Cover Page DetailsAerial Photograph of Kariakoowww.greatmirror.comMAP OF TANZANIA
1HousingStudy-TanzaniaSource: CIA World FactbookTable of ContentsHOUSING STUDY - TANZANIA.....................................................................21.0 CONTEXT ANALYSIS..............................................................................31.1 POLITICAL STRUCTURE..................................................................................... 31.2 THE ECONOMY ............................................................................................... 51.6 POPULATION DEMOGRAPHICS (INCLUDE GROWTH AND AGEING POPULATION) ..........81.7 LABOR MARKET ..............................................................................................8SOURCE: WORLD BANK........................................................................................91.8 CAPITAL MARKETS ..........................................................................................92.0 SITUATIONAL ANALYSIS OF HOUSING IN TANZANIA .......................... 103.0 INSTITUTIONAL AND POLITICAL CONTEXT OF HOUSING IN TANZANIA123.1 INSTITUTIONAL ORGANIZATIONS ..................................................................... 123.2 NATIONAL HOUSING CORPORATION ................................................................ 123.3 HOUSING POLICY ...........................................................................................134.0 LEGAL AND REGULATORY FRAMEWORK ON LAND ............................. 144.1 LEGAL ENVIRONMENT GOVERNING LAND ......................................................... 154.2 LAND DELIVERY MECHANISMS.........................................................................174.3 PLOT SIZE AND DISTRIBUTION OF LAND............................................................ 184.5 OWNERSHIP OF LAND.................................................................................... 204.6 FORCED ACQUISITION OF LAND BY THE GOVERNMENT........................................ 214.7 WOMEN’S RIGHTS TO LAND............................................................................ 224.8 FOREIGN OWNERSHIP OF LAND....................................................................... 224.9 PRIMARY CONSTRAINTS TO THE DEVELOPMENT OF A FORMAL LAND MARKET........ 235.0 LEGAL ENVIRONMENT GOVERNING HOUSING .................................... 246.0 JUDICIAL CONTEXT OF THE HOUSING SECTOR WITH RESPECT TOMORTGAGES.............................................................................................28
2HousingStudy-Tanzania6.1 JUDICIAL CONTEXT OF THE HOUSING SECTOR WITH RESPECT TO LAND..................................................................................................................307.0 BANKING AND FINANCIAL SYSTEM WITH REFERENCE TO THE HOUSINGSECTOR.....................................................................................................317.1 THE MORTGAGE MARKET IN TANZANIA ..............................................................347.3 TANZANIA MORTGAGE REFINANCING COMPANY.................................................377.4 CREDIT REFERENCE BUREAU............................................................................388.0 THE REAL ESTATE MARKET IN TANZANIA............................................388.1 HOUSING DEMAND ........................................................................................388.2 MAIN ACTORS AND PLAYERS IN THE REAL ESTATE MARKET IN TANZANIA ...............38SOURCE: TANZANIA DEMOGRAPHIC AND HEALTH SURVEY 2010 .............................. 408.7 TAXATION REGIME ..............................................................................429.0 RATIONALE FOR SHELTER AFRIQUE INVOLVEMENT IN TANZANIA......43APPENDIX 1 DISTRIBUTION OF HOUSEHOLD BY CONSTRUCTION MATERIALS............... 44APPENDIX 2: PROCEDURE FOR REGISTERING PROPERTY ...........................................45APPENDIX 3: DEALING WITH CONSTRUCTION PERMITS ............................................ 46BIBLIOGRAPHY .........................................................................................47Housing Study - TanzaniaTanzania suffers from a terrible shortage of good quality andaffordable housing. So dire is this shortage that the nation currentlycarries a 3 million housing deficit coupled with a 200,000 unit annualdemand. Over seventy percent of its urban residents live in unplannedand unserviced informal settlements. Only 15 percent of household inTanzania have electricity, with a very large disparity between urbanand rural households in Mainland Tanzania (45 percent and 3 percentrespectively). Two in three households in Tanzania (67 percent) live indwelling with earth, sand or dung flooring. Cement flooring onlyaccounts for 30 percent of households. With an ever increasing urbanpopulation, 5.7 percent to 22.6 percent over the period 1967-2002,based on 2002 census data, it is inevitable that this shortage, which iscompounded by lack of long-term housing finance and a lack of aformal residential housing construction sector, needs to be addressedin a timely manner. Over 80 percent of urban residents are tenants,living under a pro-landlord legislation that forces people to pay annualrent upfront in the wake of a limited supply of good houses and everincreasing cost of living. That’s the bad news!
