Delivering affordable housing and supporting infrastructure in Kigali, Rwanda

Rwanda, one of the least urbanized countries in Africa, is expecting large increase in its share of urban population from current 17% to 35% by 2020, in other words an annual urban growth of 9 percent. Considering the inability of many rural farms to provide a subsistence livelihood, high urbanization rates are inevitable. The national economic plan (EDPRS II) recognizes that despite rural productivity gains, the country must create an additional 1.8 million non-farm jobs in urban areas. But the low average annual household income (289K RFW or about $400) is inhibiting over 75% of Rwandans’ access to the existing market-based urban housing finance options.

The recently formulated national urbanization policy (MININFRA, 2014) aims to manage the rural migration process by preparing its capital city, Kigali, and other secondary cities, to host new residents. The policy promotes densification, compactness, connectivity within and between cities, climate resiliency, and an inclusive and participatory development process. Recently released national housing policy aims to address the issues of low income housing supply; the policy promotes a framework of public-private collaboration, to develop accessible and affordable housing, achieve improved living conditions, and prevent formation of informal settlements (MININFRA, 2014). It attempts to be flexibly inclusive so that different approaches can be undertaken while staying within the spirit of a program to assist low-income households. Moreover, MINIFRA has issued ministerial instructions (MININFRA, 2014) to operationalize the implementation of low cost housing neighborhoods.

Now the true challenge is how to move forward from the policy-making phase to local level demonstration projects which will allow evaluation of appropriate low income housing delivery methods (e.g. upgrading, site and services, cooperative housing, etc.) and their financing options (e.g., cooperative renting, rent to own, self- construction, individual or group mortgage and micro-finance). The results of the above will subsequently help to build capacity of responsible institutions at national and local levels in scaling up the implementation of successful models.

Kigali, a city of 1.1 m, is almost ten times larger than the next large city and serves as the hub of Rwanda’s export and trading with the central/southern African countries. It is and will continue to be the magnate for rural migrants and an agglomeration of higher productivity than other urban centers. To manage future development the city has formulated a master plan (RDB), and as per an EU aid study (Planet Consortium 2012) by 2022 the city will need about 458K housing units. Such a demand can be met by maintaining or upgrading a part of the existing housing stock that is in good condition (114K) plus building new 344K dwellings. In other words, the city must supply on average 30K dwellings per year compared to the current formal housing delivery rate of 1K. Since 78% of the new housing demand will be among households earning less than 300K RWF/month (about $440) the delivery challenge is not limited to the scale of demand but also the affordability level of majority to own or rent dwellings. Currently over 70% of Kigali residents live in informal settlements, rents are rising and the units supplied by the formal market exceed affordability level of most low income households, particularly those below monthly income of 200K RWF (below $280). A large share of residents in informal settlements access affordable living by renting. Besides a 120-unit Batsinda program which had offered units at 3.5m RFW (about $5,125), the lowest prices that seem to be targeted by the government so far exceed $30,000 per unit. Hence, the challenge of delivering affordable housing remains the key to sustaining the economic vitality and living quality of Kigali and its role in transforming the economic future of Rwanda.

Study Approach:

The study aims to develop a responsive and affordable housing supply policy framework for Kigali. The framework which will highlight the conditions that are inhibiting supply of affordable housing, one of the top priorities of the government as identified in recently released housing policy documents and under the two earlier IGC projects: 1. Sustainable Urbanization in Support of Economic transformation- A Rwanda Study (Aug. 2012) and 2. National Forum on Sustainable Urbanization in Support of EDPRS 2 (March 2014). The problem of delivering affordable housing remains one of the most difficult urban challenges globally and more so for the fast growing cities of developing countries. No one has found a magic bullet. However, there are evidences of good policies and practices in many developing countries which will help to formulate a Rwanda specific approach, as well as avoid some of the mistaken approaches that have been pursued elsewhere. Given the topographical constraints (steep hills, wetlands, etc.) the study will promote efficient use of land by identifying two sets of complementary measures, one to upgrade the existing informal settlements in the central city and second, to prepare the periphery and/or other urban centers near Kigali for new housing development. The objective is to demonstrate how the rapid urbanization that the city of Kigali is experiencing could be handled by increasing the supply of accessible housing that is affordable.

