Will leaders' retreat fix housing, jobs?

The government scored a last minute goal when, two days to the start of this year’s leadership retreat, infrastructure minister James Musoni launched a project to construct 7,480 ‘low cost’ housing units in the City of Kigali. The launch was timely because the first two resolutions of the 43 that were passed in last year’s retreat were about housing; it’s a subject likely to be high on the agenda of this year’s retreat again where leaders are expected to discuss the progress of their efforts, thus far. As Rwanda grows so does the demand for more houses which the Ministry of Infrastructure estimates at 560,000 by 2020, mostly in the city of Kigali. Simply put, over the next five years, at least 93,400 units must be constructed every year, that’s 7,780 units monthly and roughly 1945 houses a week. Can the government drum up enough activity to meet this daunting demand? Observers think this should be one of the questions that leaders should seek to answer at this year’s retreat. During the Thursday ground breaking ceremony, Musoni and City of Kigali Mayor Fidele Ndayisaba invited the private sector to support government efforts. Currently, it’s government affiliated agencies such as Rwanda Social Security Board (RSSB), Development Bank of Rwanda (BRD) and Shelter Afrique investing in low cost housing while private developers concentrate on high-end market. For instance at Batsinda, RSSB will reportedly construct 609 dwelling units each expected to cost Rwf30 million. The other agencies are involved in the 2,743 units to be constructed at Rugarama, 2,000 at Ndera and another 2,000 at Kanombe and 128 units at Ziniya. Low cost for whom? Although the news of the projects thrilled the public, a curious question also emerged; low cost houses for whom? At Rwf30million per unit, the thinking among many urban dwellers is that, ‘that is not low cost at all.’ How low can the government go? That’s probably another question the retreat should answer if leaders are to solve the housing equation. Commentators point out that those listed in the category of low income earners, (who are the majority), it’s impossible for them to find Rwf30million without a bank loan. However, with exorbitant lending rates at an average of 17.3 per cent, a true low income earner may never afford these houses. Property experts who talked to Sunday Times off the record opined that Rwf30 million is a price tag for the lower-middle class not low income earners if one considered all the factors involved. “Before you get excited, do the math’s, how are you going to raise the Rwf30 million and if its borrowing, how much will it cost you to finance such a loan in 15 years? In the end, the price might shoot to over Rwf50 million,” said Joel Kimono, a property consultant. Kimono adds that without a clear definition and strategy to identify low income earners, the houses might end up in the hands of the ‘rich’ who will buy off the houses for commercial purposes. The first resolution in last year’s retreat stated that the government would “develop a policy and legal framework on low cost housing and lay down strategies to ensure timely construction of low cost houses.’ He also points out that some of the developments are wasteful and developing horizontal structures without putting in consideration Rwanda’s land limitation. “Kigali’s population is fast growing but land [will] not. So we have to abandon horizontal development and encourage developers to construct vertically (storied structures),” he added. Rwanda is one of the most densely populated countries in Africa and land is perhaps its scarcest resource with population density of 416 people per square km, according to the National Institute of Statistics Rwanda (NISR). Property experts have warned that current developments that don’t take into account scarcity of land might have to be demolished in the next decade to create space for appropriate structures. “Some of the properties seem to be short term responses to the city’s current housing crisis, there appears to be no long-term plan that takes in consideration population growth and the land factor,” said Albert Ngoga, an architect. Ngoga’s observation was echoed by Minister Musoni who pointed out that developers have to be innovative and try to put the available land to good use to create enough space for all the houses needed. Where are the jobs? But the housing problem, experts note, can’t be discussed in isolation of urban unemployment. According to Yusuf Murangwa, the Director General of NISR, urban unemployment stands at 7 per cent but it rises to 15 per cent among fresh graduates joining the job market. Can the economy produce more jobs to meet the growing needs? Another question with no easy answers for the leaders to ponder; at the moment, according to Murangwa, only slightly over 100,000 jobs are being created annually. “Unfortunately, the number of those joining the labour market is over 150,000 every year,” said Murangwa. The government seeks to create at least 200, 000 off farm jobs every year but there’s currently no clear statistics to indicate how it is performing on the pledge. Although a critical need, expediting efforts to create more jobs and reduce urban unemployment, especially among the youth, was not listed among the 43 resolutions from last year’s retreat. Experts say there’s a close link between urbanization and unemployment and in the absence of a welfare state to cater for the unemployed, jobs must be created to enable people meet the cost of living in cities, including housing and food. According to the World Bank, Rwanda has the fastest rate of urbanisation among African countries, with the proportion of people living in urban areas increasing nearly threefold between 1990 and 2011. The government notes in the Economic Development and Poverty Reduction Strategy (EDPRS II) that while the urbanisation rate is growing, the level remains relatively low for proper management. “This is a unique opportunity for Rwanda to avoid mistakes made by other middle income countries by pro-actively managing the urbanisation process and mitigating risks of urban sprawl, divided cities, high urban unemployment and high urban poverty,” it states.

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Will leaders' retreat fix housing, jobs?