3HousingStudy-TanzaniaThe good news is Tanzania continues to rise from a centrally plannedeconomy into a market driven economy registering on average above 6percent growth consistently over the past five years. The Governmentthrough the Bank of Tanzania has began the process of initiating theHousing Finance Project (HFP) that will see the development of avibrant mortgage market accompanied by housing microfinanceinstruments that will allow the markets to cater for different segmentsof income distribution. Steps have already been made towards pavingthe way through legislation that support the planned initiatives withthe passing of the Mortgage Finance (Special Provisions) Act 2008 thatbrought about key changes to Chapter X of the Land (Amendment) Act2004 the principal legislation that oversees the governance ofmortgages. Duly supporting this move is the passing of the Unit TitlesAct 2008, that effectively brought into existence the Condominium lawfor managing sectional properties etc. Deepening reforms towardsbetter financial services are being carried out primarily through theNational Strategy for Growth and Reduction of Poverty (NSGRP) orMKUKUTA to ensure security of tenure for land and property.This document aims to provide a broad picture of the current situationof the housing market in Tanzania. However, information is scarce andlargely non-existent. With no established mortgage market, noexisting housing policy, no private developer association and apreviously lackadaisical National Housing Corporation, statistics onhousing are hard to come by. However, effort has been made todisseminate information from different parts, departments and peopleto ensure that the detail is relevant and a such informative andthoughtful enough to merit a decision on the way forward for ShelterAfrique.1.0 Context Analysis1.1 Political Structure1The Government of the United Republic of Tanzania (GOT) is a unitaryrepublic based on multiparty parliamentary democracy. All state authorityin the United Republic is exercised and controlled by the Government ofthe United Republic of Tanzania and the Revolutionary Government ofZanzibar. Each Central Government has three organs namely theExecutive, the Judiciary and the Legislature that have powers over theconduct of public affairs and duly supported by Local Governmentauthorities. Authority over all Union and Mainland Tanzania matters isheld with the Government of the United Republic of Tanzania while theRevolutionary Government of Zanzibar maintains authority over allmatters, which are not Union matters, and are exclusive to Zanzibar.The President of the United Republic serves as the leader of the Executiveorgan which comprises the President, the Vice-President, the President ofZanzibar and the Prime Minister (day to day head of government) and theCabinet Ministers of the Union government. The Judiciary consists of threeorgans namely the Court of Appeal of the United Republic of Tanzania, the1(Public Administration, 2011)
4HousingStudy-TanzaniaHigh Courts for Mainland Tanzania2and Tanzania Zanzibar and the JudicialService Commission for Tanzania Mainland supported by both MagistratesCourts and Primary Courts. The Judicial Service Commission for TanzaniaMainland consists of the Chief Justice of the Court of Appeal of Tanzania(Chairman), the Justice of the Court of Appeal of Tanzania, the PrincipalJudge of the High Court and two members appointed by the President.The Tanzania Law Reform Commission is responsible for the review of thecountry’s laws.3TheConstitution enacted in 1977 under Article 4 (chapters two, three and five)provides for legislative supremacy of Parliament (consisting of thePresident and the National Assembly) and independence of the Judiciarywhile embracing the principles of rule of law, separation of powers and apluralistic political system. To this end, the President assents laws whilethe National Assembly maintains the authority to oversee and advise theGovernment and all its organs in the discharge of their respective duties.The President of Tanzania and the members of the National Assembly areelected concurrently by direct popular vote for five-year terms with theConstitution empowering the President to appoint an Attorney Generaland nominate ten non-elected members of Parliament who can becomecabinet members. Traditionally, women contribute not less than fifteenpercent of Parliamentary members. The Parliament is headed by theSpeaker who is assisted by the Deputy Speaker and the Clerk to theNational Assembly as Head of the Secretariat of the National Assemblysupported