Excerpt from Africa Housing Finance Yearbook 2015


Tanzania is a growing economy, straddling the East African and Southern African economic development communities. The country is one of the fastest growing countries on the African continent, and is rich in natural resources. At least 31.6 percent of the country’s 51 million people live in urban areas, with a population growth rate of almost three percent and urbanisation rate of five percent per annum .
The country has experienced impressive Gross Domestic Product growth rates over the past decade averaging almost seven percent per year. This growth is underpinned by rising investment in the natural gas sector, firm growth in private consumption, and growth in the telecommunications, transport, financial services and manufacturing sectors. The construction sector is also expected to grow as further investment is made in the gas, transport, power and urban property development sectors. The growth rate for the country is projected to remain above seven percent in the coming years .
Inflation rates have portrayed an increasing trend in the first half of 2015 with the rate increasing from four percent

Read More »

Excerpt from Africa Housing Finance Yearbook 2015


Tanzania is a growing economy, straddling the East African and Southern African economic development communities. The country is one of the fastest growing countries on the African continent, and is rich in natural resources. At least 31.6 percent of the country’s 51 million people live in urban areas, with a population growth rate of almost three percent and urbanisation rate of five percent per annum .
The country has experienced impressive Gross Domestic Product growth rates over the past decade averaging almost seven percent per year. This growth is underpinned by rising investment in the natural gas sector, firm growth in private consumption, and growth in the telecommunications, transport, financial services and manufacturing sectors. The construction sector is also expected to grow as further investment is made in the gas, transport, power and urban property development sectors. The growth rate for the country is projected to remain above seven percent in the coming years .
Inflation rates have portrayed an increasing trend in the first half of 2015 with the rate increasing from four percent in January 2015 to six percent in July 2015 falling from seven percent in 2014 and 16.1 percent in 2012. The rate is predicted to converge to slightly above seven percent in the long term .
These positive economic indicators and reforms, as well as stable political leadership, have resulted in substantial multilateral and donor support for the country’s development agenda. Some of this support is specifically targeted at developing the housing finance sector.

