Investors who bought land in the Kigali Special Economic Zone and have failed to develop it risk losing the plots, the government has warned. The warning comes after the Zone management expressed frustration at the lack of development three years after selling the land.

Francois Kanimba, speaking on behalf of the Trade and Industry Minister, warned both speculators and genuine investors that the government will not hesitate to repossess the land if they fail to complete their payments and develop the land.

“The investors risk losing the plots after the grace period expires,” said Mr Kanimba.

According to the regulations, the investors were to make a 30 per cent down payment on the land and clear the remaining 70 per cent within two years before they are issued with title deeds.

And should a buyer fail to develop his plot according to the purpose for which he acquired it in a specified period, the management of the Zone has a right to repossess it.

The grace period for some of the investors has already lapsed; however, the minister did not give a specific period as to when the government will begun the repossession.

All the plots allocated in the first phase of the project were sold off three years ago and the government expected construction work to have began by now; however, this is not the case.

Only 15 companies of the 49 involved in the first phase of the project have started constructing warehouses, factories and service centres on the 98 hectares of land the government allocated for the project.

Sources told Rwanda Today that speculators who bought the land expecting to cash in later when it appreciates are largely responsible for the delay in developing the land.

“This was the most successful project. 100 per cent of the plots have been allocated to investors,” said Isabella Gasana, the managing director of the Rwanda Special Economic Zone.

A square metre of the land in the area costs Rwf20,000 ($32.53) making it one of the cheapest in Kigali city, where land prices have been appreciating due to increased demand.

Though the Rwanda Special Economic Zone is are expressing frustration at the delay in construction, investors cite the tight schedule given by the government to commence and complete the work.

In addition, many do not have land titles for the plots because they have not finished paying for them, hence cannot access bank loans to finance construction.

Mr Kanimba said the government has not come up with any bailout plan for investors who have failed to develop their plots.

“As a government, we are in a tricky situation to provide any further incentives,” Mr Kanimba said, citing the example of Pembe and Bakhresa grain milling companies, engaged in the same business but one is operating in the economic zone and the other outside the zone, in the countryside.

“Bakhresa is in the Economic Zone while Pembe is established outside the zone,” he said, , “thus giving Bakhresa special treatment will be favouring one industrial player against the competitor.”

“I am told some investors are talking to Zone management to help them get loans,” the minister said.

The government allocated a big chunk of land in Nyandungu and the surrounding hills near the international airport for the construction of light, medium and heavy industries and other businesses.

The government has a 45 per cent stake in the project while other partners have 55 per cent. The government also compensated the people who were moved from the area.

Other investors in the Zone are the Rwanda Development Bank, Rwanda Social Security Board, Sonarwa, Magerwa and Bond Trading.

The government and its partners pooled close to Rwf10 billion ($16.3 million) into phase one of the project to put up infrastructure — roads, power lines, fibre optic cable — as incentives for attracting investors to acquire land. Land is expensive and not easy to come by in Kigali.

The aim of the project was to enhance the country’s competitiveness as a commercial and logistics hub, create jobs and enhance the import substitution and export promotion strategies.

Rwanda’s strategic position in the Great Lake Region is one of the advantages and the biggest selling point that the Rwanda Development Board uses to market the country.

The marketers base their arguments on study findings that showed that the industries that set up in Kigali would be assured of sales of up to $1.2 billion worth in basic fast moving consumer goods and another $1.5 billion in consumer durables.

The business brief and the economic sense the project made attracted several investors and speculators alike.

To make sure many investors benefit from the land, there was a cap on the minimum and maximum size of land on sale.

“We don’t want to end up having four or five investors only. We need to have a vibrant area with a lot of activities, whereby investors will be sourcing raw materials from each other so we can build synergy in one area,” said Alex Ruzibukira, who worked closely with the project from its inception five years ago said.

Among the investors who have already set up are the Bakhresa Group which has invested $24 in a grain milling factory and the Ministry of Agriculture which is investing over $20 million in four projects in the agro-park.

Sadolin Paints, an international paint manufacturer, has also acquired land and has started ground works, investing an estimated $10 million.
Others are who have started construction are Alpha Media, Beijing Decoration Design and Engineering, Bhavesh Overseas, China Star Construction Company, EGHI and Fadar.

“The chairman of Roofings Group, Sikander Lalani, recently visited the company’s plot in the Zone but was discouraged because of the hilly nature of the land. It needs excavating before any construction begins,” said Maria Namukisa, the group’s representative in Rwanda.

Ms Namukisa said the company was negotiating with the Zone management for another plot located on a relatively flat area to cut costs involved in excavating.