Upgrading Existing Units: At present, most of the existing housing stock in Kigali is single storied. Hence, one hypothesis to be examined is the issue of how much less expensive it would be to increase the height of some of these buildings to provide denser land use. That is, could some of the single story buildings be built with additional floors? This question is in many ways an architectural and engineering one. Can it be done and if so then at what cost? If it could be done structurally and at financially viable costs, then it is a question of how to disburse the funding and seek financing given the prevailing high interest rates in the financial sector.

This will require gathering information on the cost of construction for upgrading and enlarging various existing housing units, determining the acceptability of such investments to existing residents, and that an adequate supply of finance is available so that these investments could be undertaken. Through stakeholder consultations the constraints (e.g., zoning, affordability, access to services and jobs, cost of constructions, finance, etc.) and likely incentives will be identified which might help the residents to consider upgrading options for their houses and community.

New Low Income Housing Communities: In addition, to upgrading and densifying the existing housing stock attention would also be given to determining how cost effective it would be to either develop periphery land and/or improve the transport nodes and related public transport services that could serve commuters from the already existing smaller towns now on the outskirts of Kigali. By improving commuting services to some of the cities surrounding Kigali overall housing supply and access to low cost land for new housing can be increased with modest investment. Moreover, new supply of low cost land will enable basic sites and services program -- a traditional but effective model of low-income housing – to be viable. The viability of site and services program will be examined considering various factors such as plot sizes, self -help strategy, use of specific local construction material and method, provision for incremental dwelling expansion, typologies of dwellings clusters and land allocation for economic and social activities etc. The level of services will no doubt depend upon the ability of resident to pay for them.

The costs associated with infrastructure and basic services (circulation, school, clinics and open spaces) to access and develop land are also an important consideration in determining cost effectiveness of any housing program. Determining such feasibility will require a review of the on-going low housing projects in Kigali and discussions with current stakeholders -- existing land owners, city and district officials, MININFRA and its agencies, potential residents, financiers and developers. Above diagnostic complemented with additional information on unit costs of on and off site infrastructure and services and land cost will assist the formulation of a land development and affordable dwelling delivery approach at the periphery. This approach will also identify appropriate recovery measures and the need for targeting subsidy if necessary, to certain income groups for the purchase of dwellings, and use of public transport and basic community services (e.g., water, electricity, toilets, maintenance of community spaces/facilities and solid waste collection). One of the strong features of the national housing policy is to adopt participatory approach and nurture community groups and/or co-operatives that will develop new neighborhoods of clustered dwellings. Such neighborhoods will be home for different income groups and also accommodate non-residential uses. The question of how these organizations may interact with developers needs to be examined under the Rwandan context.

Schedule of Activities:

During the preparation phase the project team will be consulting with all relevant national and local government departments, dwellers of informal settlements, private land and housing developers, financial institutions (Banks, WB and UNCHS) and NGOs engaged in housing sector. For the above the project investigators will make two visits to Kigali and will be assisted by the local IGC staff. For data collection one or more consultants will be appointed to assist the project team. The findings of the study will be discussed with key stakeholders in a workshop organized by the IGC.

References:

MININFRA, Report on the National Consultative Meetings for the Development of Urbanization Policy
MINIFRA, Dec. 2014, National Urbanization Policy, Draft III
MINIFRA, Dec. 2014, National Housing Policy (Draft)
MININFRA 2014, Ministerial Instructions of Determining the Conditions for Obtaining Government Support to Housing Development and Procedures of Initiation, Assessment, Approval and Implementation of Low Cost Housing Neighborhood Development.
Planet Consortium, July 2012, Housing Market Demand, Housing Finance and Housing Preferences Study for the City of Kigali
RHA, Affordable Housing Development Project in Rwanda
Rwanda Development Board, Kigali Conceptual Master Plan