Rwanda's growing construction and development sector - CNBC Africa

Rwanda's growing construction and development sector

East Africa

by Tendai Dube 0

Rwanda's growing construction and development sector. Photo: Pexels

With population growth of 2.7 per cent and a growing middle class, Rwanda is experiencing a massive boost in the construction sector and growing demand for real estate developments.

Every year in Rwanda between 28 thousand and 35 thousand units are in demand just in Kigali, a need developers are struggling to meet.

"I think the construction sector really boomed and had taken a significant chunk of the GDP, various sectors, infrastructure, offices and developments - however on the real estate part we still have a high demand to address," said Patrick Sebatigita, CEO of Ujenge Group and a member of the Young Presidents' Association.

Sebatigita says you can really feel the burden of investing in a real estate project because the mortgage interest rates are quite high.

"So people tend to focus on the construction costs to reduce it however it thinks it may be a bit more complex than that - if we want to address demand - I think the local developers have to be empowered first with capacity to generate capital," says Sebatigita.

A big issue is that with regards to construction material is that fifty per cent of the material is imported he said but that the East African bloc is trying to compensate for this issue by waiving fees for those in the region.

Sebatigita suggests that governments in the bloc should provide incentives for manufacturers to produce finishing materials like flooring or ceilings.

Sebatigita's Ujenge Group also built the first condominium homes in Rwanda.

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"We had the first condo and we faced - fortunately or unfortunately - all the challenges we can face on such developments but I think that the people were really keen in getting condos.

He theorises that Rwanda might have a housing policy that is pushing people to go high rise instead of horizontally because of the scarcity of space.

"I think we still have a long way to go in terms of really capturing the market but the demand is there."

He adds: "The financial package on the mortgage side is still tailored on a trade models because commercial banks are really getting involved in mortgage in East Africa, before the context was not there and I think the transition is quite slow so I think we need to think about something more inclusive more adapted."

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