in the local construction sector given its week nature of delivery systems.
The local construction sector in its current form has not managed to deliver truly affordable homes needed given fact that construction costs especially inputs needed in construction such as building blocks are still on higher side.
In order to offer a solution, RSSB seems to have adopted this line of new thinking of strengthening value chain in the local property development sector to drive costs by assembling an investment consortium with a reputable builder armed with requisite capability of carrying out en mass construction.
The building partners assembled by RSSB are using rapid construction technology in the form of precast manufacturing and construction to save on cost and time with intentions of passing the reduction to end users.
Precast concrete that is adopted for use on constructing homes in kinyinya site is a construction technique where concrete which is a key component of construction is casted in a reusable mold or form which is then cured in a factory controlled environment and transported to site and lifted into place.
Done that way the technology is cheaper by more than 20 percent and takes less time by more than 30 percent compared to traditional use of concrete that is poured into site specific forms and cured on site.
In addition, given scale of the project in the local context, RSSB says that it brought in cheaper forms of long term development finance to enable financial closure of the project through striking a deal with International Finance Corporation the private sector development arm of World Bank.
A combination of cheaper technology by the project’s building partners and cheaper funding by IFC is meant to enable RSSB to deliver truly affordable housing stocks in the market in next 3-4 years.
Karin Finkelston, IFC’s vice president for partnerships, communication and outreach, says that, among other things, IFC intends to intervene in the market by facilitating risk reduction by developers and by increasing scale of investment in the sector by supporting the development of bigger well conceived projects with scale like the Kinyinya mixed use development project.
“Our intervention will also focus not only on developers but will also look at down- stream home ownership issues such as cheaper forms of mortgages to homeowners who often rely on expensive commercial bank loans to own homes in the market”,
says Karin during signing of the MOU.
IFC is upbeat that given its planned interventions Rwanda will be supported to build a viable affordable housing industry in the country.
Bo Huang, the vice president of Broad homes a leading builder of mass homes in China, added that the deal will address challenges that have previously hindered his firms entry into local market as it de-risks the sector and avails cheaper capital that would have otherwise been expensive to source.
“The signing of this deal makes it viable for our firm to enter the local market by introducing cheaper technology in housing technically known as precast concrete manufacturing and construction that we have developed over a long period of time back home in China”.
By Fred Oluoch-Ojiwah