Excerpt from Africa Housing Finance Yearbook 2014


Since 1996, Rwanda has seen a positive economic transformation, focusing on upgrading infrastructure, reducing poverty, privatizing state-owned assets, expanding its export base and relaxing trade laws. As of 2013, Rwanda managed to almost triple its per capita GDP in the last decade and has used donor funds efficiently. The country also posted strong performance under the IMF’s policy support instrument (PSI) and reduced poverty rates to 45 percent in 2010/11, from 57 percent in 2005/06. A low public debt burden, as a result of debt relief from the HIPC and MDRI programs, also supports the ratings. Additionally in 2008, the capital Kigali was the first city in Africa to be awarded the Habitat Scroll of Honour Award in recognition of its “cleanliness, security and urban conservation model”.

Rwanda is classified as a low income country, with the majority of its population still engaged in agricultural and mining activities. According to the Fourth Population and housing census conducted in 2012, only 16.5 percent of the total Rwandan population lives in urban areas. This represents a slight decrease

Read More »

Excerpt from Africa Housing Finance Yearbook 2014


Since 1996, Rwanda has seen a positive economic transformation, focusing on upgrading infrastructure, reducing poverty, privatizing state-owned assets, expanding its export base and relaxing trade laws. As of 2013, Rwanda managed to almost triple its per capita GDP in the last decade and has used donor funds efficiently. The country also posted strong performance under the IMF’s policy support instrument (PSI) and reduced poverty rates to 45 percent in 2010/11, from 57 percent in 2005/06. A low public debt burden, as a result of debt relief from the HIPC and MDRI programs, also supports the ratings. Additionally in 2008, the capital Kigali was the first city in Africa to be awarded the Habitat Scroll of Honour Award in recognition of its “cleanliness, security and urban conservation model”.

Rwanda is classified as a low income country, with the majority of its population still engaged in agricultural and mining activities. According to the Fourth Population and housing census conducted in 2012, only 16.5 percent of the total Rwandan population lives in urban areas. This represents a slight decrease from 2002 (16.9 percent). Rwanda’s percentage of urban dwellers is one of the lowest in Africa. According to the 2012 census, 83 percent of Rwandans now live in rural areas, but the balance is shifting. According to the City of Kigali’s Development Plan, by 2020, Rwanda’s population will reach 16 million people with 30 percent of that total living in cities. Kigali will take the majority of this increase.

This will have consequences for urban policies and the construction of housing. Kigali will be most affected. Already informal settlements in Kigali make up about 62 percent of the land area and house about 83 percent of the city’s population.

In 2013, Rwanda’s real GDP growth slowed down to 4.6 percent from 7.3 percent in 2012 due to lower than expected performance in agriculture and aid-related delays in the implementation of strategic public investments following the suspension of budget support disbursements in 2012. Growth is projected to recover to seven percent and 7.4 percent in 2014 and 2015 respectively due to the recovery in services, improvement in agricultural productivity and sustained implementation of the public investment programme. As of August 2014, inflation decelerated to 0.9 percent from 3.7 percent in December 2013 and is expected to be around 3.2 percent in December 2014.

In the first quarter of 2014, Rwanda’s economy grew by 7.4 percent in and is expected to further improve to six percent growth rate in 2014. Coffee, tea, minerals and tourism are the main sectors. The economy is dominated by services, which contributes about 45 percent of GDP, compared to 33 percent and 15 percent by the agricultural and industrial sectors respectively. This sector grew at four percent in 2013, built on expansion in trade, transport and telecommunication, and increases in finance and insurance.


Access to finance

Access to finance has been steadily improving. According to the 2012 FinScope Rwanda survey, financial inclusion has improved by almost 50 percent between 2008 and 2012, with only 28 percent (1.3 million adults) excluded. The improvement in access was caused by a significant increase in the proportion of adults who were formally served: in 2012, 42 percent of adults used a product or service from a formal financial institution and the banked population increased 23 percent.