Access to finance

After two decades of economic liberalisation, Tanzania has 53 commercial banks and other private financial institutions. The private banking sector is sound and profitable, with net profit after tax rising at a Compound Annual Growth Rate (CAGR) of 38.5 percent between 2010 and 2014 .
According to Finscope (2013), the greatest area of growth in the non-bank formal sector has been in mobile facilities. A report on ‘Enabling Mobile Money Policies’ in Tanzania by Groupe Speciale Mobile Association (GSMA) revealed there has been a huge hike in the use of mobile finance since 2008, from less than one percent to 90 percent of the population in 2013. The 2014 Global Findex database reported the rate of account penetration to have doubled to 40 percent in Tanzania from year 2011 to 2014 mainly due to people adding a mobile money account rather than a financial institution account. The wide spread use of mobile financial services in Tanzania has led to increased financial institutions account dormancy rates. According to Findex, while 37 percent of adults with an account at a financial institution reported having made no deposit in the past year, 62 percent of this group reported having made financial transactions using a mobile phone over that period. In 2010, the Bank of Tanzania issued regulations for a credit reference bureau within the framework of the Bank of Tanzania Act of 2006. By June 2013 Bank of Tanzania had registered two credit reference bureaus namely Dun & Bradstreet and Creditinfo Tanzania Limited. This has increased availability of borrowers’ credit information and has brought more hope to banks that they will do away with defaulters.
Tanzania’s mortgage market is among the smallest in the East African region (the ratio of outstanding mortgage debt to GDP is 0.48 percent as at 30 June 2015 . According to 2014 Findex very few Tanzanians – only 4.5 percent of the adults aged 15 years and above report having an outstanding loan to purchase a home .
According to the BoT (2014), the mortgage market recorded an annual growth rate in mortgage loan balances of 59 percent in 2014. A key element in the growth of the mortgage market has been the provision of long term funding by the Tanzania Mortgage Refinance Company (TMRC). The TMRC was established in 2010 under the Housing Finance Program which was created with US$40 million funding support from the World Bank to expand access to affordable housing finance in Tanzania. The TMRC has 12 borrowing members (banks), 9 of which are offering mortgage loans.. In 2015, two non-borrowing members (Shelter Afrique and NHC) were also admitted.
By 30 June 2015, TMRC had extended loans by TZS41.1 billion (US$19.28 million) to seven of its member banks in a bid to facilitate mortgage lending. Mortgage loans’ average duration has also increased since the creation of the TMRC, from five to 10 years to 15-20 years.
As at 30 June 2015, 21 lenders were offering mortgage product (from only two in 2011) with more expected to enter the market.
As at 30 June 2015, total mortgage debt stood at TZS334 billion(US$156.82 million). Average loan size as at 30th June 2015 was TZS75 million (US$35 182), an increase from 31 December 2014 when the average loan size was TZS69 million (US$32 367). Demand for housing and housing loans remains extremely high but is constrained by inadequate supply of affordable housing and high interest rates. Typical rates offered by lenders for the mortgage loan product vary between 18 and 22 percent. Most lenders offer loans for home purchase but increasingly different products are emerging such as loans for self construction and for equity withdrawal, which continue to be expensive and beyond the reach of the average Tanzanian.
Given affordability levels, the microfinance sector is especially important in addressing housing supply in Tanzania and is growing steadily. A study commissioned by the Bank of Tanzania found that 41 percent of Tanzanians who borrow microloans planned to use these for housing construction or improvements. Some 22 MFIs report to the Mix Market, an online source of microfinance performance data and analysis. Based on the most recent data found, these lenders had a gross loan portfolio of US$1.4 billion, 364 813 active borrowers and 819 959 depositors giving an average loan size of US$3 838. The largest microlender in Tanzania is the National Microfinance Bank (NMB), with a gross loan portfolio of US$1.04 billion. In 2011, the Tanzanian government announced a plan to establish a Housing Microfinance Fund (HMFF) as one of the components of the Housing Finance Program with a US$3 million contribution from the World Bank. Progress has been slow as no loans were extended up to March 2015 where additional funding of US$60 million was extended by the World Bank for the Housing Finance Program. Out of the US$60 million, US$15 million was extended for the HMFF to make a total fund of US$18 million. On 31 July 2015, the first disbursement of TZS1 billion (US$469 092) was made under the microfinance fund to DCB Commercial Bank Plc with the total credit line to the bank being TZS3 billion (US$1.4 million). This has marked the first step towards significant progress of the microfinance sector. DCB is looking to lend the funds to low income earners to renovate or construct new houses. For this microfinance housing product, the bank will lend up to TZS30 million (US$14 073) per borrower for a tenor of one to five years. Commercial MFIs are also entering the affordable housing space. In 2015 Akiba Commercial Bank introduced a microfinance product for home improvement with loan amounts ranging from TZS500 000 (US$235) to TZS20 million (US$9 382), repayable over 3 to 12 months.


According to FinScope Tanzania 2013, 53 percent of all adults in Tanzania earn less than TZS50 000 (about US$23) a month. 4.5 percent of adults are employed in the formal sector, and another 22.4 percent earn their incomes from running their own business (not farm related). According to the 2014 World Bank’s World Development Indicators, household survey data for 2010 -2014 showed an estimate of 43.5 percent of the Tanzanian population living on less than US$1.25 a day with a national estimate of unemployment rate of 3.5 percent in 2012. According to a World Bank report, Tanzania’s work force is expected to grow to 40 million workers who will need productive jobs by 2030. The share of the population employed in emerging sectors is expected to increase to 22 percent whereas the average income per worker is expected to only increase to US$1 900 by 2030.
As mentioned, the average mortgage size is TZS75 million (US$35 182), and so most clients are high income earners. Yet more than 70 percent of Tanzanians have incomes of less than US$150 a month, and so are unable to access mortgage finance. Most households therefore finance their housing through cash sourced from household savings, others include micro credit loans and personal loans. A number of NGOs cater for the lower income market segments, but their reach is insufficient to meet the scale of demand.
TMRC intervention has had a positive impact on interest rates. TMRC member banks can currently borrow from the TMRC at 11.5 percent and are therefore able to extend mortgage loans to their customers at lower mortgage interest rates than those prevailing in the market. In May 2014, Bank of Africa (BOA) who is a member bank accessing funds from TMRC introduced a 6 months campaign for interest rate reduction from 18 to 16 percent on their mortgage loan product which brought about competition for other mortgage lenders. Plans were also underway to re-launch the campaign in 2015.
A 50kg bag of cement costs US$7.04, but is more expensive in rural areas. A standard sheet of surrogated iron for roofing, gauge 28 is US$9.85, gauge 30 is US$8.44 and gauge 32 is US$6.57.
The minimum plot size for residential property in urban areas is 400m2. The cheapest two bedroom 65m2 house offered from the Mwongozo Housing Estate developed about 19.5km from the Kigamboni Ferry was priced at TZS44.75 million (US$20 992) VAT exclusive. Three bedroom houses with the size ranging from 85m2 to 144m2 were priced from TZS58.52 million (US$27 453) to TZS128.9 million (US$60 467) VAT exclusive .

