AFR Study: Affordable Housing in Rwanda: Housing Finance Access Frontiers

This review of Rwanda’s affordable housing sector and its financing was commissioned by Access to Finance Rwanda and undertaken by CAHF in partnership with 71point4 and local consultant Fatou Dieye.  Eight reports are available.  This report considers access to housing finance in Rwanda, by charting the housing finance “access frontier” – in a methodology originally developed by David Porteous and then refined for the housing sector by Illana Melzer.  This report was prepared by 71point4.

In 2020, the Government of Rwanda partnered with the World Bank to access two grants, one of which is for housing finance. US$150 million has been approved to fund the Rwanda Housing Financing Project, the main objective of which is to expand access to long term housing finance for the benefit of middle income segments that have limited or no access to mortgages, while also supporting capital market development.  While this is encouraging and important, it is unlikely to cover the breadth of the need for housing finance, specifically for lower income earners who are outside the scope of mortgage lending. How the end user finance intentions align with the availability of construction finance, and whether this addresses the needs of the so-called informal, or small scale supply sector (and critically, rental accommodation) is also not clear. To this end, a broader and more detailed understanding of the demand and supply sides, how they intersect, and the specific housing value chains engaged with and served by each, is required.

The publication at the end of December 2020 of Rwanda’s Vision 2050 document by the Ministry of Finance and Economic Planning is a further input to this study. That vision “sets a new pathway that will lead the country to the livings standards of upper middle income by 2035 and high income countries by 2050”. That document specifically references the development of a responsive affordable housing and housing finance sectors.

As Rwanda develops in line with its vision, there is an opportunity for AfR to support the development of a housing finance sector in Rwanda that is comprehensive, and that meets the needs of all residents and all housing supply approaches, with a variety of products and services designed explicitly to engage with the breadth and nuance of their capacity.

The review of Rwanda’s affordable housing sector and its financing explored the overall institutional, policy and legislative environment for affordable housing, scoped the demand side, interrogated the capacity and activities of the supply side, and considered where finance could make a difference. This report sets out the analysis of the housing finance access frontier in Rwanda.