During the first half of 2014, one new commercial bank and one new microfinance bank started their operations. The Rwandan banking system now has 16 financial institutions as listed by the National Bank of Rwanda up from 14 in 2012. These are made up of ten commercial banks, Kenya Commercial Bank (KCB), Cogebanque, I&M Bank Rwanda Ltd ( formerly Bank Commerciale du Rwanda BCR), Banque de Kigali (BK), Banque Populaire du Rwanda (BPR), Guaranty Trust Bank Rwanda Ltd (formerly Fina Bank), Equity bank Rwanda Ltd, Ecobank, Access Bank Rwanda Ltd (formerly Bancor) and Crane Bank Rwanda, one commercial bank which merged with a mortgage financing bank (Rwanda Development Bank merged with Housing Bank of Rwanda in 2011), microfinance banks (Urwego Opportunity Bank, Agaseke Bank, AB Bank Rwanda, and Unguka Bank) and one co-operative bank (Zigama CSS).

As at June 2013, the Rwandan commercial banks continued to dominate the banking industry with 80.4 percent of the total banking system’s assets while other specialised banks (microfinance banks, development banks, and cooperative banks) account for 19.6 percent. In spite of that, the Rwandan banking system remained concentrated, with the four largest banks together holding over 54 percent of the total system assets. One major bank is holding 32 percent of the total commercial banks’ assets while the minor bank has 3.4 percent of the total commercial bank sector’s assets.

As at June 2013, three sectors (Commercial and Hotels, Mortgage industries and personal loans) hold a share of 79 percent of all outstanding loans. The same sectors hold a considerable proportion of Non-Performing Loans.

Bad loans are mostly concentrated in the Mortgage and Commercial and Hotel sectors of the economy, which together accounted for about 69 percent of total Non-Performing Loans. Interestingly, it is the same two sectors that account for the highest loans in the banking sector, which suggests that, if bad loan problems were to spiral out of control, then there’s a high possibility that they could contaminate the whole banking sector. However, despite the year over year improvement in asset quality, the national bank still thinks that the ideal level should be five percent and below.

Irrespective of the above, the sector’s performance in terms of growth and stability continued to improve. The industry balance sheet measured by total assets grew by 17 percent from RWF1 510.7 billion end December 2013 to RWF1 767.6 billion end June 2014. This growth is mainly attributed to the loans to the private sector which increased by 7.2 percent (including loans from the other specialised banks such as BRD and microfinance banks) from RWF843.9 end December 2013 to RWF904.5 end June 2014. On the liability side, deposits grew by 20.6 percent from RWF1 019.9 billion end December 2013 to RWF1 230.2 billion end June 2014. The sector remains resilient as demonstrated by financial soundness indicators: the capital adequacy ratio (CAR) stood at 23.6 percent end June 2014 compared to 23.1 percent in December 2013, well above the regulatory minimum requirement of 15 percent.

In a bid to mitigate the housing shortage, Rwanda amended its mortgage laws in 2011 to facilitate access to home loans. As a result, banks have reduced down payments from 70 percent to 30 percent, and extended the duration of mortgage loans to up to 20 years, further stimulating housing demand. There appears to be an adequate supply of high end, luxury homes in Kigali. Property owners have complained of falling rents and/or stagnant rental properties in the newer, high-end developments of Kigali. Commercial real estate developers have dramatically changed Kigali’s skyline over the past five years. Significant investment opportunities should continue to arise as the City of Kigali continues to implement its development master plan

However while construction remains the fastest growing sub-sector of the Rwandan economy (accounting for 27.2 percent of total turnover of the industrial sector), supply of affordable housing to the growing urban population remains a major challenge. According to a state of housing report by the City of Kigali (CoK), only about half of the existing housing units in the city can be categorised as habitable while the rest are in urgent need of upgrade.

One major constraint to the development of real estate in Rwanda is lack of mortgage finance at a reasonable rate of interest. In 2012, it was estimated that 96.2 percent of households in Rwanda had no access to housing finance. There has been a clear increase in the provision of mortgage finance since 2004 with the current supply of mortgage finance estimated between RWF64.7 and RWF84 billion. The numbers of banks offering mortgage finance have also slightly increased.

