KIGALI - Parliament Tuesday heard that Kigali City Council (KCC) overstepped its boundaries by acquiring a Rwf 740m loan from African Development Corporation (ADC).
This was revealed by the Standing Committee on Budget during the assessment of the 2008 Auditor General’s report, which showed that the move caused financial loss to the Government to the tune of Rwf106m.
According to the committee, KCC intentionally violated laws that govern the acquisition of loans by government entities.
Addressing the house, the vice chair of the committee, Abbas Mukama, said that any loan that exceeds Rwf500m is supposed to be authorized by the Cabinet.
“Although the Minister of Finance claimed that the ministry approved the money, it is not right. There is no any supporting document,” Mukama said.
“The loan carried an interest rate of 12% but when we went to the City Council to follow up, they rushed and acquired another loan from the Banque of Kigali at the interest rate of 20 percent to cover up the other loan from African development Cooperation. This called for a loss of Rwf106m.”
“KCC never consulted the City Council Advisory Committee and yet any loan KCC acquires has to be authorized by the Advisory Committee,” Mukama added.
Before the end of 2008, ADC provided a loan to KCC for putting up affordable housing and was supposed to purchase 39 hectares.
According to Parliament, the money was acquired for a good cause but the process of acquisition was irregular.
Efforts to reach the Minister of Finance for a comment were fruitless as his phone was switched off.
When contacted, the Mayor of Kigali City, Dr. Aisa Kirabo Kacyira, said that there are explanations for taking the loan, but the MP’s have not asked for it.
“We have discussed the issue with relevant institutions, but the parliament has not yet approached me for explanations. The day they approach me I will give them details,” Kirabo said.
The Mayor, however, added that the money was put to good use. “In an effort to support the low income population to access affordable housing, Kigali City took the loan from ADC with an aim of acquiring 39 hectares in Akumunigo in Nyarugenge for the construction of affordable houses for the poor,” she said.
“The acquisition of this loan followed a grant awarded to the City by the World Bank under the infrastructure development project (PIGU) which wanted to avail basic infrastructure such as roads, the drainage system and demarcating plots in that area”.
Kirabo added that the fully serviced plots are available to investors for construction of affordable apartments and very soon construction activities will kick off.