Housing supply

Tanzania suffers from a shortage of good quality and affordable housing. The current housing deficit is estimated at three million housing units coupled with a 200 000 unit annual demand. According to a thesis on Modelling Informal Settlement Growth in Dar-es-Salaam in 2011, about 50 to 80 percent of its urban population lives in informal settlements, and the informal housing shares more than 50 percent of the whole urban housing stock. A Household Budget Survey for year 2011/2012 by the National Bureau of Statistics revealed that 18 percent of the households had connection to the electricity grid. This is an increase from 12 percent reported in 2007. Coverage by the grid continued to be concentrated in Dar-es-Salaam and other urban areas with rural areas having coverage of only 3.8 percent in 2011/2012.
The survey further revealed that there was an increase in the proportion of households living in dwellings made of modern materials from 2007 to 2011/2012. In 2011/2012, 39 percent of households in Tanzania Mainland were constructed with non-earth floors, 48 percent with durable walls and over half with metal roofs.
Survey on home ownership showed that more than 75 percent of households in Tanzania Mainland owned the houses in which they were currently living. Ownership in rural areas, urban areas and Dar-es- salaam was 89.3 percent, 57.9 percent and 37.1 percent respectively. Also, about 17.4 percent of households were living in privately rented houses, mostly in Dar-es-Salaam where more than half of the households were living in privately rented dwellings. .
The government of Tanzania has also played a pivotal role in ensuring that the huge housing gaps are addressed. In July 2015, the government announced that it is currently evaluating a considerable reduction on the Value Added Tax (VAT) on houses in order to boost the investment in real estate in Tanzania and raise living standards.
The Corporation announced in 2011 that it was raising its budget from US$23 million to US$230 million to increase the scale of delivery in the country. By November 2014 NHC reported to have corporate investments worth TZS600 billion (about US$281.5 million) and that it further plans for its project investment to grow to TZS1 trillion (US$469) by year 2015. Alternative building materials are being explored as a way to deliver these houses on a rapid scale. Under the new ‘Civil Servants Housing Scheme’, 50 000 houses will be constructed over the next five years. By September 2014 it was reported that construction of 5 000 units had already started in Dar-es-Salaam and was expected to be completed within one year. Furthermore, under the Tanzanian Building Agency (TBA), the government has already embarked on a special project to construct 10 000 affordable housing units for low and higher income earner public servants. By July 2015, TBA reported to have spent TZS6 billion (US$2.8 million) for construction of 850 units in Bunju B area in Dar-es-Salaam.
As part of its 2010-2015 vision, the NHC plans to build a minimum of 15 000 housing units (including 5 000 affordable houses for low income earners) for both sale (70 percent) and rental (30 percent), assuming the role of a master developer. In October 2013, NHC launched the sale of the 5 000 affordable houses completed from this strategy. To June 2013, the NHC had a total of 175 joint venture projects under way, of which 55 were completed, 59 were under construction and 61 had been stalled. By December 2014, NHC reported that assets owned by the corporation had increased to 2 389 buildings with 17 111 apartments at a net worth of TZS2.911 trillion (US$1.4 billion). In September 2012, the NHC announced a development in Arusha in northern Tanzania, which was expected for completion by January 2013. Some 100 apartments of 60m2 each were offered for sale at TZS82 million (about US$38 466). This project has been completed and is now selling. Furthermore in 2013, the NHC announced that it would add 510 housing units to the housing market in Dar es Salaam within the next two and half years, as part of three projects worth TZS124 billion (US$58.17 million). The three high rise modern housing projects are expected to house over 3 000 people and have areas for commercial and recreational facilities. Apart from these three projects, another four projects of 1 000 units have already been handed over to contractors for implementation and are currently part of NHC’s ongoing projects. These projects include: twin towers of 26 floors each built by China Railways Jianchan Engineering at TZS68.3 billion (US$32.04 million); three storey buildings each with 16 floors at a cost of TZS30.3 billion (US$14.21 million) to be undertaken by Group Six International; and two structures with 16 floors at a cost of TZS24.9 billion (US$11.68 million) to be implemented by Estim Construction.
In the July – December 2014 (Nyumba Newsletter), NHC announced its plans to launch 3 projects which are expected to run for the next 5 to 10 years. Two of the projects called Safari City and USA River are aimed at building a total of 8 000 houses in Arusha and the third project called Salama Creek Satelite City will aim to construct 9 500 houses in Dar-es-Salaam. While the USA River Satellite City is targeting the tourism industry, the Safari Satellite City is meant for de-congesting the Arusha Central Business District (CBD). The Salama Creek Satelite City is targeting middle income earners and aims to de-congest the Dar-es-Salaam Central Business District (CBD). In 2014 NHC signed a Memorandum of Understanding (MoU) with China Poly Technologies Inc. for investment of USD200 million to Valhalla Project for construction of commercial and residential buildings located at Masaki in Dar es Salaam. NHC also signed two other MoUs with China Railway Jianchang Engineering (CRJE) to jointly develop Salama Creek Satelite city located at Uvumba Temeke Dar es Salaam at a cost of USD1 billion and a Financial Square located in Upanga Kinondoni Dar es Salaam at a cost of USD500 million.