As the development arm of the government of Rwanda that is mandated to ensure social-economic development of the people, the Development Bank of Rwanda (BRD) plays a major role in ensuring that Rwandans are properly housed through financing of large-scale real estate projects as well as individual home buying and construction. As such, BRD started mortgage financing in 2011 after acquisition of the former Housing Bank of Rwanda. This was partly aimed at ensuring the continuity of its mission. The acquisition of the Housing Bank enabled BRD to launch into the retail banking segment that supports the mortgage financing by giving mortgage loans on individual basis. At the time of the acquisition, the mortgage portfolio was RWF8.7 billion. This has since grown annually by 34 percent and in 2013, the bank approved mortgage loans amounting to RWF5.7 billion. The money went into financing of acquisition and construction of 155 residential houses. This year (2014), the Bank will invest RWF5 billion in mortgage financing for affordable housing targeting mainly salary earners in both low and middle income categories

BCR, Cogebanque, Ecobank, Access Bank, KCB and BK are also mortgage lenders. From 2004 to 2007, mortgage lending almost doubled from 1.8 percent mortgage debt to GDP to 2.6 percent. Rwanda’s mortgage market in 2009 was worth between RWF33 billion and RWF47 billion (US$60 million and US$80 million), a small number compared to its estimated potential demand of more than RWF200 billion (US$340 million). In 2009, a mortgage finance shortage arose as a result of difficult lending conditions. A domestic liquidity squeeze caused outstanding credit to the private sector to fall by 1.8 percent. This contributed to a fall in housing prices, by as much as 20 percent in late 2009. As a result of these liquidity problems, BCR suspended its mortgage product in early 2009, but resumed lending later in the year.

Since then, the mortgage market has been growing rapidly. KCB introduced its mortgage business in 2011. In June 2011, the bank reported it had approved loans to a value of RWF3 billion (US$5.059 million), and by June 2013, its loan book had grown to RWF14.2 billion (almost US$22 million). In June 2013, the bank announced a further injection of RWF7 billion (US$10.8 million) into the mortgage market.

Rwanda’s mortgage market faces a number of challenges, the most critical being the lack of liquidity. Long-term finance for mortgages as well as for microfinance has been a constant problem. Part of the solution lies in selling long-term debt to the market, given the growing demand for such from good companies in an economy with limited investment opportunity. The modestly sized Rwandan stock market, in existence since early 2008, has provided some facility for these listings. This includes BCR’s 10-year note issue worth RWF5 billion (US$8.4 million). As a result, the BCR is now offering 20-year loans, funding mortgages with a mix of short-term deposits (65 percent) and the bond issues proceeds (35 percent). BCR also has a construction loan of seven to 15 years. BCR’s growth has been substantial – in 2011 BRC posted a net profit of RWF2.9 billion, up from RWF2.8 billion in 2010. KCB shares have also been listed on the Rwanda stock exchange as they have been through cross-listings across the East Africa Community.

A further challenge was access to land titles however according to the World Bank’s 2014 Doing Business Report, Rwanda made transferring property easier by eliminating the requirement to obtain a tax clearance certificate and by implementing the web-based Land Administration Information System for processing land transactions. This will greatly improve the prospects for access to finance for the rural population and SMEs, given the importance of land as a source of collateral for lending.

The microfinance sector in Rwanda is comprised of 493 institutions including 13 limited companies and 480 savings and credit cooperatives (SACCOs) of which 416 are UMURENGE SACCOs[1]. The sector plays a critical role in fostering economic development by offering financial services, particularly loans and opportunities for savings to economic agents with limited access to commercial banks services. The sector’s asset size registered an increase of 14.5 percent between December 2013 and June 2014, rising from RWF128.7 billion to RWF147.4 billion. The increase was mainly driven by liquid assets and gross loans which increased from RWF42.1 billion to RWF53.4 billion and from RWF73.5 billion to RWF81.2 billion, respectively.

Rwanda has a well-established micro-lending sector, with 22 MFIs reporting to the Mix Market in 2013. Between them, they have issued US$128.1 million in loans to 80 413 borrowers, and have collected US$56.5 million in deposits from 285 603 depositors. According to the African Economic Outlook, 497 savings and credit co-operatives and MFIs operate in the country, together with 49 non-bank financial institutions. The government has enacted facilitative, specialised microfinance laws and some housing microfinance lenders are emerging. For example, COOPEDU-Kigali, a local MFI, is offering housing microfinance loans averaging US$350 for a term of one to five years. Urwego has also partnered with Habitat for Humanity to offer home improvement loans.

