Kigali City Needs U.S. $2.5 Billion to Build Half a Million Houses


Photo: File photo ( In 2 East Africa)

Kigali City authorities face an up-hill task of urgently finding $2.5 billion over the next couple of years to build about a half a million affordable houses for its alarmingly growing population.

According to a report released by city authorities last week, Kigali urgently needs to build at least 344,068 new housing units over the next ten years for its residents, majority of whom experts say are living in deplorable conditions.

The report based on a six and half month survey conducted by European Union housing experts is full of daunting statistics that have left City authorities alarmed at the scope of the problem.

“This is far larger than what we originally anticipated and I am afraid the total cost of $2.5billion could double considering its more than housing but also water, electricity and other social amenities required,”

observed the Minister of Infrastructure, Albert Nsengiyumva in reaction to the report.

According to the report, as of 2012, at least 96% of city residents cannot access housing finance as it’s only for those with incomes of at least RWF0.9million, who only make just 4% of Kigali’s total population.

But even then, the report notes that that category too, categorized as ‘premium housing’ is under supplied and daunted by high mortgage facilities due to the high costs involved in putting up houses.

The report notes that city needs 1,601 dwelling units (houses) for residents earning above RWF2.5 million per month which is just 0.47% of Kigali’s total population.

In 2011, Kigali had 223,000 houses but the report notes that only a quarter (42,710 DUs) were in good housing condition and that 71,487 dwelling units could be up-graded to modern standards while 108,903 houses don’t deserve to be in the city.

The annual supply of houses from both the formal and informal sector developers is between 800 and 1,000 very low against 35,000 new residential houses needed annually.

As of now, Kigali has 42,710 houses in good habitable conditions and 71,487 others that are regarded as up-gradable.

Photo: Steve/ Rwanda Wikipedia

Even the houses built, the report notes, range from the minimum of $25,000 (Frw 15million), way above the capacities of an average Kigali resident. Yet despite that, this category needs 28,965 new houses between now and 2022 but only 17,190 of those houses will have been built by then indicating a shortfall of 11,775 apartments for this group by 2022.

Divisive categories

The experts group city residents in four main categories based on their financial earnings and goes ahead to propose four different housing categories in the city to accommodate each of the groups, an idea which was flatly rejected by the city authorities given the possible outcomes of such a move.

“We simply can’t have such a housing plan in the city, what we would prefer is a mix of the different social clusters,” said a city official.

According to experts, the city needs 43,436 houses for residents who are below the poverty line (earning below Frw 35,500 monthly) accounting for 12.62% of the total population in Kigali. These need total help as they can’t afford any form of modern housing and the Government would need to provide free houses for them under the social housing group.

The biggest group is for city residents earning between Frw 35,500 to 200,000 or US$ 329 per month who need about 186,163 houses. Experts note that this category – about 54.11% of the total – can access housing finance through a special payment model of ‘rent to own’ where tenants can pay rent until they reach the unit value amount. Under the same category, there are 71,487 houses available for up-grading.

The other category is for residents who need mid-range houses. These are residents earning between Frw 200,001 (US$ 330) to Frw 2,500,000 (US$ 4111) per month. It’s the second largest segment and it requires 112,867 houses financed through traditional mortgage funding.

The final group is the premium houses for residents earning above Frw 2.5million per month accounting for 0.47% and requiring 1601 dwelling units.

The experts propose three housing typology for Kigali named type A, B and C which would create a colonial err set-up of residency that contributed to unrest among residents causing pricey consequences. The types according to experts would accommodate locals according to their worth.

Other challenges

Fidel Ndayisaba, the Kigali City mayor was overwhelmed by the numbers of his residents who need houses and pointed out possible challenges including land and the funds to undertake such projects.

According to the Kigali conceptual plan, the city composed of three districts has a total of 35,590 ha of land available for development. Though enough, the estimated amount of money needed, over US$ 2.5billion (two entire financial years) is astronomical.

But experts from the EU and Donna Rubinoff, Kigali City Senior Advisor in Urban Planning, advised the leaders to look at the multiplier effect of the project with potential to create over 60,000 construction and other related jobs annually for the next five years.

The experts add that compared to Pakistan, which needs over 9million houses in the same period, “yours is no problem.”

Developers who the report hit at for failing to answer the current housing demand of the city, hit back accusing government of throwing the sector to wolves with the finance ministry increasing taxes on imported materials.

 

Related article:

Where is the comprehensive vision on Kigali City?

“The government needs to increase cooperation with the real estate sector because the target is high and needs a lot of attention and dialogue,” said Charles Haba, the president of Rwanda’s Real Estate Association.

In response, Minister Nsengiyumva challenged developers to come up with schemes that directly aim at addressing the real needs and Government will help.

read: Where Is the Comprehensive Vision On Kigali City?

 

 

Source:  KENNETH AGUTAMBA, 29 OCTOBER 2012, The New Times, allAfrica.com
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