Rwanda Social Security Board (RSSB) will, mid this year, launch a construction project for housing units for the low and middle-income earners, officials have said.
Upon completion, the houses will be acquired through a mortgage arrangement to be provided by various commercial banks, which have promised to support the project.
The development was disclosed by Hyacinte Gacendeli, the Director of Real Estate Division at RSSB.
The banks are expected to negotiate the mortgage terms with the clients, according to their respective terms.
“We will start the construction of three housing projects, between May and June, two of which will target low and middle-income earners, and one for middle-high income earners,” said Gacendeli.
Gacendeli explained that one of the projects involves 100 housing units for low-income earners, which will be built in Batsinda area, Gasabo District, where RSSB owns 10 hectares of land.
“But we are yet to finalise talks with government about possible subsidies, like in infrastructure, where it can, for instance, construct roads to the houses. That would support reduce the costs we envisage, and consequently make the houses more affordable for the people.”
The City of Kigali also intends to offer more land to RSSB, which will also be used for constructing more low-cost housing units in the near future.
According to Gacendeli, the biggest challenge is acquiring land for the project, especially since the land they have is not designated for low-cost houses, as required by the City Master Plan.
The city has already constructed 250 low-cost houses in Batsinza to accommodate people relocated from slum areas in Kigali City, like Muhima.
The official, however, did not reveal the houses’ financial value, and the average earning for the people eligible to get them, saying the construction cost was yet to be agreed upon among the various actors.
Gacendeli added that RSSB also plans to construct 500 houses for middle-income earners, especially public servants.
Each house will be cost between Rwf25 and 30 million.
“They will be constructed on the 100 hectares RSSB owns in Kinyinya Sector in Gasabo, and we are targeting mainly public servants; but other people earning from Rwf200,000 upwards will also be eligible.”
Public servants are given the priority because it is generally believed that they earn less than other people in their bracket of employment, he explained.
The cost of these houses will reduce when the government fulfills its promise of supporting the project too, the RSSB official added.
The third estate will target middle-high income earners, and will be developed in Gacuriro, Gasabo District.
Maurice K. Toroitich, the head of the Kenya Commercial Bank (KCB) Kigali, which is one of the banks that have expressed interest in lending to the clients interested in mortgages, confirmed the bank’s plan to work with RSSB, in providing the mortgage facility.
According to Toroitich, clients will be charged 16 percent annually, just like any other regular mortgage to be serviced within a maximum of 20 years.
An initial deposit, equivalent to 10 percent of the cost of the house, will be required, he said.
Charles Haba, the president of REAR, the body that brings together real estate practitioners in Rwanda, commended RSSB’s planned investment, arguing it was a timely move, coming at a time when no other developers have shown interest in catering for the growing housing demand.
“RSSB’s initiative is good because the demand for low-cost houses is increasing yet no real estate developers have shown interest in investing in that area; they prefer to invest in more expensive houses since they are more profitable, businesswise,” Haba said.
Commenting on the development, Gibril Murenzi, a waiter at Hope Restaurant in Gikondo, Kicukiro District, called on the government to put more emphasis in the construction of more affordable houses.
“RSSB’s efforts are not enough at the moment; for example, Kigali alone has hundreds of thousands of low-income earners who need decent, yet affordable homes. 100 or a few huindred units are not enough at all; it is a drop in the ocean.”
“Even those houses they say are designed for the poor are still not affordable for a man like me who makes less that Rwf80, 000 a month,” he added.
Murenzi says government should influence RSSB to invest more in low-cost housing units and encourage more investors to do the same.
“The banks’ interest rates are also still too high; they need to be revised downwards because they scare many people away.”