ADDRESS BY THE DIRECTOR GENERAL, NATIONAL HOUSING CORPORATION, AT THE SIGNING CEREMONY HELD AT THE HYATT KILIMANJARO HOTEL, DAR-ES-SALAAM, ON OCTOBER 31^ST, 2011.

Hon. Prof. Anna Tibaijuka, Minister for Lands, Housing and Human Settlements Development,

Hon. Members of Parliament,

Hon. Goodluck Ole Megeye, Deputy Minister for Lands, Housing and Human Settlements Development,

The Governor of Bank of Tanzania,

Permanent Secretary Ministry of Lands, Housing and Human Settlements Development,

The Chairman of the Tanzania Bankers Association,

The Chairman – NHC Board of Director,

Chief Executives from the Banks,

Director General – NHC,

The Management of NHC,

The media,

Distinguished guests,

Ladies and Gentlemen,

I wish to extend my sincere gratitude to all of you for participating in this important event marking a new milestone in the development of housing sector in Tanzania. Indeed, this is historical day to me as I am meeting you for the second time this year as an outcome of the banker’s cocktail we had with you in March 2011 in this same venue and thereafter followed by a number of discussion regarding facilitation of mortgage financing to our potential customers.

Ladies and Gentlemen;

Today the National Housing Corporation (NHC) is marking an important event where seven banks will be signing Memorandum of Understanding (MOU) for providing mortgage products to potential customers who wish to purchase houses from NHC. It is a special and meaningful day which calls for all of us present here today to celebrate together. We have been waiting for this moment of signing of the MOU for quite some time and today you are going to witness the signing ceremony with; NMB PLC, National Bank of Commerce (NBC), KCB (Tanzania) Limited, Exim Bank (Tanzania) Limited, Commercial Bank of Africa (Tanzania) Limited (CBA), Bank of Africa (Tanzania) Limited (BOA), and  Azania Bank (Tanzania) Limited.

Ladies and Gentlemen;

The MOU commits us to work together more closely towards achieving our common goal, the pursuit of development of housing sector in Tanzania. NHC in this arrangement acts as supplier of houses while banks are the intermediaries where customers can obtain financing for houses. This event provides opportunity for the banks as well as NHC to inform the general public about our offerings.

I want to firmly reassure the banks which are here today that NHC is committed to deliver its strategic plan without fail. Our strategic plan 2010/2015 has been disseminated at various stakeholder levels including the Members of Parliament. NHC has already started execution of the strategic goal of constructing 15,000 houses in different regions. As you are aware, sale of houses has commence in various project areas such as Medeli in Dodoma and Meru Residential Apartments in Arusha. More projects are in the pipeline for construction this calendar year in Ubungo, Chang’ombe (Dar-Es-Salaam), Levolosi, Ngarenaro (Arusha), Wageni and Forest (Mbeya) and Kilakala (Morogoro).

NHC is expected to operate commercially while utilizing funds from the banks and financial institutions where it is expected to repay the loan timely. This can only be possible through construction of more houses for high and middle groups so as to make profit and make it possible to subsidize construction of 5000 houses for low income group as indicated in our strategic plan. Hon. Minister, this is also a challenge for the government to look for alternative ways of raising housing bond to support NHC on construction of affordable houses. The government tasked NHC to prepare a paper which will elaborate the implementation of the low housing scheme, the paper is ready hoping that it will be presented to you for further action.

Ladies and Gentlemen;

Let me therefore urge and challenge other banks to undertake necessary steps towards timely execution of mortgage financing product.

Lastly, I would like to thank the collaborating banks and the NHC team for their efforts and professional work to make this signing ceremony a great success.

Thank you.

ADDRESS BY THE HONOURABLE PROF. ANNA KAJUMULO TIBAIJUKA (MP), MINISTER FOR LANDS, HOUSING AND HUMAN SETTELMENT, AT THE SIGNING CEREMONY HELD AT THE HYATT KILIMANJARO HOTEL, DAR-ES-SALAAM, ON OCTOBER 31^ST, 2011.

Hon. Members of Parliament,

The Deputy Minister for Lands, Housing and Human Settlements, Hon. Goodluck Ole Mideye (MP),

The Governor of Bank of Tanzania, Prof. Benno Ndulu,

The Permanent Secretary Ministry of Lands, Housing and Human Settlements,

The Chairman of the Tanzania Bankers Association,

The Chairman , National Housing Corporation Board of Director, Eng. Msita

The Chief Executive Officers of  Banks,

Director General of National Housing Corporation ,

The media,

Distinguished guests,

Ladies and Gentlemen,

It is my great pleasure to join you this morning for this important event. As the Director General has rightly said, this is my second opportunity to meet with officials from the banking sector as a group. I recall meeting you in March this year during the bankers’ cocktail party organized by the National Housing Corporation (NHC) in this same venue. I therefore wish to extend my sincere appreciation to NHC for inviting me again to witness this signing ceremony which formally brings the banking sector to support NHC’s initiative to deliver housing as required by the CCM 2010 Election Manifesto.

