1 February 2013

Rwanda: Pension Plazas Struggle

The Rwanda Social Security Board (RSSB) has spent 30 per cent of the investment portfolio, equivalent to Rwf 94.4bn out of Rwf 319bn on real estate development.

The idea behind this investment, according to an official from RSSB, is to compete with other real estate developers in the growing market that presents opportunities to attract investment while contributing towards infrastructural development in the country.

So far, RSSB has constructed 672 units for high-end, middle and low income earners in Kigali.

The agency has also set up commercial buildings commonly known as Pension Plazas, around the country. These magnificent buildings, which are strategically located in Nyarugenge, Kicukiro, Musanze, Karongi, Nyanza and Rwamagana, are yet to be fully occupied and some have been open for almost one year.

The latest addition to this family is the 20-storeyed Grand Pension Plaza that dominates Kigali's skyline that has 83 per cent of its space occupied. Like the others, it is also earmarked for both office and commercial use.

The mayor of Nyanza district, Abdallah Murenzi, says only 54 per cent of the Pension Plaza in his district - and in Karongi - is occupied. Murenzi says the reason for the low occupancy is the high rent fees.

That's the same reason Rwamagana mayor Nehemie Uwimana gives for the 20 per cent occupancy of the plazas in his and Musanze districts.

RSSB regional offices and some renowned banks are the only tenants of the pension plazas up country.

Affordable rent?

But Angelique Kantengwa, the director of RSSB, says the US$13 rent per square meter for the pension plazas located upcountry is not much money.

"We are discussing with local authorities to market these modern buildings to NGOs and others," she told The New Times.

Mayors who talked to The New Times said they have carried out such campaigns, but are yet to see results, except Murenzi, who is expecting the Southern Province office to move to the Nyanza Pension Plaza.

However, The New Times has learnt that several other commercial buildings are fully booked even before they are completed.

For example, the BoDIFA MERCY HOUSE, a-10 storeyed building opposite the Prosecutor General's office that will be completed after 18 months is fully booked.

The proprietor, Jean Bosco Nkundunkundiye, confirmed in an interview that super markets have already booked four floors and the remaining space will be used for offices and apartments.

On other hand, commercial buildings upcountry have been more successful when owned by local business persons.

A case in point is Huye Modern Market, which is owned by Ingenzi za Huye Cooperative for which the district received an award for supporting the private sector.

The president of Ingenzi za Huye cooperative, Vincent Semuhungu, says that "in matter of ownership, it's better to invest in your own house than renting from anybody. Though we are servicing a bank loan, we know that benefit is coming to us."

Semuhungu said their four-storeyed building is owned by 11 members who invested Rwf1.5 billion, including a Rwf900 million bank loan.

The only way that occupancy will pick up, according to Pichette Kampeta Sayinzoga, the Permanent Secretary in Ministry of Finance and Economic Planning, is through increased marketing 'but the Pension Plaza is a viable business'.

That is the reason why RSSB officials believe they can build more plazas in other districts despite this low occupancy rate.

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