The Global Financial Inclusion (Global Findex) Database shows that loans for home improvement and construction are more popular than loans for home purchase, suggesting the importance of the microlending sector. In 2011, eight percent of the top 60 percent of income earners over the age of 15 reported having an outstanding loan for home construction, versus 1.8 percent for home purchase. This was similar for the bottom 40 percent of income earners over the age of 15: 6.5 percent reporting having an outstanding loan for home construction, versus 1.9 percent for home purchase.



FinScope Rwanda 2012 found that 87 percent of adults are from households involved in farming activities. In Kigali City, 26 percent generated their income from piecework, 19 percent from business, 11 percent from government employment and 15 percent earned an income from farming activities. That said, 44 percent of adults reported having more than one source of income. Some three percent of adults do not generate an income, but depend rather on government grants, remittances or household transfers to subsist.

As a result, access to mortgage finance is limited by household affordability as well as the irregularity of incomes among some borrowers. Further, deposit requirements of up to 30 percent make mortgage finance inaccessible to the majority of people without formal employment.

An intervention launched in 2012 promises to ease some of the affordability challenges. Home Finance Guarantors Africa Reinsurance Limited, a South African company, has been working with Soras Assurances Generales Ltd in Rwanda to establish collateral replacement guarantees. Effectively, the product is an insurance cover equivalent to a loan deposit – with the cover. The borrower does not have to pay the deposit, and the lender can offer a 100 percent loan without compromising its balance sheet. The lender remains in an equivalent risk exposure as it would have with a cash deposit. In July, Soras announced a partnership with BCR and KCB to offer the Collateral Replacement Indemnity to their mortgage clients.

Even so, the price of formal housing is out of reach of the majority. A 2012 study of housing in Kigali found that a well-located, formal, developer built house costs about RWF70 million (about US$116 000). This is far out of reach of the majority, in a country where an estimated 90 percent of the population earns less than US$60 a month. Low and middle income households rather build their housing independently – often incrementally – on the peripheries of the city, generally at a cost of between RWF10 million and RWF30 million (about US$17 000 to US$50 000) including land and construction. Plots in peri-urban areas are bought at low prices, a 600m2 or more plot can be purchased at RWF1 million to RWF3 million (about US$1 500 to US$4 600).

Real estate development and construction have served as key growth sectors over the past three years. Population growth of three percent per annum combined with an emerging middle class and diaspora investment should continue to bolster some segments of Rwanda’s real estate sector. Rwanda’s low and middle income housing market remains under-served. Total housing needs in Kigali (2012-2022) are estimated at 458 265 dwellings, requiring construction of 344 000 new units. The Kigali Conceptual Master Plan provides the framework for housing development in Kigali. According to the plan, 35 590 hectares of land are available for potential growth in Kigali.

Much of inner city of Kigali (Nyarugenge district) has been re-zoned in the District Masterplan, with an emphasis on larger plots and multi-story multifamily residential buildings – new developments as opposed to in-situ upgrading. Accordingly, no permits are being issued for construction, including home improvements, unless the house plan and underlying structure is in full compliance with the new zoning regulations, which includes a larger minimum plot size ranging from 250m2 to 1 000m2 and higher minimum floor-area ratios. In the other two city districts, Masterplans are being developed, and no new construction permits are being issued by the district authorities until that process is complete. Households unable to afford to comply with the regulations are selling their stake and moving to the periphery.

Construction costs are high in Kigali, between US$400 and US$600 per square metre, because of the high cost of materials. The cost of steel, glass and cement tripled from 1994 to 2011 (cement increased from RWF3 000/bag (US$4.83) to RWF10 000/bag (US$16.09) in 2012 and the materials are mainly imported (Rwanda imports US$64.6 million worth of materials a year). Due to the lack of skills in the country, many construction contracts are sourced from outside the country. In an effort to promote the use of local materials, Rwanda’s new tax regime, implemented in early 2013, imposed a 25 percent tax on imported construction materials. In January 2013, PPC Cement acquired a 51 percent equity stake in CIMERWA Limited, located in the South-West of Rwanda. PPC’s investment totalled US$69.4 million. The move will expand the cement manufacturer’s capacity five-fold. CIMERWA is the only integrated cement producer in Rwanda with installed capacity of 100 000 tons per annum, with a well-established and recognised brand. In response to the fast growing demand for cement in the region, CIMERWA is investing in a new 600 000 tons per annum cement plant with the latest technology. The project is well advanced and construction completion is targeted for the second half of 2014, with production expected to commence during the first half of 2015.

