About 80 per cent of houses in the Vision City real estate project has so far been sold, Rwanda Social Security Board Director-General, Regis Rugemanshuro has said.
Rugemanshuro was speaking on Tuesday, September 22, 2020 during a virtual Public Accounts Committee hearing where RSSB senior management was responding to issues in the Auditor General (AG) report for the financial year 2018/2019.
Rugemanshuro told PAC that more than 80 per cent of the houses have been sold so far following adjustment of prices.
He noted that the prices for some of them was slashed thanks to a more than $30 million (over Rwf27 billion) subsidy commitment by the Government, which is almost equivalent to the money that RSSB had put in developing infrastructures for the project.
The agency, he said, has new strategic plans whereby they will not only focus on high end housing but also work on housing projects that will deliver affordable housing.
"In our strategic plan, we put members first. We are planning to start new housing projects that will deliver affordable houses to our members,” he said.
Rugemanshuro also addressed concerns by a section of the Public Accounts Committee with regard to losses incurred in the financial year 2018/2019.
The AG’s report for the financial year 2018/2019 had pointed to the increasing loss on the project resulting from management cost of unsold houses, as well as the prices of sale of some houses.
In the previous financial year, the loss was projected at Rwf10.6 billion, but the 2018/2019 audit noted that the loss was projected to increase to Rwf12.5 billion.
This increase, it indicated, is associated with administrative and management expenses incurred on the unsold houses, which increased by Rwf1.9bn from Rwf2.9bn in 2017 to Rwf4.8bn in 2018.
Available documentation suggested that out of 504 constructed houses, 313 houses were sold by the time of the audit. It showed that if the houses were not sold out, it will continue aggravating the loss suffered on this project.
"Although this project has no expected profit on investment, management should devise measures to sell these houses as a means of avoiding further increase in losses,” the Office of the Auditor General advised in the report.
Rugemanshuro who assumed leadership of the firm this year said that the loss from the Vision City Project stems from poorly carried out studies and associated additional costs for its implementation. The completion of the project was delayed for more than two years.
"There was a lack of thorough study for the project before its implementation,” he said.
Members of the Public Accounts Committee have urged the management of the Rwanda Social Security Board (RSSB) to make profitable investments going forward to avoid any further losses.
Jean Claude Ntezimana said that it has been observed that the value of a plot of land continues an upward trend which would also make houses more valuable, but wondered why RSSB sells the houses at almost half of the cost of their construction.
MP Médiatrice Izabiliza said that it is good that RSSB makes investments, but try to make studies for profitable projects that engage the members and their participation, and focus on what they will benefit from them.
"Venturing in house construction is a good idea, but when you do not assess the needs and the financial means of the people for which you are going to build for, it will not be beneficial enough,” she said.
RSSB has another project for construction of low-cost houses, but it was changed to the middle-income category after a revision of the wall construction material, whereby it was initially supposed to be bricks, but later, precast (prefabricated concrete walls) was adopted.
The move resulted in the increase of the project cost by Rwf5 billion from Rwf28 billion to Rwf33 billion.
MPs said that given that the project will consist of two categories one with two-bedroom houses costing Rwf60 million each, and the other with three-bed room houses priced at Rwf72 million, each, there is a need to build residential houses that are within the means of many Rwandans.
"Considering the financial means of Rwandans right now, not many can afford such houses. In your investment plans, you should focus on the capacity and benefits of the members of the social security schemes through assessment,” said PAC Chairperson Valens Muhakwa.
This, Rugemanshuro said, has been factored in their new strategic plan which put members first and will implement housing projects that will deliver affordable houses to members.
Rwf54 billion profit on overall investments
Rugemanshuro said that although there are areas where RSSB investments did not go well, there are ventures which performed well, citing investments in Bank of Kigali, and treasury bills and bonds.
Overall, he said, RSSB registered Rwf54 billion profits on its portfolio in the fiscal year 2018/2019, compared to Rwf47 billion in the previous year.