Kagame’s Vision City Has Lost US$116 Million Of Pension Money
General Paul Kagame wants the Rwandan capital city, Kigali, to be the best urban center in Africa. Vision City is the centerpiece of that Kagame dream. But Vision City has become a nightmare, as revealed by 2018 Auditor General’s Report.
The saddest part of Vision City is the source of the money that built it — as usual, Kagame used Rwandan workers’ money, the pension fund managed by Rwanda Social Security Board (RSSB). The plan was to build 4,529 houses in four phases. The initial phase of 504 houses was completed in August 2018.
According to the Auditor General, Vision City has incurred heavy losses due to three major problems, namely, 1) selling below cost, 2) low uptake of the houses, and 3) cost overruns.
1. Selling below cost
Because there are very few buyers due to low incomes in Rwanda, the houses are being marketed cheaply below cost to make them affordable. The Auditor General writes:
“Compared to total expenditure incurred on construction works and company expenses of Frw 113,650,143,654 a deficit amounting to Frw 10,625,425,193 is projected.
In other words, US$12 million of the Rwandan pension money is lost.
2. Low uptake for the houses
Of 504 houses built in phase one, only 213 customers has “signed contracts” as at 31 December 2018. The remaining 291 houses (58%) had not been booked. Says the Auditor General:
“The cumulative sales revenue stood at Frw 18,862,788,803 by December 2018 being 25.09% of expected sale revenue of Frw 75,192,180,541. This is an indicator of low likelihood to sell the houses over a reasonable period of time.”
In other words, US$64 million in sales revenue was lost by December 2018 — with no indication that the loss would be reversed in the near future.
3. Cost overruns
According to the Auditor General, “the original construction cost was estimated at USD 89,605,000 (Frw 77,594,363,721). However, by 31 August 2018, a total of Frw 113,650,143,654 had been incurred. Hence, additional cost over and above the initial projection standing at Frw 36,055,779,933.” In other words, US$40 million was lost in cost overruns.