Property markets

At 131st of 189 economies on the World Bank’s 2015 Doing Business Report, Tanzania ranks poorly in terms of ease of doing business although this is an improvement from year 2014 where it ranked 145th out of 189 economies. It ranks 123rd in terms of ease of registering property, down from 146th in 2014. It takes eight procedures and 67 days to register a property, at a cost of 4.5 percent of the property value – almost three times longer than the time it takes in Organisation for Economic Cooperation and Development (OECD) countries, but comparable in terms of cost.
Lenders argue that an inadequate supply of mortgageable units makes it difficult for a vibrant property market to exist. Recent offerings by the NHC have been sold out within days of becoming available. The demand for new, affordable housing is considerable. A more fundamental problem, however, is the lack of land titles. Data from the Bank of Tanzania suggests that 75 percent of land is not surveyed in Dar es Salaam.
On the other hand NHC’s rental portfolio performed better than the sale of houses. During the year ended 30 June 2013, rental revenue increased to TZS63 billion (US$29.55 million) as compared to TZS47 billion (US$22.05 million) achieved in June 2012. NHC has sought to increase its rentals to 60 percent of market rates, up from the average of 30 percent of market rates that NHC tenants were charged in the past. The goal is to reach an average of 85 percent of the market rate by June 2015. The government remains the sole and primary instrument for land delivery. While in principle, rights of occupancy can be bought, sold, leased and mortgaged in Tanzania; in practice the land market is inhibited by many layers of government control. According to Shelter Afrique (2010), the formal market for transfers requires government approval, and land received through grants must be held for three years before the landholder can sell the rights. The transfer of a granted right of occupancy must be approved by the municipality and registered. A holder of a customary right of occupancy can sell the right, subject to the approval of (and subject to any restrictions imposed by) the village council. Mortgages are regulated by formal law, and land rights must be registered before they can be mortgaged. There is a very limited formal land sale market in Tanzania. Most land transactions occur on the informal market, and these tend to be leases. In rural areas, land sales were historically conducted between members of families or clans.
With notable inefficiencies, land acquisition, although improving, has been a hurdle in many respects towards the development of an efficient housing market; along with the limited availability of mortgage financing to support housing development. In recent years, the Ministry of Lands, Housing, and Human Settlements Division has undertaken a drive towards implementing key steps such as improved plot allocation in greenfield areas, land regularisation and titling in existing informal settlements that will enable it to encourage land development.

Policy and regulation

Since the time of independence in 1961, the government has recognised housing as one of the basic needs for all. The Ministry of Lands, Housing and Human Settlements Development has been mandated to administer land and human settlements in Tanzania on behalf of the President of Tanzania who serves as the trustee of all land.
While housing development in Tanzania is guided by the National Human Settlements Development Policy of 2000, the policy’s objectives largely cater towards the provision of adequate shelter, an efficient land delivery system, service provision and better rural housing without specifically addressing the problems within the housing sector. Efforts are currently underway towards developing a housing policy that will aim to address key issues surrounding the housing sector.
Mortgage Finance in Tanzania is guided by the Mortgage Finance Act of 2008, and the Banking and Financial Institutions (Mortgage Finance Regulations), 2011 developed for regulating mortgage finance operations for banks and housing finance companies. The Banking and Financial Institutions (Tanzania Mortgage Refinance Company) Regulations, 2011 were also developed with support from World Bank to guide the operations of the TMRC.

