Construction of affordable housing units by the Development Bank of Rwanda (BRD) and Palmeraie Development Group is set to kick off early next year, following the signing of a partnership agreement during the visit of King Mohammed VI of Morocco last week.
The agreement sealed a partnership between the two bodies to develop 5000 affordable housing units last week.
According to Alex Kanyankole, the chief executive of BRD, the two institutions are currently ironing out final details of the project ahead of groundbreaking early in 2017 and the works will take 18 months.
Kanyankole told that they had, however, agreed on financing modalities of the project, estimated at $68 million (about Rwf5.5 billion).
BRD and Palmeraie Development Group will contribute 30 per cent of the total value.
“The remaining 70 per cent, which is about $40 million (about Rwf3.2 billion), will come from Bank of Africa, also signatory to the agreement,” Kanyankole said.
The project site is Ndera in Gasabo District for the initial 2000 housing units.
However, Kanyankole noted that Palmeraie Development Group has committed to a total of 5000 housing units, adding that they were in the process of identifying other sites for construction of the other units.
Kanyankole said the project targets people who have previously been unable to afford housing and would develop an innovative financial model to ensure affordability.
“For those who may not be able to afford to pay upfront, we will come up with lease agreements whereby they pay a modest amount per month and after a certain period, we identify a modest amount that you can pay to acquire the house. These are the details that we are still ironing out. We are aware of the challenges associated with affordable housing and are working to address them,” he said.
The project also aims at changing the kind of housing structure preferences from bungalow to apartment blocks, which he said are ideal in densely populated regions.
Hicham Berrada Sunni, the Palmeraie Development Group chief executive, who was part of King Mohammed VI’s entourage during his visit to Rwanda last week, said the new project was part of the group’s expansion efforts to the rest of Africa, sharing its expertise in social housing in partnership with other countries.
Founded over 30 years ago, the group brings in rich expertise in social and affordable housing.
The project also comes in handy as Rwanda tries to address the issue of affordable housing in the country.
According to joint a study by the City of Kigali, the Ministry of Infrastructure, and the European Union Kigali could face a housing deficit of 344,000 homes in 2020.
Presently, between 800 and 1,000 housing units are constructed annually, the majority targeting high-income earners, leaving the majority of city dwellers without decent homes.
To address the housing shortage, the city needs to build at least 31,000 housing units annually, according to the study to ensure city dwellers get quality shelter.
The study showed that low and middle-income earners make up about two-thirds of all new housing demand.
Kigali’s population stands at 1.2 million people and is projected to reach 3.8 million by 2040.
Provision of affordable homes is a key element of the country’s development blueprint, the second Economic Development and Poverty Reduction Strategy, needed to support urbanisation.
Credit: All Africa