AFR Study: Scoping Rwanda’s Affordable Housing Demand & Supply: Full Report

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 is the full report for the entire study.

Rwanda’s enabling environment for affordable housing is shaped by an overarching policy and legislative framework, with key commitments articulating a focus on this sector of the economy.  Further structure is given to the sector through policies and legislation applied in terms of housing, land, the financial sector and the environment.  A key component of the enabling environment involves the availability of data that makes it possible for housing sector practitioners in both the public and private sectors make good decisions in favour of affordable housing.

According to Rwanda’s FinScope 2020, there are 2.8 million households, of which less than a quarter (23%) live in urban areas). Just under 70% of urban households and more than 90% of rural households own their dwellings. The majority of home owners in both urban and rural areas financed their homes using savings, although bank loans are noticeable in urban areas.

A field study of housing supply revealed a somewhat diverse housing delivery sector that is currently not achieving the outcomes anticipated by Vision 2050’s housing aspirations. Fewer than 5,000 dwelling units have been delivered through traditional, developer-driven channels over a 10-year period, be they local or international. With the exception of Batsinda I by RSSB, no large-scale housing project has successfully delivered affordable units below 15 million FRW. Delays in providing infrastructure subsidies has stalled or delayed major developer housing projects in the pipeline. Additionally, formal (built-to-code) rental housing is being offered at only the highest end of the income pyramid.

Access to developable land remains one of the primary bottlenecks for scaling-up the supply of affordable housing.  With 90% of land in Rwanda owned by private entities, assembling large swaths of land for development, especially in areas connected by road and infrastructure networks, remains a challenge. Consequently, for the last 10+ years, local housing developers have delivered the majority of formal houses to the market by developing private land (in many cases, previously owned/inherited, which limits their financial exposure).

CAHF has undertaken an analysis of the Housing Economic Value Chain for Rwanda, exploring the primary, secondary and tertiary sector inputs and gross value added into the housing construction process. The analysis also highlights the potential importance of housing construction as a lead economic sector, given the local value added in the intermediate inputs and creation of employment.  Further opportunity is identified in growing the capacity of the so-called informal housing sector, the small scale and owner builders who currently (but insufficiently) drive the majority of Rwanda’s housing delivery, and formalizing and developing Rwanda’s rental sector.

Finance is a key enabler in the housing ecosystem, and its application in support of affordable housing can seriously impact on the capacity of the sector to deliver.  In addition, finance can influence the quality of delivery: nudging practitioners towards good practice and value, the acceptance of green standards and the prioritization of specific demand-side target markets and housing supply submarkets.