The bank move comes at a time when the future for real estate in the country is promising pushed by strong economic growth which failed to match with demand of decent houses. Latest data show that current demand stands at around 200,000 houses while supply is merely 15,000 units annually.
This makes Dar es Salaam to rank highest in cost of rental in the region. On top of that a total housing shortage stands at around three million houses, according to National Housing Corporation (NHC) 2015 assessment.
The demand, apart from strong GDP growth, is also pushed up by commercial banks that have thrown their weight on mortgage financing to create even more house demand. Reports show the number of mortgage lenders in the market increased from three in 2009 to 21 in 2015 and the average mortgage interest rate in dropped from 22 per cent to 16 per cent.
In that vein, CRDB Bank, Tanzania’s largest bank in terms of balance sheet, takes the matter to its hand and envisages increasing focus on mortgaging and helping ‘wananchi’ to own decent houses at affordable price.
The move, according to CRDB’s Director of Marketing Research and Customer Services, Ms Tully Mwambapa, seeks to raise the country’s mortgaging bar in the region. “Housing as a basic need enhances security and health wellbeing of the society,” said Ms Tully Mwambapa, Director of Marketing Research and Customer Services, of CRDB.
The bank started to issue mortgage under a “Jijenge” portfolio four years ago in a bid to facilitate acquisition of affordable quality houses via purchase, construction and refinancing. “Using our team, we will provide technical advice on matters related to mortgage financing including selection of property, insurance, property locations and well structured loan repayment terms” Ms Mwambapa said.
In its latest report, the Bank of Tanzania (BoT) said Tanzania is one of the fastest growing mortgage markets in the region, propelled by a high demand and driven by a sustained economic growth. The mortgage market increased by almost 30 per cent to reach 482bn/- in June 2016 against 375bn/- that was recorded in March 2016. Nevertheless, the September 2016 report shows that Tanzania’s mortgage market is still relatively smaller compared to regional peers, specifically, Kenya, Rwanda and Uganda.
“Mortgage debt outstanding as a proportion of [Tanzania] GDP was around 0.53 per cent as at the end of the second quarter of 2016. “This is lower than its East African neighbouring countries but growing at an accelerated pace,” the report reads.
In Rwanda, it stands at around 3.6 per cent of the GDP while in Kenya and Uganda; it is at 3.4 per cent and 0.9 per cent respectively. Nevertheless, CRDB said apart from massively promoting its Jijenge loans, in this year, it will, also foster its relationship with existing real estate developers so as to bring Tanzania’s mortgage to new heights.
Apart from the Jijenge loans, CRDB signed in 2015, a lending agreement with Watumishi Housing Company (WHC) in a move that seeks to boost provision of mortgage financing to public servants. WHC is a property developer and a licensed fund manager for the WHC Real Estate Investment Trust (WHC-REIT) which is the main implementer of the Tanzania Public Servant Housing Scheme tasked with building 50,000 housing units in five phases commencing from 2014/2015.
According to Ms Mwambapa, CRDB is also working with several stakeholders the NHC, PSPF, Joiven Investments (the developer of the Jangwani Seabreeze Project) and with AVIC Coastland Development Limited in the endeavour to develop the real estate industry. NHC, which has built thousands of houses during the past few years, is currently undertaking a country-wide project known as ‘My Home My Life’ which seeks to offer 5,000 affordable housing units.