Residents living in informal settlements in Kigali could soon have a reason to smile as the City of Kigali and the Capital Markets Authority (CMA) are exploring ways to spearhead a financial scheme to enable them to move into decent modern housing units.
At a stakeholders meeting in Kigali on Wednesday, bankers, real estate developers, architects and engineers discussed how existing unplanned settlements could be turned into sustainable condos with quality shelter in accordance with the City’s master plan.
Speaking at the meeting, Fidele Ndayisaba, the mayor of the City of Kigali, said cities all over the world are built by real estate developers and that individual developers have never developed organised cities.
“Individual developers put up buildings that are disorganised and it results in misuse of land and other challenges,” Ndayisaba said.
“A recent survey indicated that we have a shortage of residential houses but another one also showed that we have a big challenge of informal settlements to deal with. This is not only about houses but the infrastructure that goes with it.
“All this requires finances but, most importantly, the good technology and partnerships for good designs, governments and a well organised capital market to support the financing.”
Ndayisaba said the City is looking to help its slum dwellers get modern housing and they would come up with guidelines on how they can afford modern housing.
Kigali has a population of about 1.2 million people, projected to reach 3.8 million by 2040.
“We are left with 50 per cent developable land, which means we must use what we are left with not only sparingly but also productively,” the City mayor said.
Role of capital markets
Robert Mathu, the executive director of CMA, said the role of capital markets is significant in addressing the financial challenges of the city’s housing project.
Access to capital has been one of the critical issues affecting the health and long term viability of social and affordable housing in many cities in emerging countries, Mathu said.
“We are conducting a study which seeks to find the possibility of housing schemes that would utilise capital market structures to enable residents to upgrade to modern houses in line with City of Kigali master plan,” he said.
The capital market, Mathu said, is the cornerstone of an economy.
“All we do is mobilise long term capital through mobilisation of people and institutions. We put schemes in place. To develop real estate we need long-term capital and this is where capital markets come in,” he said.
“We are in this project from the beginning and we are here to ensure that governing structures and schemes that will be put in place are appropriate for investors.”
Mathu cited banks, engineers, architects, pension funds, and insurance companies as key partners in the development of real estate.
The CMA chief said commercial banks play a pivotal financing role in development but added that focus of mobilising long-term capital is key “and that’s why we have capital markets in this.
CMA will, among others, provide legal and supervisory structures to enable free and easy movement of assets in terms of transferability.
Dr Darin Gunesekera, a realtor consultant who set up the Real Estate Exchange (REEL) in Sri Lanka, and was a capital markets advisor in Kenya in the past was engaged through IFC/ World Bank to study and develop the proposal for the novel scheme.
Dr Gunesekera explained a methodology called “Social REITs” for the scheme, which he noted has succeeded to convert unplanned settlements into regenerated planned parts of cities like in Sri Lanka and in the Philippines.
Highlighting scenarios in unplanned urban areas such as Kibera slum in Nairobi, Kenya, the consultant said a master plan has to be effected through equity in the capital markets plan.
Pertinent global solutions often require or include constructive social action, Gunesekera said.
“People are realising that they can make money out of this. Unplanned settlements means there is poor use of land but with planned settlement you get maximum use of land,” Gunesekera said.
The City of Kigali Master Plan 2013 is the final step of a long planning process started in 2007.
With the completion of the Kicukiro and Gasabo Physical Detailed Plans in 2013, in addition to the existing Nyarugenge detailed plan, the City now has detailed plans for all three districts of Kigali.
The detailed plans now guide the development of individual plots.