The Rwandan government is crafting a set of regulations aimed at curbing rising land speculation across the country. The first set of guidelines targets agriculture investors seeking land for development.

Investors will now be required to sign a binding contract for land use that will incorporate a detailed project development plan based on the investor’s business plan, covering key project milestones and realistic timeframes for the rate of capital investment and job creation.

In addition, the development plans will have to be explicitly binding for continued access to land, with clear processes and penalties and lease termination in case of delays or underperformance.

“We want to make sure that there is regular monitoring to encourage land use — land is a very limited resource in our country and should not be used for speculation,” said Tony Nsanganira, head of agriculture development at the Rwanda Development Board.

Mr Nsanganira is currently spearheading the taskforce crafting a Client Charter for leasing agricultural land in the country.
The new land use guidelines in the Client Charter focus on the complex procedures involved in acquisition of private, state, Kigali city and district land.

With a high population density of over 230 people per sq km and with close to 80 per cent of the population involved in agriculture, land in Rwanda is currently used for low-output subsistence agriculture.

However, the government wants to make its use more efficient and also discourage subdivision of land into smaller units that make farming uneconomical.

According to Mr Nsanganira, land speculation is a “common phenomenon,” whereby “investors” serve as middlemen after acquiring rights over land but never develop the land as intended, instead using it to raise financing and seek other partners, or even selling on their rights to a proper developer.
“While it is no-one’s interest to terminate a good project that may be facing justified delays, it is important that the level and nature of land utilisation and the speed of development of the project be captured in the lease agreement, providing a basis for project monitoring and taking corrective action in case the project is not developed as intended,” Mr Nsanganira said.

Government agencies

He particularly referred to an agribusiness investment for which 50 hectares of private state land was secured but which has taken a year to complete due to absence of not only a binding agreement with timeframes for completion for each step but also absence of clear land leasing procedures.

But property and real estate agents say land speculation is mainly driven by government agencies that acquire substantial land from individuals through expropriation but delay in having it developed.

The Rwanda Social Security Board (RSSB) and the Kigali City Council are among the agencies with large pieces of land where expropriation has been done but the land is yet to be developed. “The government through its agencies is sending the wrong message when they buy land and do not develop it.

There are loopholes within the law on expropriation — it provides a timeframe for compensation but is silent on the timeframe for developing the land,” said Charles Haba, a property agent at Century Real Estate Ltd.

As a result of speculation, land prices are between 15 and 25 per cent per annum. “The cost of housing/real estate is going to go up because of delayed development of acquired land as the cost of inputs involved in development is also increasing,” Mr Haba said.

Land speculation is rife particularly in areas expected to host strategic government investments, especially in the eastern province of the country — Bugesera — where a new $600 million airport is to be constructed.

Land prices in the area have increased dramatically since the announcement. This is in addition to areas around Kigali city where the Special Economic Zones are being developed.

But according to Dr Emmanuel Nkuririziza, Director General of the Rwanda Natural Resources Authority, while the land law indicates that land should be repossessed if it is not developed within three years after acquisition, enforcement is still lacking.

“To make sure that land speculation does not happen, we have to ensure that when you are given land, you are also given an agreement with a number of obligations. What is still lacking is strict oversight of adherence to those obligations — if you keep it undeveloped for three years, you are supposed to be notified and eventually have the land taken away from you,” said Dr Nkuririziza said.