Kigali's housing dilemma: Lessons from Ethiopia

Imagine buying and owning a modern apartment in a decent city neighborhood at US$100! Not exactly US$100 but technically, Rwf73,000 for a two-bedroom condo, is what Ethiopia’s urban low income earners are paying, monthly, to own an apartment in Addis Ababa. The beauty of it is in the way it works. A few years ago, the Ethiopian government took a decision to construct hundreds of apartments in the outskirts of the city where it would resettle low income earners and progressively eliminate shanty neighborhoods that are currently a common sight in Addis. There are more than two dozen condominium project sites located around the Ethiopian capital, some completed and others nearing completion. Perhaps the largest of them all is Yeka Abado, constructed on an area spanning 200 hectares on a green-field site about 16km east of Meskel Square, Addis city centre; The site will be linked to the city center by the Light Rail Transit (LRT) system launched recently, giving urban dwellers both a decent place to live and easy connectivity to the city. Yeka Abado has over 18,000 flats. The project manager explained that over 90 percent of the works had been completed and that the houses would be handed over to owners in the next two months. Some of the shanty houses that the Ethiopian Government wants to eliminate from its capital. (Kenneth Agutamba) It’s a breathe taking sight on a large swath of land with multi-storied apartment blocks; the area will also be equipped with a modern market, health centre, school and other social amenities to serve the over 80,000 people expected to live in the project. A four kilometer asphalt road was under construction with at least 70 percent of the works complete, according to the foreman. Once fully complete and occupied, the Yeka Abado site will be a small town of sorts that would require serious hygiene facilities in place. But to address that, authorities have put in place a major water treatment plant to serve the area, two huge water tanks have also been completed while the distribution of sewer lines to the various blocks is reportedly 75 percent done. Model approach Perhaps the Ethiopian approach to addressing urban housing challenges could be a helpful model for City of Kigali authorities who are currently sourcing for ideas on how to best provide ‘affordable units’ for hundreds of thousands of its low income urban earners. So far, success seems to have eluded them, and the closest they have come to an affordable house is still way out of reach of the target group. Works on the Yeka Abado project started in 2011 with the construction of 377 blocks containing 1,058 condos; more blocks were constructed to make a total of 746 with at least 18,269 units, between January 2012 and May November 2013, ranging from 1 to 3-bedrooms apartments. Although Ethiopia’s condominium project is aimed at solving the city’s housing problem, it has also helped authorities create jobs for the urban jobless youths many of whom were formerly involved in petty crime as a result of idleness. Such youths, according to Ethiopia’s communication Minister, Getachew Reda, have benefited from the government’s rehabilitation programs where they get skilled in various practices such as construction…just the way Iwawa operates in Rwanda. “From being a social problem, these youths have become part of the solution and many of them are working on these projects,” he explained. The Yeka Abado project alone has created 12,619 jobs including for 668 youth enterprises with 63,000 members, generating some Br200 million (about US$10 million). Smart costing Once the houses are completed, Ethiopian authorities have adopted a smart model that enables the city’s low income earners to afford the apartments on a rent-to-own arrangement. Potential home owners have to pay at least 20 percent of the value of the house to participate in a lottery where they all stand an equal chance of being picked. Winners in the housing lottery are then given the keys to the houses and pay monthly installments until the entire value of the house is covered. Those who don’t win are kept in the system and their names are drawn in other lotteries when houses in other projects are available. According to officials, the lottery helps eliminate rigging the system and promotes transparency to ensure that the truly low income earners get to own the houses; however, there are also projects for those regarded as middle-income or rich. Thirty two year old Sisaz Abebe, husband to one wife and dad to two kids, owns a small shop; he is among the beneficiaries already occupying a two-bedroom apartment in some of the completed projects not far from the Yeka Abado site. “I pay US$100 dollars every month for this apartment, I will do so for fifteen years before taking full ownership of the house,” he told me adding that he was a happy man. Although the rooms are tiny, they are decent enough, with running water, a toilet, and modern kitchen in an organized environment which is far better than the shack he used to occupy a few years back, in one of Addis Ababa’s shanty neighborhoods. Can it work in Rwanda? Both Kigali and Addis face similar challenges regarding surging urban population levels which compound the problem of urban housing. For instance, Kigali city’s population, estimated at 1,059,000 people in 2011, will hit almost two million by 2022 and over three million by 2030. According to a state of housing report launched in October 2012, as of 2011, the city had 223,000 dwelling units but only about half of them were habitable while 71,487 need urgent up-grading. It was also found that private property developers were concentrating on building houses for the high income earners who form only a tiny minority of the city’s population leaving an acute deficit for the majority of low income earners. For Kigali city authorities to flatten the 108,903 condemned units, they would need a project such as Ethiopia’s grand condominium schemes; such a plan has been mooted before but actualization may take a few years. The 2012 state of housing report indicated that Kigali city needs at least 344,068 new units by 2022; at the moment, developers are churning out between 800-1,000 units annually; but that’s quite low compared to the city needs of 25,000 units per year. If city authorities chose to invest in condominium projects, it would have to benefit the 54.11 percent urban dwellers who earn between Rwf 35,500 and 200,000 per month and another 12.6 percent of Kigali’s population who earn less than Rwf 25,500 per month. Those two categories, according to the 2012 housing report, require 186,163 and 43,436 housing units, respectively.

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Kigali's housing dilemma: Lessons from Ethiopia