Ladies and Gentlemen;

Banking sector plays a critical role in any country’s development process. If people are left to entirely rely on their own financial resources to fund their activities, they would be unable to make any significant development. The government therefore, considers banking sector as an important player in accelerating economic growth and reducing poverty. Without banks and financial institutions, development may be held back, even if other conditions are met.

Ladies and Gentlemen;

The Housing Sector plays a more critical role in a country’s welfare than is always recognized, as it directly affects not only the well-being of the people, but also the performance of other sectors of the economy. Adequate housing provision has engaged the attention of most countries, especially the developing ones, for a number of reasons. First, it is one of the three most important basic needs of mankind– the others being food and clothing. Second, housing is a very important durable consumer item, which impacts positively on

productivity, as decent housing significantly increases workers’ health and well being, and consequently, growth. Third, it is one of the indices for measuring the standard of living of people across societies.

The absence of mortgage financing system in Tanzania has left people in this country to depend on informal finance system since the demise of the Tanzania Housing Bank (THB) in 1995. Even before that time, the impact of THB in the housing market was insignificant. The absence of a mortgage finance system has adverse effects on our country’s economy in a number of ways:

·        The majority of Tanzanians have been forced to build their houses incrementally through own savings.

·        As a consequence, it takes 5-10 years for families to move in the houses so built. In most cases, families move in incomplete houses..

·        Colossal amount of capital that could have been utilized for other developmental purposes is immobilized for a long time.

Ladies and Gentlemen;

The government has been making considerable efforts to put in place a mortgage financing system. In 2003, the government, with support from UN-Habitat undertook a study on re-establishing a formal housing finance system in the country. The study provided useful inputs to the amendment of the Land Act of 1999 and other relevant Laws so that in 2008 the Parliament enacted the Mortgage Financing (Special Provisions) Act No. 17. This Act has put in place a legal framework for mortgage lending that protects the rights of borrowers and lenders on equal footing. To further enhance mortgage lending in 2010, the Government with the World Bank support, has facilitated establishment of a mortgage liquidity facility which in the form of a private company the Tanzania Mortgage Refinancing Company (TMRC), with the sole purpose of refinancing primary mortgage lenders. As you may be aware, the company will start refinancing mortgage lenders before the end of this year. Let me take this opportunity to commend banks which have already become members of TMRC by buying shares: Azania Bank, Tanzania Investment Bank, Exim Bank, CRDB Bank, National Micro-finance Bank, Dar es Salaam Community Bank, and Banc ABC. I call upon the remaining banks to do the same and eventually engage in mortgage lending.

Ladies and Gentlemen;

Despite the government efforts, most banks in Tanzania are hesitating to start mortgage financing except for four banks Commercial Bank of Africa (CBA) Azania Bank, Stanbic Bank and Kenya Commercial Bank. I know the first two banks Azania Bank and Commercial Bank of Africa started mortgage lending before the Mortgage Financing (Special Provisions) Act was enacted by the Parliament. We commend them for showing the way. As one of the advocates of the mortgage financing in Tanzania, I am encouraged by today’s event whereby NHC has managed to bring on board seven (7) banks to undertake mortgage finance. I commend the NHC’s initiative as well as the commitment of the banks that have agreed to join in this formal mortgage lending arrangement which will enable home seekers to purchase houses to be built by the NHC.. The government fully supports the initiative and you may therefore count on our support whenever needed. Mortgage product is highly needed in this country. Let me take this opportunity to call banks and financial institution present in this ceremony today and those not present to enable NHC to provide the much needed affordable housing to our people. 

I challenge the banks to look for ways of providing loans that are affordable to wider section of loan seekers. Affordable interest rate and repayment period are issues that need to be addressed urgently. Interest rate of 15% - 20% is very high and unaffordable to mortgage seekers.  

I take the challenge raised by the Director General on government participation in funding affordable housing. This requires a dialogue between my Ministry and Ministry of Finance to find a sustainable way on how the government can intervene.

Ladies and Gentlemen;

The signing of Memorandum of Understanding between National Housing Corporation and the Banks today marks a win – win partnership where banks will be able to direct potential customers to NHC and vice versa. Today, we are in serious need to evolve ourselves in a reciprocal development relationship in fostering housing sector than ever. I call upon those banks which are still silent on mortgage financing product to follow the suit.

Ladies and Gentlemen;

By these few words, I officially welcome National Housing Corporation with the collaborating banks to this signing ceremony.

Thank you for your attention.