by various Standing Committees.2As a passing note, a commercial court was established in September 1999 as a division ofthe High Court.3Based on English Common LawApart from sharing the Court of Appeal with the United Republic withMainland Tanzania, Zanzibar has a distinct and separate legal systemwhere the High Court of Zanzibar is constitutionally recognized as notbeing a Union matter4and is supported by Kadhi and Magistrates Courts.Similarly, the Attorney General’s Chambers of Zanzibar fall outside thepurview of Union matters, and it is a department of RevolutionaryGovernment of Zanzibar.Local Government Authorities, classified broadly either as urban or rural,exist to provide law and order while consolidating and giving more powerto the people to competently participate in the planning andimplementation of development initiatives and programmes within theirrespective areas. Tanzania is thus divided into 26 regions (mkoa), 21 on themainland and 5 in Zanzibar (3 on Unguja, 2 on Pemba); Ninety-nine (99)districts (wilaya), each with at least one council. 114 councils operatewithin these 99 districts of which 22 are urban and 92 rural. The 22 urbanunits are further classified as city councils (Dar es Salaam and Mwanza),municipal councils (Arusha, Dodoma, Iringa, Kilimanjaro, Mbeya,Morogoro, Shinyanga, Tabora, and Tanga) or town councils (the remainingeleven communities).4Article 114, Constitution of United Republic of Tanzania, 1977
5HousingStudy-TanzaniaRegional Map of TanzaniaSource: http://mapsof.net/tanzania/static-maps/png/regions-of-tanzania1.2 The Economy
6HousingStudy-TanzaniaThe mid 1980s saw the Tanzanian economy in severe distress followingseveral years of a centrally planned economy. However, transformationhas been radical since. Robust economic growth has been evidenthovering around 7 percent per year since 2000. Sound macroeconomicpolicies, market-oriented reforms, debt relief and, until recently, afavourable global environment have been the main drivers o f Tanzania’ssteady growth. The International Monetary Fund (IMF) distinguishes threebroad phases of this transformation: 1970-1985 which was characterised byUjamaa (socialism) and economic decline; 1986-1995, a period ofliberalization and partial reforms; and 1996-2006, marked bymacroeconomic stabilization and structural reforms. These reforms havecontinued to the present (Mutero 2010).Following fifteen years of Ujamaa policy, the economy was graduallyliberalized from 1986 to 1995 to remove state domination in productionand to promote private enterprise. Thus, prices were allowed to adjust tomarket levels, interest rates and the exchange rate were freed andrestrictions on economic activities were phased out. Specific reformsincluded: (a) restructuring the financial sector and licensing foreign banksthus expanding private access to finance for investment; (b) liberalizingtrade, a move that triggered an export boom and restored the country’sforeign exchange reserves; and (c) denying credit to poorly performingpublic corporations and subjecting public finance to greater scrutiny anddiscipline. One of the country’s main challenges remains to translate thesesuccesses into significant improvement in employment and povertyreduction. The 2007 Household Budget Survey shows that povertyincidence fell slightly from 35.7 percent in 2001 to 33.3 percent in 2007,implying an increase in the total number of the poor, given highpopulation growth. The population currently estimated at 42 million5people has been growing at a pace of slightly above 2 percent per annumsupported by a rapid rate of urbanization (roughly 4.7 percent (est. 2011)that has seen the urban population grow to 26 percent of total population6.Reforms within the housing sector saw the winding up of a bankruptTanzania Housing Bank in 1995, which had been created in 1972 as a part ofgovernment’s interventionist economic policy. The IMF points out that acommitted ownership of the reform process has been key to success,symbolized by Mkukuta, mainland Tanzania’s own growth and povertyreduction strategy7.Prior to the mentioned reforms, Tanzania had one of the smallest bankingsystems in Africa, dominated by a single commercial bank and other state-owned financial institutions. After two and a half decades of liberalization,three dozen commercial banks and many other private financialinstitutions are in operation, offering a broad range of financial services.Since 2000, credit to the private sector has expanded at 30-40 per cent ayear, supported by growing customer deposits, and bank performance hasimproved8. In spite of these reforms, household access to credit isappallingly low with a mere 9 per cent of the population reported as havingaccess to financial services from the formal sector in 20069. The second5(CIA, 2011)6(CIA, 2011)7 IMF (2009);8 IMF (2009)9 Financial Sector Deepening Trust (2007) Finscope E-book Tanzania
