Kenya Commercial Bank Rwanda (KCBR), a subsidiary of Kenya’s KCB Group has unveiled a mortgage project that will help ease the housing shortage in the country.
Maurice K. Toroitich, the Managing Director of KCB Rwanda told Business Times that the bank will invest some Rwf7 billion in the project this year. The bank says it will source the funds internally and also borrow from other institutions.
“We will also be looking to institutions that can provide long-term funding,” Toroitich said, Wednesday, during the launch of the product in Kigali.
The launch of KCB’s mortgage project comes at a time when Rwanda needs between 20,000 and 25,000 residential houses every year, according to the Minister of Finance and Economic Planning, John Rwangombwa. Only about 300 are provided.
“The bank’s mortgage product will offer home ownership with a minimum of 10 percent deposit for first time home owners, minimum 20 percent deposit for residential units under construction and 30 percent deposit for non residential commercial properties,” Toroitich said.
He said the bank’s basic interest rate on mortgages is 16 percent per annum, which is a subjected to change depending on market conditions.
He added that the mortgage will be financed up to 20 years for residential properties subjected to a retirement age of 65 year and 10 year for the case of commercial properties and residential properties for income generation purpose.
The Minister of Finance and Economic Planning, John Rwangombwa, said that over the past few years, the country has achieved a sustained high economic and social development, attributing it to government’s visionary policies.
However, according to the Minister, the demand for houses is hardly met due to lack of financing to long term mortgages.
“Therefore KCB’s launch of a competitive and affordable mortgage product will go a long way in bridging the existing finance gap,” Rwangombwa noted, adding that the bank’s new product, will encompass an element of saving, which is critically needed in the country to raise capital for long-term investment.
KCB Rwanda is yet to breakeven since the launch of its operations in the country two years ago. Its balance sheet stands at US$50 million (Rwf29.6 billion), almost two folds higher than Rwf15 million) at the end of 2009.