Rentals are high. According to a World Bank study, a two-bedroom 70m2 apartment (formal sector housing) can be rented out for as much as US$1 000, although these are typically aimed at expats or Rwandan diaspora. Most low to middle income earners cannot afford such rents, as their incomes are too low. They mostly live in informal housing where the rents are more affordable but basic infrastructure is typically inadequate and unsanitary. Rentals are volatile and can be raised anytime if demand is high, which is why landlords usually do not get into long contract periods that are over a year. At the bottom of the income pyramid, the rent for a 10m2 room could be as high as RWF20 000 (US$33) for a household that earns RWF50 000 to RWF60 000 a month.


Housing supply

A 2012 study of the Kigali Housing Market calculated that the city’s total housing requirements by 2022 would be 458 265. Towards this, 42 710 of the city’s existing stock was upgradeable and 71 487 was in good condition, meaning that the total requirement for new stock by 2022 was 344 068. This suggested an annual required delivery rate of just over 34 000 units. The study also noted that the bulk of the demand, 78 percent, was for households with a monthly income of less than RWF300 000 (US$463) a month. To address the demand, the study proposed the construction of 1 601 high value units, targeted at households earning above RWF2.5 million (US$3 864) a month; 112 867 mid range units, targeted at households earning RWF200 001 (US$309) to RWF2.5 million; 186 163 affordable units, targeted at households earning RWF33 501 (US$51) to RWF200 000; and finally, 43 436 fully subsidised social housing units, targeted at households earning less than RWF330 500 a month. The high value and mid range units would be financed only with mortgages, and a rent-to-own mechanism would be applied to the affordable units.

In 2013, the city authorities decided to prioritise af­fordable housing in the city’s five-year development plan, which was recently unveiled by the city council. The plan has set out tough measures to allow households below the poverty line (a monthly income of less than RWF35 500) to get decent shelters. This cat­egory of Social Housing accounts for 12.62 percent of the city’s population with a need for 21 718 units. “It has been recommended that this type of demand be addressed by the government through a subsidy sys­tem,” elaborates the development plan. City officials note that the house­holds earning between RWF35 500 to RWF200 000 a month constitute the larg­est part of the population in need of af­fordable housing; estimated at 93 081 dwelling units (54.11 percent).

These households have some pay­ment capacity and could access a spe­cial rental market which may include for instance rent-to-own leasing mech­anisms. In this category the report on the Housing Demand in Kigali recom­mends upgradable housing to be in­cluded.

Another subcategory is mid-range housing with 56 433 units (32.8 percent) needed. It includes a wide variety of income segments from RWF200 001 to RWF2.5 million a month. Most house­holds belonging to this category may be eligible for traditional mortgage fi­nancing. The last group categorised as Premi­um Housing requires a supply of 801 dwellings (0.46 percent) for the highest earn­ers with a monthly income of more than RWF2.5 million

In a bid to cope with the issue, au­thorities of the city say that 1 744 hect­ares for affordable housing units will be secured within the five-year period. BRD and Shelter Afrique are among the organisations to invest in such projects. At the same time, 5 000 affordable housing units are set to be developed at five sites: 3 000 units to be devel­oped in Akumunigo and Rugarama of Nyarugenge, and 2 000 units in Gacu­liro and Batsinda of Gasabo. So far, the Rwanda Social Security Board (RSSB) has expressed interest in investing in the project.

Kigali’s acute housing shortage could ease as banks start offering insured loans covering as much as 90 percent of the cost of a house. The City of Kigali also recently announced the ease of acquiring construction related permits, cutting the number of procedures an investor had to go through to get permits from 13 to four during the period 2014-2015. The reduction in procedures is also expected to reduce the time it takes to acquire the permits from 104 days to 25 days.

In mid-2013, Kigali City announced that it was renewing plans to issue a municipal bond to raise funding for housing construction, in terms of its housing development objectives. The original plan to issue a bond had been developed in 2009, but had been put on hold because the city’s revenue collection was too low. However, the pressure for delivery has led the City to work with the Capital Markets Authority to draft a regulatory framework to facilitate the issuance of the bond within the year.

