Rwandan subsidiaries of Kenyan banks KCB and Equity are seeking to have Kigali Business Centre placed under receivership for defaulting on a $16 million loan owed to the two lenders.

BPR Rwanda – a subsidiary of KCB after the merger of KCB Rwanda and BPR – and Equity Bank Rwanda have requested the Registrar General at Rwanda Development Board (RDB) to put the shopping complex in Kigali under statutory management to protect their interests.

BPR Rwanda chief executive officer George Odhiambo told The EastAfrican that the lenders settled on receivership after other efforts to recover their money from the building owners failed.
Kigali Business Centre (KBC) is one of the newest prime shopping complexes to be added to the Kigali skyline. It is located at an affluent city intersection with other premium amenities like Kigali Heights, Kigali Convention Centre (KCC) and Radisson Blu hotel.

The shopping complex hosts furniture and clothing shops, entertainment spots, and BPR and Equity bank branches.
But despite its near full occupancy, the property owners have been unable to repay the $16 million loan owed to the two lenders, which prompted the banks to set the receivership process in motion.

“We are not foreclosing KBC as reported. BPR and the bank we co-financed the project have just applied for receivership as per the law; that’s where the matter stands,” Mr Odhiambo said.
“There have been several efforts from the side of the bank like giving a moratorium-a grace period, restructuring the loan, but nothing has changed,” he added.

RDB arbitration
He said the two banks have been engaging RDB, including asking the board to talk to the borrower to meet his obligations and arbitrate between the lenders and the borrower.

“The property has occupancy, and the tenants have been paying rent, including BPR, which is one of the tenants, but the loan is not being paid. The customer did not only fail to honour commitments to the banks but to RDB as well,” he said.
Mr Odhiambo noted that the ball is now in RDB’s hands to approve the receivership request and appoint a receiver manager.

KBC ownership
Kigali Business Centre is owned by Charles Mporanyi, one of Rwanda’s consummate career businessmen. He built the complex after selling his insurance company Soras, Rwanda’s second oldest insurer, to South African giant Sanlam. It was to be his swansong after a long career in corporate Rwanda.

The developments have left many wondering what could have gone wrong for the businessman as there had barely been any signs of distress at KBC given its high occupancy rate, save for Covid-19 pandemic shocks.

The EastAfrican could not get a comment from Mr Mporanyi, but an inside source said that the problems the property is facing now are rooted in governance issues due to interference by the businessman's children.
“The property has a high occupancy rate, north of 80 percent – higher than most players in the market. There is a bit of default by a few tenants but not alarming,” the source added.

Mr Odhiambo said KBC is currently valued at around $23 million, adding that the lenders are not hell-bent on foreclosure.
“Banks do not enjoy this process. If the customer starts paying, all this will stop,” he said.

Commercial real estate is one of the sectors with high non-performing loans in Rwanda. According to data from the central bank, the sector NPLs between December 2020 to March 2021 grew from 7.5 percent to 16.7 percent.
https://www.theeastafrican.co.ke/tea/business/kcb-equity-units-seek-rece...