The New Times (Kigali)

21 February 2009

Rwanda: KCB to Venture Into Mortgage Financing in Country

Kigali — Rwanda's mortgage industry is not fully exploited with only two banks, Commercial Bank of Rwanda (BCR) and the Rwanda Housing bank as the main players.

New entrant into Rwanda's banking industry, KCB is set to include mortgage financing on its investment portfolios this year, the bank's top executive has said. This follows the announcement by the parent company in Kenya that its Kenyan based lending mortgage arm, S&L has increased its lending limit from KShs100 million (Rwf714.2 million) to Kshs250 million (Rwf1.786 billion).

Maurice K. Toroitich, speaking from the head office in Kigali yesterday said, "in the context of regional expansion plan for KCB, the strategy is that for each of the market we operate in, we will be looking to add innovations obviously driven by the needs."

"S&L, run as a subsidiary and the product is a very successful one in Kenya. The intention is to rollout in other areas where KCB operates," Toroitich said. He added that KCB is viewing housing as one of the critical elements of development in East Africa.

Rwanda's mortgage industry is not fully exploited with only two banks, Commercial Bank of Rwanda (BCR) and the Rwanda Housing bank as the main players.

However, the later is set to start operating as a mortgage liquidity facility, meaning it will be financing commercial banks engaged in mortgage funding in order to expand mortgage lending in the country.

"It's important that the mortgage product being a primary area of focus for KCB is something that we want to grow big and develop as the market also develops," Toroitich said.

He did not explain the strategy which KCB will employ to profit from this project but added that their approach will take into account issues of land registration, title registration and the general registration of a mortgage.

According to Toroitich, the court system and the regulatory environment have to be in support of that. Each market will deal with the mortgage business depending on how supportive the legal and regulatory environment is.

Without mentioning the size of investment into this project, he said they are looking at different options of long-term financing which include but not limited to issuing a bond, looking for strategic partners and also floating shares on the Rwanda stock market.

"Of course it's also important to know that mortgage financing is long term. The ability of banking institutions to finance mortgages is based on whether it has long term funds. How aggressive we develop our mortgage here is going to be dependent on our access to long term finance," he said.

KCB Group Chief Executive Martin Oduor-Otieno said in a statement this week that "we are an ideal partner for businesses not only due to our large branch network hence increased access to financial services but also because of our regional reach."

KCB operates in five markets of Kenya, Uganda, Tanzania, Sudan and Rwanda.

Oduor-Otieno said, "we have plans to introduce mortgage products under the parent brand, KCB in order to capitalize on existing business opportunities. This should encourage many people wishing to venture into property development across the borders to get their plans."

KCB's participation in Rwanda's mortgage industry will possibly increase the collateralization of loans and mobilization of savings.

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