In 2013, Rwanda’s insurance sector saw the entry of a new company, UAP Holding Ltd. In July 2014, the company announced that it would invest RWF34 billion in the local real estate industry in a bid to ease the housing shortage that Rwanda faces, especially in the City of Kigali. As already observed, demand for both residential houses and office space in Kigali is increasing, with most commercial buildings in the city doubling roles as retail stores and office rentals. For UAP, the project in Kigali is expected to boost its earnings from investments as insurers look at real estate to deploy their own cash and premiums paid by customers.

At the national level, the Rwandan government has undertaken a pilot housing project to address the needs of public servants. The Affordable Housing Project for Government Employees aims to act as a model for creating more sustainable affordable human settlements. Low and middle income government employees (with an income of between RWF100 000 and RWF350 000 (US$154 to US$540) are targeted and the project will develop about 200 two- and three-bedroom units in four storey buildings. Another government project involves the construction of houses for 30 822 families living in disaster prone areas. The evacuation plan is expected to cost the government RWF6.5 billion (US$10 million) and new units will be made available to evacuees for RWF9 million (US$13 910).

Barring a few development entrepreneurs experimenting with houses in the RWF40 million to RWF50 million (about US$62 000 to US$77 000) range, most developers are building homes priced above RWF70 million. The costs of land and materials, and limited access to finance, were cited as the reason for the high costs of the houses. In addition, capacity remains limited among developers. Many of the housing projects undertaken are small (five to 100 houses). The Rwanda Social Security Board (RSSB) is the largest developer in Rwanda and built about 700 units in seven years (2004 to 2011), 250 of which were subsidised housing targeted at low to middle income earners.

In November 2013, RSSB started on yet another project dubbed “Vision City” which is the biggest residential housing project in Rwanda to date. It is set on a prime 158 hectare tract of land in Gaculiro, Kinyinya Sector of Gasabo district in Kigali City. The estate is adjacent to another RSSB estate named “Vision 2020 Estate” and approximately three kilometres from the proposed Kigali’s Central Business District (CBD) at Muhima and six kilometres from Kigali International Airport. The whole project will consist of over 4 500 units in different configurations ranging from luxury villas to apartments to be built in four phases over seven to eight years. Phase 1 is made up of 504 units to be built on 33 hectares. Construction work is expected to last 21 months and the total cost for phase 1 is US$106 million which will be financed through a combination of debt and equity. Phase 1 of Vision City will also feature a town centre made up of retail shopping space, recreational and leisure spots (restaurants, sports facilities and club house), a three star hotel, office block and a medium size convention centre with a capacity of 1 000 people. Construction of the town centre is expected to start in May 2014 at an estimated project cost of US$50 million.

The second RSSB project will see development of houses for middle income earners in Kinyinya.  This will be the second biggest residential housing project consisting of 3 672 units of one to four bedrooms set out in four storey apartment buildings. This layout will maximise the available 100 hectares marked out for development of the estate, resulting in a housing density of approximately 60 units per hectare. Kinyinya housing estate will have commercial, entertainment, recreational and public transport amenities for use by its residents. It will be built in three phases over seven to eight years. The units will have lower price points than Vision City units and will cater mostly to middle income buyers. The total expected cost of phase 1 of Kinyinya is US$57 million financed through a combination of debt and equity. RSSB also plans to construct 100 low cost housing units on the outskirts of Kigali.

Shelter Afrique plans to invest US$10 million in low cost housing. It has co-financed with a local bank for the construction of a 168-apartment estate in Kinyinya.

The reality is that the majority are unable to afford the housing that is delivered, often whether or not state support is involved. With the new District Masterplans, informal, self-build activity has ground to a virtual standstill, and those without affordability to comply with the inner city standards are forced to move to the periphery. There, they face the challenge of access to serviced land, as the government makes very few plots available.


Property markets

The residential real estate market in Rwanda is growing, with more developers entering the market. From a buy-to-let perspective, Knight Frank real estate consultancy suggests a seven percent yield can be achieved. The cadastral system is new, however, and resale market transactions are only just beginning.

