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The new financing will build on the achievements of the ongoing 2010 Housing Finance Project (HFP) and brings the total IDA investment in the project to USD 100 million.
A press statement issued yesterday by the World Bank office in Dar es Salaam said the fund was approved by the World Banj Group’s Board of Executive Directors.
It said the HFP has overseen the establishment of the Tanzania Mortgage Refinancing Company (TMRC) which plays a key role in developing the mortgage market. The Company provides long term financing to mortgage lenders which has encouraged an increasing number of banks to offer mortgages.According to the statement, the project is implemented by the Bank of Tanzania (BoT) that delivers a comprehensive capacity building programme on the mortgage market targeting service providers, financial intermediaries, market professionals, policy makers, regulators, government authorities, the judiciary and the general public.
World Bank Country Director for Tanzania, Burundi and Uganda, Philippe Dongier said that Tanzania's rapid urbanisation in recent years has underscored the urgency to improve access to finance for affordable housing.
“Developing mortgage markets will make it possible for ordinary families (including those that have low incomes) to invest in their own housing as opposed to renting or building slowly over many years as and when they set aside some savings,” he said. Dongier said the mortgage market will go a long way in addressing the constraints to access housing credit which many working urban residents face and also serve to expand the construction industry and associated jobs.
World Bank’s Senior Financial Sector Specialist Yoko Doi, said TMRC has been operating in the country for three years now and has made a large impact as the number of banks now offering mortgage loans has grown from eight banks in 2010 to 19 in 2014 and mortgage repayment periods increased from the maximum of seven years that was previously offered to 20 years that banks offer now.
“The additional IDA funds will put TMRC on a stronger path to sustainability by raising its own funds through other means, such as local bond issuance”, said Doi. The TMRC provides a critical link between investors and housing markets, ensuring the needed capital is invested in growing Tanzania's housing resources.
The company is now fully capitalised and profitable with paid-in share capital amounting to USD 8.8 million from its shareholders, currently consisting of 12 commercial banks.
Another initiative set up under the project is the Housing Microfinance Fund (HMFF) to provide long-term loans for low income earners who currently lack access to housing finance either for the purchase of a home or for home improvements.
The additional IDA financing will allow the HMFF to be in a position to start building microfinance institutions' capacities to develop and administer housing microfinance products.
HFP is aligned with Tanzania's five-year National Strategy for Growth and Poverty Reduction (MKUKUTA) and the Tanzania Development Vision 2025, which highlight the importance of affordable housing, access to finance and capital market development.
The World Bank's International Development Association (IDA), established in 1960, helps the world's poorest countries by providing grants and low to zero-interest loans for projects and programmes that boost economic growth, reduce poverty and improve poor people's lives. IDA is one of the largest sources of assistance for the world's 77 poorest countries, 39 of which are in Africa. Resources from IDA bring positive change for 2.8 billion people living on less than USD 2 a day.
Since 1960, IDA has supported development work in 112 countries. Annual commitments have averaged about USD 18 billion over the last three years, with about 50 percent going to Africa.
SOURCE: THE GUARDIAN
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