REAL ESTATE INVESTMENT - ECONOMIC EMPOWERMENT AND HOME OWNERSHIP

By Dr. Fred Msemwa

It is everybody’s dream to live and own a decent home. Unfortunately, realizing this dream is not an easy task considering the low income levels of the majority.

It is considered that the working class could be better positioned to have at least more access to decent homes compared to the majority of Tanzanians who work as peasant mainly practising subsistence farming. Experience gained from the real estate sector shows that the majority of the working class group can’t afford a home loan that exceed twenty five million.

This unfavourable development is caused by the level of salaries paid by the economy and higher interest rates on mortgage financing. A recent study commissioned in 2015 by the World Bank titled “ Stocktaking of the Housing Challenges in Sub-Saharan Africa” sheds light that even government sponsored housing programs meant to address housing challenges for the lower income group end up benefitting the high income group due to lack of affordability.

It is therefore not surprising that people in the lower income group resort to informal housing development that denies them to a myriad economic opportunities that are associated with owning registered properties. Housing is a basic human need, yet one-sixth of the world’s population lives in slums. Data from recent studies shows that 70% of the urban housing stock in Sub-Saharan Africa is of poor quality and out of compliance with local regulations.

Studies also indicate that almost a quarter of a billion people in urban areas in the world lacked portable water and more than half lack basic sanitation. According to 2012 Census, Tanzania has about nine million homes out of which, three million are of poor quality that need urgent replacement.

The quality of houses built is directly linked with the economic status of the owners. Despite these challenges, decent housing remains an important tool in fighting poverty at family level and in empowering communities across Tanzania and the globe in general.

Housing provides a strong motivation for one to make saving. It saves as an asset base for the rural poor, improving people’s health and accelerates recovery fromdisasters. Apart from providing a decent shelter, the possession of formal housing increases economic opportunities to individuals and families.

Access to economic opportunities such as loans have the potential of increasing family earnings and creating wealth. While these advantages are obvious, the challenges is for national, municipal and district authorities to link their development strategies in a manner that increases chances for more people to own formal houses in areas of their jurisdiction.

Current national initiatives implemented by public and private entities such as Watumishi Housing Company (WHC), NHC, TBA, AVIC Town etc respectively are commendable but not adequate in addressing the housing and affordability gap facing the country.

This calls for the need for municipal and district authorities to have a hand in the provision of homes and not mere plots. Initiatives by municipals and district councils to actively participate in the provision of homes could take the form of establishing housing departments within their structures some of which are already manned by existing civil engineers and surveyors.

Houses so built could be either rented or sold to residents. This could not only increase the speed of solving housing challenges in their localities but also provide municipals with reliable future cash flows in terms of property taxes and a share of land rent with the national government.

Deciding to own a home is a single biggest decision to own an asset that most family will make which has a potential to appreciate in value over time. Building or buying a home grows the wealth of the family and is a good tool in distributing income over a larger population.

Families can start slowly to build own homes on incremental basis and by doing so they invest their otherwise small income over time. Building of homes forces families to save as they buy materials to be stocked for the intended building.

Furthermore, families that build extra space for renting help in providing homes for young families and absorb the pressure caused by rural-urban youth migration. such rentable space also enhance flexibility in the labour force to move to places where there economic opportunities.

According to the Habitat for Humanity, homes for the rural poor do not only provide shelter for the family but also critical for rural development as it allow families to tackle other needs such as education and health. As the rural poor have limited asset base, homes allow members of families to work and through which they can generate income to meet family needs.

A study commissioned by the Habitat for Humanity in Malawi provide evidence on the impact of improved housing on key indicators. Finding of this study shows that children aged under five living in improved houses registered a Forty Four percent reduction in malaria and respiratory deceases incidents compared to children living in traditional houses with poor ventilation.

This study generally argues that poor people living in poor conditions have short life expectancy and high rates of child mortality as they experience very high incidents of infectious diseases such as waterborne and respiratory diseases.

Indoor air pollution from poor ventilated homes affects more women and children. Home ownership gives citizens a true stake in their communities. After owning homes, citizens starts to be truly concerned about the provision of public goods in their communities such as schools, clinics, security etc.

These are intangible social benefits that comes with housing development. Natural disasters such as floods and earth quakes exacerbate the problem of poverty in the community. Building of homes after such disasters provide an opportunity to build better homes by incorporating mitigation measures and complying with government building regulations which may have not been complied with in the past.

These initiatives have a potential to provide displaced communities with an opportunity to own homes that can open economic opportunities and enhance their overall wellbeing.

While our country has its own system in managing disasters, there is always an opportunity to improve by borrowing a leaf from other countries that experience similar disasters by extending a more focused local and national support to victims through provision of services such as re-planning the affected areas if they were informally developed, extending building support services and geological information that can facilitate to mitigate against future similar earth quake incidents etc.

In conclusion, housing is a measure of household’s wealth. It is generally accepted that the standard of housing in a nation mirrors its economic development; standard of living and even its level of civilization. The housing sector has a key role to play in job creation, employment, security, health, social and political stability, effective economic growth and general economic development of the society.

Dr. Fred Msemwa is the CEO of Watumishi Housing Company Real Estate Investment Trust (WHC-REIT) responsible for management of collective investment schemes and provision of affordable homes in Tanzania.