While SSFR plans to spend Rwf50.6 billion in this year’s investments, it has already built and sold over 250 units of low cost and 300 units of medium cost

The Social Security Fund of Rwanda (SSFR) has been urged to venture into housing, as a way of investing savings. The scheme proposed to be called the, ‘Home Ownership Scheme,’ will aim at facillitating Rwandans own an asset in their homeland, which according to the ‘Actuarial Consulting Group’ (ACG), may prove to be one of the most valuable investments in their lifetime.

Actuarial Consulting Group’ (ACG), is a Singapore based company which was contracted to carry out a study in December 2007, to determine the SSFR’s funding status and whether it is financially sustainable.

The findings which were also expected to guide the institution in its modernisation process were presented last week to all SSFR stakeholders at Hotel La Pallise, Nyandungu.

The report said that, "As a whole, home ownership should help in the overall social, political and economic stability of the country.”

"However, it appears that the current prices on homes built by the pension body are misaligned with the income of most SSFR members making home ownership out of reach for majority of its members,” says the report.

According to findings there is an increased demand of housing in Rwanda far exceeding the rate of supply especially in the major cities.

Findings indicate that, Kigali is in need of over 100,000 housing units each year.

Quoting the Financial Sector Development Programmes Draft Report for 2007, the trend is expected to continue into the foreseeable future if not addressed.

In the recent past, SSFR has built and sold over 250 units of low cost and 300 units of medium cost. These low and medium cost houses are priced at Rwf8m and Rwf40m respectively.

Currently, about 750 units of low cost and 282 units of high cost have been planned for sale by 2010. The selling prices of these are expected to be about 10 percent higher than the current housing price.

The ACG report said that the majority of members cannot afford the houses built at the current pricing, adding that extra housing options, at lower than current prices, should be explored further in order to benefit more member under the proposed scheme.

This according to the consultants makes more economic sense to own a house than to rents one. The report also explains that the mortgage financing of home ownership is not well served by commercial banks and the Rwanda Housing Bank both in quantity and terms.

It says the scheme can be funded if 25 percent of earnings are set a side with or without government subsidies and employer contribution.

"To aid the mortgage payments, the proposed special saving and voluntary saving accounts should also be setup,” the report says.

"This is because it may not go well to introduce mandatory salary contribution coined to solve the housing problem with no government support. It is in the national interest to see the proposed home ownership scheme become a great success,” the report adds.

Apart from major recommendations proposed throughout the entire actuarial study, the report also summarises the findings on various proposed reforms and enhancements to the social security systems in Rwanda, after they were mismanage during the pre-genocide era.  

In 2006 cabinet endorsed the restructure and modernisation of the operations of SSFR and a team was setup to undertake the task. The reforms are still in the infancy stage and are expected to result in the mobilisation of sufficient savings for investment and capital market development.

Ends