VZCZCXYZ0005
RR RUEHWEB

DE RUEHLGB #1110/01 3441047
ZNR UUUUU ZZH
R 101047Z DEC 07
FM AMEMBASSY KIGALI
TO RUEHC/SECSTATE WASHDC 4958
INFO RUEHJB/AMEMBASSY BUJUMBURA 0202
RUEHDR/AMEMBASSY DAR ES SALAAM 1018
RUEHKM/AMEMBASSY KAMPALA 1778
RUEHKI/AMEMBASSY KINSHASA 0337
RUEHNR/AMEMBASSY NAIROBI 1088
RUEHFR/AMEMBASSY PARIS 0381

UNCLAS KIGALI 001110 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR AF/C 
DEPARTMENT PASS USTDA: EEBONG 
DEPARTMENT PASS USTR: WJACKSON 
DEPARTMENT PASS COMMERCE: RTELCHIN 
DEPARTMENT PASS OPIC: BCAMERON 
 
E.O. 12958: N/A 
TAGS: EFIN ECON PGOV EINV ENRG ETRD EPET BTIO RW
SUBJECT: AFFORDABLE HOUSING IN KIGALI:  NEEDED BUT ELUSIVE 
 
 
¶1. Summary.  The housing industry in Rwanda is fragmented and 
in need of assistance.  Individuals are currently allocated 
plots and build according to their convenience, taste and 
capacity, irrespective of the area.  The results are 
environmentally, aesthetically, and logistically problematic 
for the country.  Both the real estate and appraisal 
professions in Rwanda are at early stages of development. 
The legal and regulatory framework necessary to spur the 
development of a market is developing, but it is still 
largely incomplete.  Mortgage loans are not widely available 
and carry high interest rates, although commercial banks are 
beginning to look favorably at the expansion of residential 
lending.  The city of Kigali has created a master plan to 
address unplanned development and to exercise more control 
over inevitable expansion.  The city is attempting to spur 
investment in planned housing, but it is far from creating a 
replicable model for its various neighborhoods.  End Summary. 
 
 
¶2.  Rwanda is fashioning a legal and regulatory framework for 
a functioning real estate market.  An Organic Land Law was 
adopted in 2004, but it is very broad and requires a number 
of implementing laws, regulations, and decrees for it to 
function properly.  USAID and the British Department of 
International Development (DFID) have been providing 
assistance to the Ministry of Land on the legal framework. 
DFID focuses its assistance on pilot efforts to regularize, 
register, and title land in several rural districts.  USAID 
consultants have assisted with the drafting of an 
Expropriation Law, a revised version of which has just been 
passed by the Rwandan Parliament and is awaiting formal 
promulgation.  The USAID consultants are also assisting in 
the drafting of a Valuation Law, a Surveying Law, a National 
Land Use Planning Law, and on regulations defining leasing 
procedures, ownership, and property registration. 
 
¶3.  The brokerage community in Rwanda is tiny and poorly 
organized.  There are between four and six legitimate real 
estate companies in Rwanda with professional staff that 
mainly show properties and perform minimal sales assistance. 
The largest company has seven permanent employees; some have 
as few as two.  There are, however, a large number of 
independent individuals who act as "brokers" or "agents" in 
the informal sector. 
 
¶4.  There are a number of housing developers building new 
housing "estates" for middle and higher income families. 
There is a considerable amount of construction of individual 
homes for upper income families, including returnees from the 
Rwandan Diaspora, either for their own residences or to rent 
to the growing number of expatriates in the country. 
According to Rwandan Housing Bank (RHB) Marketing and Sales 
Manager Charles Haba, RHB has almost 900 units in the 
planning stages.  However, the secondary sales market is 
still extremely thin. 
 
