The Rwanda Housing Finance Project, RHFP is a Government of Rwanda (GoR) Project implemented by the Development Bank of Rwanda (BRD) and financed by the World Bank to the tune of Rwf150 Million USD. The aim of the project is to expand Housing finance to households and support capital market development in Rwanda.
BRD on-lends the funds to the Participating Financial Institutions (PFI’s) at an interest rate of 6% after the PFI’s sign Participation Agreement. The PFI’s will on-lend the funds to eligible beneficiaries at a maximum interest rate of 11% up to a period of 20 years. The Borrowers will access mortgages through Participating Financial Institutions that have signed Participating Agreements with BRD.
The Environmental and Social Management Framework (ESMF) for the Rwanda Housing Finance Project
The Rwanda Housing Finance Project is a US$150million five-year project, which aims to expand access to housing finance to households and to support capital market development in Rwanda. To address structural challenges in the Rwandan housing finance market, the project helps develop the financial system’s institutional framework and build capacity to facilitate financial intermediation beyond the banking sector. In this regard, the project was designed with two components: (1): Provision of Long-term Finance to Expand Housing Finance (US$147 million equivalent), and (2): Technical Assistance and Implementation Support (US$3 million equivalent). Part of component one proceeds will be allocated to finance a potential Government of Rwanda (GoR) investment into the Rwanda Mortgage Refinance Company (RMRC) in the form of equity and/or debt alongside commitments from other institutional investors.
The ESMF provides guidance, procedure and implementation arrangement of the provision of infrastructure for affordable housing development projects which was not previously planned in the earlier project design, in order to anticipately address adverse environmental and social impacts. Specific information on country-wide project locations, land requirements, bio- physical features etc. will trigger the preparation of Environmental and Social Impact Assessment (ESIA). However, the proposed locations for sub projects activities to be implemented under the Rwanda Housing Finance Project (RHFP) include locations identified by Rwanda Housing Authority for selected housing developments and also other unknown locations that may be identified in the course of the project implementation.
Resettlement Policy Framework (RPF) for the Rwanda Housing Finance Project
The Rwanda Housing Finance Project activities are likely to result in the relocation of people except perhaps in the areas where developers have already acquired the land, new/additional land would have to be acquired for activities such as access roads or land expansion.This RPF is therefore necessary to provide guidelines for addressing concerns of Project Affected People (PAPs). The guiding principle for land acquisition will be that where land is required for implementation of the investment programme appropriate safeguards will be observed to avoid or reduce the negative impacts of land acquisition on the affected community members.
Development Bank of Rwanda (BRD) seeks to promote affordable housing basing on two-twin pillars of “mortgage finance and production of bankable housing” through focusing on both short, medium and longer term market interventions to address challenges around housing finance in Rwanda.
The Bank’s key financing interventions include;
- Increasing supply, bankability and affordability of housing, reduce the national housing deficit;
- Increasing availability and pricing of housing finance (mortgage loans);
- Standardize all aspects of lending, make mortgage loans a commodity;
- Improve liquidity of mortgage loans, create risk management mechanisms to improve safety and performance;
- Create funding links to local capital markets where there is long term funds and desire to invest in mortgage securities.
The successful provision of affordable housing relies on the twin pillars of mortgage finance and production of bankable housing.
- Rugarama Park estate;
- Kimisange and Kagarama Estates;
- Land banking projects for Ziniya, Ndera and Busanza; and
- Building a piece of land (situated at former US Embassy) for the new BRD premises for commercial purposes.
The Housing Department will also focus on finding more sites for housing development in the six secondary cities – that is – Muhanga, Rubavu, Huye, Nyagatare, Rusizi and Musanze.