The National Land Tenure Reform Programme has recently been launched to improve the deeds registry system. The programme was launched in Rwaza Sector, in the Western Province. The government of Rwanda has purportedly issued hundreds of titles to farmers across the country. The Rwanda Natural Resources Authority expects to complete the registration and issuing of deeds across the country by December 2013. As of September 2013, The Rwanda National Resources national coverage had reached 6.3 million plots out of the targeted 8 million. Registration of all land in Kigali City was expected to be completed by end of September last year while the national coverage was to be completed by 2013. It has not yet been possible to verify if this did, in fact, occur.

Rwanda once again emerged among the best performing countries according to the World Bank’s 2014 Doing Business Report, becoming 8th and 85th in registering property and dealing with construction permits respectively. Rwanda made dealing with construction permits easier and less costly by reducing the building permit fees, implementing an electronic platform for building permit applications and streamlining procedures. Furthermore it is reported that registering property was made easier by eliminating the requirement to obtain a tax clearance certificate and by implementing the web-based Land Administration Information System for processing land transactions requirement to obtain project conditions from the water and sewerage provider.


Policy and regulation

Housing in Rwanda falls under the responsibility of the Ministry of Infrastructure, within the Habitat and Urbanism sub-sector. Rwanda’s National Urban Housing Policy acknowledges the lack of affordable housing finance products and calls for facilitation of greater access for lower and middle-income groups. The country is generally regarded as a top reformer in making its business environment more investor friendly.

Some of the major policies include the Vision 2020, a broad policy that, among other things, aims to encourage capacity building for human resources and encourage investment to enable economic growth. The Economic Development and Poverty Reduction Strategy is another policy that targets human settlements and the management of public property through improving planning and development, and sustainable use of land and the environment, among many other objectives.

An affordable Housing Policy is currently being developed and a draft is already available. The policy is a commitment of the Government of Rwanda to support the supply of housing which is affordable to people within all income segments, and the creation of an enabling environment to do so. It will set the framework for private sector involvement, and private sector enhancement, along with addressing all social, environmental and economic principles to establish affordable housing support.

A modernised law on mortgages has made it easier for Rwandans to access home loans by improving the risk parameters under which banks operate. Banks can now sell the loan security in the case of defaults, and the down payment requirements have been lowered to 30 percent, and lower, with the new collateral replacement guarantee. A new banking law has been published, and the process to update the prudential regulations started towards the end of 2009. An amendment to the Social Security Act of 2006 resulted in the establishment of an umbrella, compulsory contribution provident fund to which citizens and government will contribute. According to reports, the fund will be used to help develop affordable housing.



Housing finance demand, both mortgage and microfinance, in rapidly urbanising Rwanda has barely been met, and there is great potential for growth. More players are needed in the market to improve accessibility. As a top regional performer in reforming the macroeconomic environment, the state has performed its role as a market maker well. For example, the incorporation of the Rwandan Housing Bank into the BRD has created liquidity.

Rwanda has made tremendous progress in registering property, and this shows the commitment of the government to improve the property market by making it more inviting for developers.

Given Rwanda’s high poverty rates, the mortgage market will not meet the needs of the majority. Housing microfinance offers an important opportunity and the nascent HMF lending practices serve as a pointer to this enormous potential. Further action by the state to enable incremental construction by providing serviced stands, relaxing plot sizes and building regulations, and promoting the use of local building materials would all contribute towards growth in this sector and meeting the needs of many Rwandans. Clear action towards creating a good investment climate by the state, growing urban demand and positive economic growth has already made a good start and provides substantial opportunity for the growth of housing finance in this country.

Rwanda can also learn from Nairobi by becoming a City with Taller Buildings If this transformation can be managed, “going up in height” will allow valuable land value to be realised which, in turn, can pay for funding those adversely affected. A good strategy is to begin by encouraging and assisting the families who already own single story units to make their houses taller—ground plus two or even three floors. This densification of buildings is one of the least expensive ways to add to the supply of housing, avoiding the pitfalls of large-scale government provision of housing while increasing density in the centre of the city. Denser construction in the city centre also has the benefit of providing a more desirable financial position for the many families who now reside in single story buildings. Such urban transformations, like the process of urbanisation itself, are highly dislocative and in such a context it is always desirable to have some who gain from the process. Existing owners, who have recently had their properties regularised, could well be such beneficiaries who would lend support to such a transformation. Becoming a city with taller buildings will also allow the city to be more productive. Taller buildings will allow one of the most important assets in the economy to be priced much more effectively; and it will allow the city to cope more effectively with the coming population shift. The international experience indicates that communities must be involved, and the process should begin with situations in which current residents gain. Examples of how this has been done effectively, and implemented in government policy in India and Thailand, are described in a study of a World Bank-funded project in Mumbai, in the Water and Sanitation Programme report (World Bank, 2006), and Buckley and Kallergis (2014), respectively.

