The key to building cheap houses? The economics of building materials in Rwanda

There is a considerable analysis gap regarding the housing building materials sector in Rwanda despite interest from Rwanda’s Ministry of Infrastructure and two of the Ministry’s housing sector groups. Rwanda’s formal housing construction and materials industry are unable to meet the needs of the population because of a combination of high costs, insufficient supply, and the low purchasing power of Rwanda’s urban population (Bower & Murray 2019). Our project aims to generate insights on which design and building material choices yield the most cost-effective housing sector.

As IGC’s Cities theme recognises, housing is an important aspect and sub-theme of urbanisation. The housing construction sector plays an outsized role in the macroeconomy and there are enormous economic benefits by reducing the cost of housing construction materials and developing the industry.

This study intends to answer the following questions:

• What were the main patterns of trade, and prices, of building materials in Rwanda, over the last 10 years, including during the COVID-19 pandemic?
• What is the extent of exchange rate pass-through from import prices at the border to internal Kigali market prices?
• What is the extent of competition among intermediary traders in the building materials sector?
• What is the most cost-effective basic dwelling unit, appropriately designed to fulfil the zoning and building regulations of the different zones in the City of Kigali, and how do different construction materials fare under cost comparison when applied to this design?
• If there is a gap between uses of business-as-usual building materials, and the most cost-effective building materials, what drives this gap, and what can be done to eliminate it?