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Housing finance in Tanzania: fears, challenges, prospects...
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Housing finance in Tanzania: fears, challenges, prospects...

#35 6 years, 11 months ago
SEVERAL banks in Tanzania have joined forces with the parastatal National Housing Corporation (NHC) to launch a housing finance scheme which is ostensibly designed to enable Tanzanians to own houses. However, observers remain skeptical about

the efficacy of the arrangements.
At the centre of the skepticism are the crucial issues of interest rates, affordability and lack of knowledge on housing finance among Tanzanians, all of which are major hurdles to be surmounted at the outset if the plan is to be effective and sustainable on the ground.


Under the proposed scheme, it would take less than a year for a person to acquire a newly-constructed house or apartment!
It is estimated that it takes ten years or more for an ordinary Tanzanian to construct a house using personal/family savings and/or other more 'traditional' ways and means!

Dispelling the skepticism, Nehemia Mchechu – a former banker and the incumbent NHC director general today – notes that such fears among Tanzanians stem from the fact that this is “a new thing in our communities.”
If more banks join forces to finance housing, Mchechu argued, this would dilute the competition in the financial sector – thereby automatically pushing lending rates and housing prices down!

Houses which would be constructed under the NHC-initiated programme would be sold on credit at prices ranging from Tsh25 million to 50 million (US$14-28m at current exchange rates) -– with a repayment period of 15 years!
To that end, Mchechu said, the Corporation has already started to construct houses of such prices, targeting mostly the middle class.
According to Mchechu, Tanzania has a demand for 200,000 housing units annually, but only 15,000 units are constructed. This has created a big deficit that has resulted in housing prices spiral.

Currently, Tanzania has a housing deficit of three million units.
The housing shortage has been increasing as Tanzania's population is growing. Studies have established that, between 1964 and 1969, there was a shortage of around 21,000 housing units in urban areas alone.

source: bussiness times
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