The Rwandan Government can embark on providing infrastructure to places where housing can be developed, and make public land available for development. However the public sector should not buy land for development. The role of the provident fund as providing a fiduciary role for retirees is extremely important. Investments in real estate can be a significant and important part of such investments, but not at the cost of imposing the costs of subsidies on the pensioners. Such systems have almost always resulted in opaque transfers of tax liabilities as well as financial ruin for many elderly retirees. Similarly, the Rwanda Housing Authority’s expenditures for the poor need to be carefully designed. Financing houses that cost US$40 000, will do little to address the housing affordability problem.

The country can also focus on ways to reduce the high interest rate, instead of having the public sector take undue risks – such as investing in developing cities in the slowest growing areas in the country. A success story was in Ghana with the support of the World Bank, the Housing Finance Company Bank was assigned to help the provident fund make housing finance available and is now one of the most successful commercial banks in the country. The way funding was structured in Ghana helped maintain the financial solvency of the provident fund, the National Social Security Fund (NSSF), while also making funds available to modest income earners. It involved making loans available at interest rates slightly higher than the inflation rate and indexing the payments so that the NSSF would not receive negative inflation-adjusted interest rates. Many other options are also available to avoid the very high interest rate margins which now plague the financial sector and which will almost certainly prevent the kind of urban transformation needed. For example, the Thai government runs a programme that provides mild interest rate subsidies to redevelop low income communities, which is very effective.



Access to Finance (2012) Gender Statistics Publication, Vol. 2, 2012.

Africa Pulse Volume 9- World bank (2014).

Buckley R., (2014) Affordable Housing in Rwanda: Opportunities, Options, and Challenges: Some Perspectives from the International Experience.

Buckley R. and A. Kallergis 2014. A Review of the Asian Coalition for Community Action Approach to Slum Upgrading. The World Bank, Washington D.C.

City of Kigali Development Plan 2012/13.

Cuevas, M. (unpublished, 2012). Housing Market Demand, Housing Finance and Housing Preferences for the City of Kigali. Presentation prepared from the Kigali Housing Market Study.

Demirguc-Kunt, A. and Klapper, L. (2012). Measuring Financial Inclusion: The Global Findex. World Bank Policy Research WP 6025.

DFID (2010). Access to Finance Rwanda. Programme Document.

The East African, 2014 Assessing the Consumption, Production, Imports and Exports Status of Cement Industry, 30th Aug 2014.

IMF (2011). Rwanda: Financial System Stability Assessment. IMF Country Report No. 11/244.

Ministry Of Environment and Lands: Environment And Natural Resources Sector ( Land Sub-Sector Strategic Plan 2009/10- 2013/14).

Mathema, A. (forthcoming). Kigali, Rwanda: Housing Market Study. The World Bank, 2012.

National Bank of Rwanda (2013). Quarterly Bulletin, end March 2013.

National Bank of Rwanda (2012). Activities Report, January – July 2012.

National Bank of Rwanda. Financial Stability Report 2012 – 2013.

National Bank of Rwanda. Annual Report (July 2012-June 2013).

National Institute of Statistics of Rwanda, 2014.

Rwanda Housing Authority (2011). Affordable Housing Development Project in Rwanda.

Rwanda Ministry of Infrastructure (2009). Updated Version of the National Human Settlement Policy in Rwanda.

Rwanda Economic Outlook (2014).

Shah, A. (2006). Rwanda. See

Standard and Poor’s Rating Report (2013).

World Bank (2012). Doing Business 2013: Rwanda.

World Bank (2012). Kigali, Rwanda: Housing Market Study.

World Bank (2012). Doing Business 2014: Rwanda.




[1] UMURENGE SACCO is a government initiative where at least one SACCO was set up at each Administrative Sector (UMURENGE). This was done to increase financial inclusion of the rural population (Source: UMURENGE SACCOS STRATEGY, Financial Sector Development Secretariat Ministry of Finance and Economic Planning Government of Rwanda)