Editor,

RE: "Multi-million dollar Palm Estate project put under receivership” (The New Times, April 19).

Rwanda, and especially our major cities and towns, need to do everything possible to facilitate private investment to grow our much needed housing stock. Contrary to what casual observers might think, the frenetic construction boom in our capital city and in virtually all the other population agglomerations all across the country is driven by private, overwhelmingly Rwandan capital.

The benefits of this boom to the economy as a whole; to the increase in housing and commercial rental space; to employment in construction-related occupations; to retail and many other contiguous sectors are some of the drivers of Rwanda’s impressive economic growth rates and the dramatic decline in our poverty rates.

I have therefore absolutely no issue with entrepreneurs whose activities are partly responsible for this construction boom for their taking risks, pocketing the rewards when those risks succeed and taking the hit when they fail. I even have no problem with banks and other financial intermediaries winning big from such investment projects if they succeed or lose their stakes when they fail (as long as such losses do not affect their ability to honour their fiduciary responsibilities to their depositors).

Risk, rewards and losses are as integral to free enterprise as dogs and fleas; they cannot and should never be disentangled. Both the project developers and the financial institutions that back them are supposed to be sufficiently knowledgeable to be able to evaluate their risks/rewards from these projects properly and thus to make informed and well calculated decisions on whether they should undertake the projects or back them with their money (or that of their depositors in the case of deposit-taking commercial banks).

Allowing such developers to sell housing units in such projects to ordinary members of the public who have no capacity to evaluate the technical feasibility and financial viability of such projects is an entirely different matter.

Ordinary Rwandans have insufficient understanding to be able to take appropriately well-considered decisions to put their hard-earned savings or take on debt to buy into these kind of speculative ventures. It is important to understand that most ordinary Rwandans are not buying into such housing projects for speculative purposes but as homes.

Many would have sacrificed and scrounged to make the usually steep down-payment for their own unit in such a development project, but even then still face many years of high payments as a proportion of their future income in order to clear the balance of the cost of the purchase of such homes. They can therefore ill afford it when some of these so-called development projects, often based purely on speculative hopes by their sponsors of quick financial returns, go belly up.

In my view, it is therefore necessary that before such project developers are allowed to sell units to members of the public their proposals are first closely scrutinized by the authorities both for their technical feasibility and their financial viability. In this case, a way forward for all concerned seems to have been found, but all we need is to remember the case of DN International to realize that we cannot always be sure that a solution acceptable to all concerned can always be achieved.

Mwene Kalinda