¶5.  The mortgage industry in Rwanda is quite undeveloped and 
unsophisticated with RHB being the only institution 
specialised in mortgage finance.  RHB offers Housing Savings 
Plans and Housing Savings Accounts, and makes 15-year 
mortgage loans at 14 percent interest with a 30 percent down 
payment, and 20-year loans at 7 percent interest to civil 
servants.  RHB currently writes about five loans a week or 
250 a year.  Managing Director of Banque Commerciale de 
Rwanda (BCR) David Kuwana reports that his bank, the largest 
and most active in Rwanda, has between 15 percent and 20 
percent of its portfolio in mortgage-type loans (not official 
mortgages, per se, but loans which are used to finance 
housing construction) and generally charges 14 percent-16 
percent for five-year loans.  Because of the bank's perceived 
increased demand for actual mortgages, Kuwana claimed that 
BCR will begin offering mortgage products next year once a 
capital market is established in which to raise long-term 
funds for the new products (Note:  The establishment of 
capital markets is a priority project for the Rwandan Central 
Bank with assistance from the U.S. Department of Treasury, 
the IMF, and the World Bank.  However, the project is in the 
early stages with an unclear timeline. End Note). 
 
¶6.  Mayor of Kigali Dr. Aisa Kirabo Kacyira reported that 
more than 70% of the construction in Kigali is unplanned 
settlement.  To address this, Kigali City recently developed 
a master plan to replace traditional mud homes, often 
referred to as "slums," with more aesthetically pleasing 
construction.  This involves planned housing development, 
provision of utilities, and subsidized removal of substandard 
housing. 
 
¶7.  Kacyira explained that Kigali City partnered with RHB and 
Caisse Sociale (Social Security Fund) for the first 
implementation of the GOR's master plan -- Batsinda Housing 
Project.  Batsinda Housing Manager Ephraim Rusurabeza 
reported that 30 homes are fully constructed and plans for a 
completion of the 250-unit community by the end of 2007. 
According to Rusurabeza, people currently residing in slum 
areas of Kigali will be compensated for their mud homes, then 
strongly encouraged to move into Batsinda, where each 
resident will own their home.  The city's compensation funds 
will be put towards the purchase price for each new home, and 
the balance must be financed with the RHB, explained 
Rusurabeza. 
 
¶8.  The Batsinda Housing Project has hundreds of workers on 
site every day, largely from the Rwadan Defense Force corps 
of engineers.  Rusurabeza explained that having electricity 
is the individual occupant's decision rather than a 
project-wide goal.  Every house comes equipped with large 
black water tanks that collect rain water and biogas sewage 
systems to power cooking stoves. 
 
¶9.  Kacyira reported that 750 slum homes will be expropriated 
by the city, but only 250 families will be moved to Batsinda. 
 Currently, there is no relocation plan for the remaining 500 
families.  Each of the 250 families at Batsinda must maintain 
a monthly mortgage payment, a concept entirely foreign to 
many Rwandans.  The project manager had no plan for residents 
who would be unable to maintain their mortgages, but did 
explain that the city is working on developing 
income-generating cooperatives to provide Batsinda residents 
with livelihoods and the means to sustain their mortgages. 
 
¶10.  As the city is filled with unplanned mud homes, Kacyira 
hopes that the Batsinda Housing Project will serve as a model 
for private developers to follow.  Haba reported that many 
foreign investors have visited and expressed interest in the 
housing market, but only three have actually made firm 
investments - a German company building 29 middle-income 
units, a Belgian company building 230 high-income units and 
another 500 middle-income units, and an American firm 
building 30 middle-income units. 
 
¶11.  COMMENT:  Kigali City should be commended for 
jumpstarting the local housing market and encouraging 
large-scale developers to invest in the housing sector.  The 
Batsinda Housing Project is a proactive effort at addressing 
Kigali's unregulated development, tearing down slum housing, 
and creating planned communities.  Laws regarding 
expropriation and valuation remain unclear however, 
potentially leaving the city open to legal action by 
residents who are either unwilling to move or who contest 
their compensation.   Providing the necessary infrastructure 
and incentives for private investment are key tasks the 
resource-strained Government of Rwanda must tackle in 
replacing the ubiquitous mud huts around the city. 
Completion of the legal and regulatory framework should act 
as a stimulus to the development of a functioning real estate 
market, both new construction and a secondary market for the 
buying and selling of existing homes. End Comment. 
ARIETTI