MICROCAPITAL BRIEF: World Bank’s International Development Association (IDA) to Loan $60m for Affordable Housing in Tanzania

The Board of Executive Directors of the World Bank Group has approved USD 60 million in new financing to be disbursed by the International Development Association (IDA), a lending arm of the World Bank, to support its ongoing Housing Finance Project (HFP) in Tanzania, which seeks to support affordable housing in the urbanizing country by providing “medium- and long-term liquidity to lenders.”

“The mortgage market will go a long way in addressing the constraints to accessing housing credit which many working urban residents face,” says Philippe Dongier, the World Bank Director for Tanzania, Burundi and Uganda, “and it will further expand the construction industry and associated jobs.”

Since its creation in 2010, HFP has overseen the creation of the Tanzania Mortgage Refinancing Company (TMRC), which seeks to ensure “needed capital is invested in growing Tanzania’s housing resources.” TMRC has paid up capital of TZS 14.5 billion (USD 7.8 million) from its 12 member commercial banks.

The investment in HFP is the second by IDA, adding to USD 40 million invested in the project in 2010. Through 2015, TMRC reports having “refinanced member banks to the tune of TZS 26.1 billion [USD 14.1 million].”

By Mathew Cerf, Research Associate

About Housing Finance Project for Tanzania (HFP)

Housing Finance Project for Tanzania (HFP) was created by the World Bank in 2010 with the aim of developing the housing mortgage finance market in Tanzania by providing medium and long term liquidity to mortgage lenders. The HFP created the Tanzania Mortgage Refinancing Corporation as a long term funding vehicle to encourage banks to start disbursing loans. The HFP is led by Yoko Doi, and was established with a budget of USD 40 million.

About Tanzania Mortgage Refinancing Company (TMRC)

The Tanzania Mortgage Refinancing Company (TMRC) was established in 2011 by HFP as its long term funding vehicle. The TMRC focuses on pre-financing as well as refinancing mortage portfolios from primary mortgage lenders with the goal of nurturing a viable mortgage market in Tanzania. As of 2014, the TMRC is “fully capitalized and profitable”. Each bank subscribes to the issued share capital of the company, with paid up capital of TZS 14.5 billion (USD 7.8 million).

About the International Development Association (IDA)

Established in 1960, the International Development Agency (IDA) is the arm of the World Bank that provides interest-free credits and grants for programs in the world’s poorest countries. Loans from IDA have repayment terms stretching over 35 to 40 years, including a 10-year grace period. IDA also provides grants to countries at risk of debt distress. In 2014, IDA investments totaled USD 22.2 billion in 242. Since its establishment in 1960, IDA has provided approximately USD 293 billion to 112 countries.

Sources and Additional Resources

[1] The FINANCIAL, Intelligence Group Llc: “World Bank Approves New Financing for More Affordable Housing in Tanzania as its Cities Expand

[2] World Bank (WB): “Projects and Operations: Tanzania – Housing Finance Project

[3] WB: “Documents and Reports: Tanzania – Housing Finance Project: additional financing

[4] Tanzania Mortgage Refinancing Company: “About Us

[5] MicroCapital Universe Profile: “International Development Association (IDA)

[6] MicroCapital Universe Profile: “Tanzania Mortgage Refinancing Company (TMRC)

[7] MicroCapital Universe Profile: “Housing Finance Project for Tanzania (HFP)

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