Panel Four: Finance for Affordable Housing

In panel four of the conference, we opened with Benjamin Manzi, Director of Investments at the Development Bank of Rwanda, who spoke broadly about how the development bank has been targeting its approach. He began by noting some of the challenges involved in the supply of affordable housing: materials are expensive, usually imported, and there are not enough local materials used, technology is also expensive and geared to larger, high-end building. The development bank’s approach, going forward, is to develop new financing strategies and new lending mechanisms. In addition, they want to develop new housing support services that target broad areas of the process from helping with land acquisition to materials sourcing.

The next speaker, Robert Buckley of the New School in New York spoke about the need to distil down the many possible options to a few options.

Broadly, it seems convincing that Kigali needs to grow out and expand, and to grow vertically with density. This should help with agglomeration and job creation, yet density is not a custom in Rwanda and this could be a problem. As the cities grows outward, we should avoid this being done in an ad-hoc manner.

Whilst being explicit that his thoughts are ideas for debate, not rules, He stated four options. First, there are some dos: do grow up, embrace the private sector and upgrade large portions of the informal stock and focus on increasing supply and improve conditions. However, don’t subsidise developers in ways that benefits the rich. Secondly, do expand the city with clear road layouts for future needs. Don’t feel obliged to expand with a public sector which may not be as efficient as the private sector. Third, do provide infrastructure where housing can be developed and make the public land available for development. Don’t have the public sector buy land for development. Fourth, do look at ways to reduce interest rates – enormous margins will reduce transformation. Don’t take undue risks – which might include investing in slower developing cities.

We also heard from Edward Kyazze of the Rwandan Housing Authority and some of the intended initiatives to boost the market and home ownership. These included housing seed funds, affordable groups of low-income people with collective collateral to enable them to borrow better. Private-public partnerships are another option, but they are aware that government needs to be well informed to deal with these effectively.

Finally we heard form Eric Gasava of the Rwandan Social Security Board and how they manage workers’ pensions. Real-estate is a large part of their investments and one they want to see strong returns on, but their challenge is to ensure that they balance a boosted supply in affordable housing with profitability of their investments.