BANKING : Sale of Rwanda Housing Bank in advanced stages

The sale of Rwanda Housing Bank (BHR) is in advanced stages as the technical process needed to facilitate the sale has been completed, in a move that is expected to strengthen the local mortgage industry, Business Times has learnt. The process includes passing the necessary legal instrument in early September giving the government mandate and authority to oversee the sale of the bank as the majority shareholder with 53 percent. The second largest shareholder of BHR is Social Security Fund of Rwanda (SSFR) with 35 percent and while minority shareholders holding with 13 percent respectively. Through the legal instrument, minority shareholders namely; OCIR THE, the Development Bank of Rwanda, Magerwa, Bank of Kigali and BCR, acceded their shares to government to sale their shares along to strategic investors. Government is now working around the clock to ensure that the bank is successfully sold by earlier next year. “We are yet to complete the financial evaluation during the next week, after that we will be able to identify the financial expert that will help us -with a proper valuation of the company,” Vincent Munyeshyaka , the chairman steering committee that is selling off the bank revealed to Business Times an exclusive interview on Friday. Munyeshyaka noted that government is to hire a financial expert who will assist in undertaking valuation of the bank to determine the exact price and value of the share of the company. “We are undertaking a proper procurement process aiming at identifying a strategic investor who will assist government to develop our financial sector and more specifically to develop the mortgage financing business in the country,” he said. “After the valuation process will be the basis of negotiation with the strategic investor,” he added. The R H B, which currently acts as a primary mortgage lender in the country, will turn into mortgage liquidity facility to finance mortgage lenders like commercial banks. According to Munyeshyaka, who also serves as the coordinator of government portfolio, the move is also part of government’s efforts to withdraw from private business to allow the private sector to be the driver of economic growth. “Since 1995, government adopted an open policy – by principle it has to withdraw but instead put in place an enabling environment for business,” he said, referring to Rwanda’s tremendous improvement in the World Bank Doing Business Report, 2010 where the country emerged as a top reformer. Rwanda’s construction sector largely financed by mortgages though statistics from the Central Bank show that current demand for mortgage finance is much higher than total supply. Only four out of eight commercial banks embrace mortgage financing alongside BHR. Recently, the Commercial Bank of Rwanda (BCR) resumed its mortgage financing after holding the product for about six months. The product had been suspended claimed to have exceeded its ceiling of Rwf2 billion by 50 percent. “We are looking for a specialist that will help us to develop mortgage business – we are expecting to benefit from that partnership to develop our financial sector has a whole but specifically - mortgage business in our country,” Munyeshaka said. “If we are talking about mortgage business -we are talking about long term financing and in order to be able to make the long term financing - we need to have long term saving. We are expecting that expert to help us to develop financial instruments capable to develop long term saving,” he added. Ends