Finally, prudential norms were created for microfinance institutions in April 2005, intended to increase wholesale funding to MFIs and ensure their financial viability. Broader finance reform has also been initiated by the Bank of Tanzania through the Banking and Financial Institutions Act, the Bank of Tanzania Act and Companies Ordinance. In 2013, the Bank of Tanzania launched its Financial Inclusion Policy, targeting 50 percent formal financial inclusion by 2016. The proposed strategy tackles supply side, demand side and structural obstacles. Furthermore, priorities for this framework includes priorities such as payment platforms, infrastructure and consumer protection.


The affordable housing market in Tanzania provides enormous potential for growth as large scale production is required. The relatively healthy economic growth and good political management of the country provide an adequate platform for this. There is a great need for affordable housing finance for the average Tanzanian. The use of alternative and lower-cost technologies and materials is a key area of opportunity which complemented by the government’s initiatives to address housing gaps, has the potential to bring down the long-term costs associated with building housing.
Beyond mortgage finance, there are real opportunities for growth in the housing microfinance sector, which is also receiving policy attention and funding support. High levels of self-build coupled with a vibrant microfinance industry with good links to the formal banking sector, and experimentation with housing, mean that housing microfinance has enormous potential to contribute towards housing the majority of the population.


AfDB(2015). African Economic Outlook 2015.
African Union for Housing Finance (2014). Financing Housing in Africa, March 2014. Issue 33.Bade, R. (2011). The Emergence and Work of the Tanzania Mortgage Refinance Company. Presentation to the African Union for Housing Finance Annual Conference. September 2011.
Tanzania Mortgage Refinance Company (2015). Tanzania Mortgage Market Update, 31 December 2014
Bank of Tanzania (2012). Annual Report.
Bank of Tanzania (Unpublished 2015).Quarterly Mortgage Data, 30 June 2015
Demirguc-Kunt, A.,Klapper, L., Singer, D. and Oudheusden, P.V. (2014). Measuring Financial Inclusion: The Global Findex. World Bank Policy Research WP 7255.
Doce, E. (2012). Housing Microfinance in Tanzania. Presentation to the AUHF Conference, October.
EIU (2014). Country Risk Service: Tanzania, July 2014.
Heymans, M. (unpublished, 2011). Credit Bureau Activity in SADC Countries. Report commissioned by the FinMark Trust.
Making Finance Work for Africa, Tanzania: Banks receive €16 million to boost mortgage lending, 19 September 2014
Masere, A. Tanzania Says Economy Will Expand by a Fifth After GDP Rebasing, 23 June 2014, www.bloomberg.com
Mwakyusa, A. (2013). Tanzania: NHC implementing Sh124 billion Housing Project in Dar es Salaam, 21 August 2013.
Melzer, I. (2011). An Access Frontier for Housing Finance in Tanzania. Prepared for the FinMark Trust and presented to the AUHF Conference.
Mutero, J. (2010). Access to Housing Finance in Africa: Exploring the Issues (No. 10) Tanzania. Report commissioned by the FinMark Trust.
National Audit Office (2013). Report of the Controller and Auditor General on the Financial Statements of the National Housing Corporation for the year ended 30 June 2013.
National Housing Corporation (2010). Strategic Plan for 2010/11-2014/15, presented to Members of Parliament on 4 July 2010.
National Housing Corporation (2014). Nyumba Newsletter for July – December 2014.
NNkya, T.J. (2014). Financing affordable housing in Tanzania: Policy, Initiatives, Challenges and Opportunities, 29 May 2014. Presentation to the 6th Global Housing Finance Conference, Washington DC.
Shelter Afrique (2010). Housing Study- Tanzania. Prepared by Urban Solutions.
TanzaniaInvest (2013). Interview with Oscar Mgaya CEO of Tanzania Mortgage Refinance Company, 18 October 2013.
WAT Human Settlements Trust and Rooftops Canada (undated). Impact of Housing Microfinance Programs in Tanzania: Three Case Studies from Kupongezana Upatu Group. World Bank (2013).
World Bank (2015). Doing Business 2015 Report: Tanzania.
World Bank (2014). World’s Development Indicators: Tanzania
World Bank (2012). Implementation Status and Results, Tanzania – Housing Finance Project (P117242), Public Disclosure Copy.
Morisset, J (2014). When good is not good enough for 40m Tanzanians.
The Banking and Financial Institutions (Mortgage Finance) Regulations, 2011The Banking and Financial Institutions (Mortgage Finance) Regulations, 2015


*Assumed Exchange rate of US$: TZS is 1:2131.78



View all documents »


[nggallery id = 9]