Optimal construction permit fees for Rwanda

Policy brief Cities

  • 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.