Optimal construction permit fees for Rwanda

Policy brief 4 May 2020 Cities

Authors

To successfully manage rapid urban growth and its attendant challenges, and to implement effective development control, municipal authorities need to increase revenue from construction permits and other sources.
Rwanda’s ranking in the Dealing with Construction Permits subcomponent of the World Bank’s Doing Business index is rising, but the Government is keen to see improvement, including in the cost sub-element.
The researchers recommend that construction permit fees should be set as a percentage of development cost as a solution for both municipal revenue to increase and Rwanda to improve its Doing Business ranking. For the City of Kigali, a rate of 0.1% to 0.2% of warehouse cost would increase revenue between six- and seventy-fold without increasing building permit costs according to Doing Business methodology.
The researchers advise against a fee per square metre, as it would increase the cost of the warehouse significantly according to Doing Business methodology and disregard significant differences in construction quality that exist.