TMRC asked to provide housing loans By In2EastAfrica Reporter

Tanzania Mortgage Refinance Company Limited (TMRC) has been asked to consider collaborating with the social security schemes to extend low cost housing loans to the employees, to cater for the ever rising demand for accommodation.

The Chairman for Parliamentary Committee for Finance and Economic Affairs Dr Abdallah Kigoda said in an interview on Wednesday in Dar es Salaam that pension funds could be an important investment partner due to its soundness financially as well as being among largest investors in real estate development.

“It is a win -win deal for TMRC, pension schemes and more importantly low and middle class employees, from both public and private sectors, who have been victims of the skyrocketing costs of homes,” he said.There are five different Pension Funds which are Public Service Pension Funds (PSPF), Local 

Authorities Pension Fund (LAPF), Government Employees Provident Fund (GEPF), National Social Security Fund (NSSF) and Parastatal Pension Fund (PPF).

He said the project is feasible as already 2 million US dollars (about 3.2bn/-) out of 40 million US dollars (about 64bn/-) given by the government to the TMRC has been allocated to carry out study on the low cost housing loans and increase the number of beneficiaries.

The parliamentary committee insisted on the TMRC to ensure the housing finance benefits the needy and evade greedy businesspersons from meddling the project for personal gains. “TMRC should enhance awareness creation to all citizens on the benefits of the project for their wellbeing,” he added.

For years Tanzania has done without the mortgage financing system, compelling majority people to opt for the most difficult alternative of building houses incrementally through own savings.The Bunge committee challenged TMRC to consider possibility of lowering cost of finance for the low income earners access affordable and long term housing credit facilities. “This is possible when TMRC goes to the public like issuing bonds to raise low cost capital,” he said.

Currently, about 18 per cent VAT is being charged on prices of residential houses thus back pedalling progress made by the infant real estate industry.The TMRC has disbursed housing loans totalling 2.5bn/- since when it became operational October last year while its members commercial banks have injected sum of 329bn/- since when investment in the subsector began.

The TMRC Chief Executive Officer Mr Rished Bade welcomed the parliamentary committee recommendations to collaborate with the pension funds but adding also that the institution is considering teaming up with private developers to broaden investment opportunities.

Commercial banks with stake in the company are CRDB bank, NBC, NMB, Exim bank, Azania, Tanzania Investment Bank (TIB), Banc ABC, Dar es Salaam Community Bank (DCB), NIC Bank and People’s Bank of Zanzibar (PBZ).Through TMRC lending, commercial banks get the loans at 10 per cent interest rate, the relief that is expected to be passed over to final consumers.

By SEBASTIAN MRINDOKO, Tanzania Daily News