20 January 2013

Rwanda: Low Income Earners Apparently Don't Have a Place in Kigali

As a vast number of commercial buildings continues to spring up in Kigali, a matching range of new business investments are expected to operate which will entice more inhabitants into the city that is already highly populated with 1,135,428 inhabitants (according to the 2012 population and housing census) compared to 765,235 in 2002.The concern however is how to accommodate this fast growing population.

According to engineer Peter Otachi, a consultant of New Life construction and engineering company, "the Kigali city suburbs are still waiting as far as residential buildings are concerned so as to be able to support the present population as well as that expected to come in as a result of the business growth."

Yet many of the new estates constructed so far are well beyond the reach of most Kigalians as far as prices are concerned. That creates problems when KCC, in its laudable drive to modernize housing in the city, expropriates residents of slums or neighborhoods with rather shabby dwellings, with people complaining that the compensation they receive is insufficient to acquire modern homes.

Many houses available to low-income earners are generally modest old shacks made of mud-bricks with leaky and rusty roofs. Such structures dominate some of the most densely populated residential suburbs of Kigali such as Biryogo, Nyamirambo, Kimisagara, Gasyata, etc. But even these are sometimes beyond the reach of many low income earners.

Gedeon Ngoga, a telephone scratch-card vendor, lives in such an abode and pays a monthly rent of Frw 10,000. "I also have to eat and take care of my family back in the village. This house is not in accordance with the rent I pay. When it rains, I have to wake up and sit up because the roof leaks," he says dejectedly, adding that he cannot save from his current earnings and sometimes even goes hungry for days to pay the rent.

A report released late 2012 by KCC stated that about 50% of Kigali residents live in overcrowded and low-quality houses. The report details the city's housing needs and opportunities for investors in the sector. It further states that there is a shortage of over 400,000 houses, meaning many city dwellers live in unplanned neighborhoods.

The report says that according to a 2011 census, the city has only 223,000 housing units, calling for heavy investment in the sector to satisfy demand. It was also discovered that most houses in the city are illegal and are bound to be demolished and that 108,903 of existing houses do not meet the minimal habitable standards.

To address the housing needs, it was noted that decent housing for people earning maximum Frw 35,500 ($59) per month has not attracted many investors, forcing many in that category to live in shacks. The report advised the government to build houses for this category of people if they are to have decent housing.

About 186,163 units are needed for low income earners, according to the report. These are people who earn between Frw 35,500 and Frw 200,000 per month. The report also notes that majority of city dwellers earn less than $329 per month. "The households have some payment capacity and could access a special rental market which may include, for instance, rent-to-own leasing mechanisms and others," says the report.

80% of houses unplanned

The city's administration recognizes the provision of decent housing for all as a key element for the sustainable growth of Kigali. "To that end, we are committed to ensure the availability of financing, land, utilities and building materials and an adequate regulatory framework," said Fidele Ndayisaba, the mayor of Kigali.

Although there has been an improvement in housing supply in the past three years, real estate dealers and developers say about 80% of houses in the city were unplanned.

The unplanned houses are slowly giving way for planned estates and multi-use commercial houses. Some of the areas like Kiyovu, Gaculiro, Kimicanga and Kinyinya where slums dwellers used to live have been demolished, displacing hundreds of people. A number of middle class housing estates have been put up in various suburbs of the city including Batsinda and Kabuga.

As a result, rents have started falling and in some residential areas like Nyarutarama, Gaculiro, Urwego and Kiyovu, the rent has reduced by about 20%. According to the Rwanda Development Board (RDB), in Gaculiro the rent has dropped to $800-$600. Many developers have invested in high-end houses and are releasing them into the market. However, RDB recognizes that renting midlevel houses is still expensive and costs almost the same money a tenant in the high end residential areas pays.

For contractor Eng Otachi, a huge portion of the population cannot afford them. He also suggests investment on high quality but cheaper apartments for Kigali's middle class would improve the city's outlook and free us of the stressing land factor. He argues that the government should come in to foster the construction of apartments and ensure a fair pricing structure rather than leave it to the private sector which is always profit oriented.

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