7HousingStudy-Tanzaniageneration of financial reforms, now underway, seeks to broaden the reachof financial services.Tanzania has been able to hold itself well despite the recent globaleconomic crisis, although a decline in exports particularly in the tourism,commodities and textiles markets that saw growth reduce toapproximately 6 percent in 2009 (see figure 1). A slight recovery wasregistered in 2010 as the global economy improved. Strong economicgrowth has mainly been driven by tight control over public spending andstructural reforms that have included the reform of the taxation systemand revenue collection, expenditure control and land ownership. Debtrelief under the Heavily Indebted Poor Country (HIPC) and the MultilateralDebt Relief Initiative also helped reduce the country’s external public debtburden significantly. Recent banking reforms have also helped increaseprivate sector growth and investment. Overall, the economy remainsheavily reliant on agriculture which accounts for slightly more than 40% ofthe GDP, provides 85% of the exports and employs 80% of the workforce.The industrial sector which accounts for less than 10% of the GDP andprimarily constitutes the processing of agricultural products and lightconsumer goods is among the smallest in Africa. Mineral production withthe extraction of gold reserves is steadily growing to account for asignificant part of Tanzania’s export.Following a monetary policy that had a clear inflation target over the pastdecade, inflation was managed down to single digit levels although it hadbeen on the rise since 2005, with the latest figures showing double digitgrowth10, primarily as a result of consumer goods price hikes driven by10Culminated to 13.5 percent at the end of 2008 from an average 5.8 percent from 2003-07drought, power rationing and increasing international oil and fuel pricesand transportation costs (see figure 1). The shilling continues to depreciateagainst a strengthening dollar as inflationary pressure continues to hauntthe domestic scene coupled with demand for foreign currency bybusinesses. While the central bank has managed to control the growth ofbroad money supply, this has been done against a backdrop of strong realGDP growth and expansion of credit growth to the private sector.Nevertheless, the country is currentlyFigure 1: Tanzania GDP Growth 1998 - 2010SOURCE: IMF WORLD ECONOMIC OUTLOOK DATABASE, OCTOBER 2010feeling the pressure on the shilling precipitated by last year’s presidentialand parliamentary elections. Traditionally, exchange rates are customarilyweaker during the first half of the year strengthening, primarily as a resultof dollar demand, during the second half of the year as exports from cashcrops dominate the economic landscape. Pressure to address corruption024681012142000 2001 2002 2003 2004 2005 2006 2007 2008 2009GDP Growth Inflation
8HousingStudy-Tanzaniahas led to the market seeing a reduction on foreign exchange as foreigndonors have cut back on funding putting more pressure on the demand forforeign exchange.With respect to interest rates, Tanzania has made considerable progress inthe development of its financial sector but financial markets are still at acomparatively nascent stage. Robust growth, as mentioned, along withprudent macroeconomic management has facilitated a strong expansionof credit by the commercial banks to the private sector over the last fiveyears. Credit to the private sector increased from 7.4 percent of GDP in2003 to 16.2 percent at the end of 2008. Nevertheless, interest ratesremain fairly high with normal lending conducted around 18 – 20% onaverage. Business remains concentrated with the larger banks whodominate the market through foreign-exchange trading, trade finance andinvolvement in government securities. In addition, there has been adecline in interest rates effectively demonstrating a drive towards a moresubstantial deepening and better performance of the financial sector.1.6 Population Demographics (include growth and ageing population)Tanzania’s population is currently estimated at 42.7 million. With apopulation growth rate of 2 percent per annum, the urban population nowmakes up 26% of the general population and is currently growing at 4.7percent annually. A staggering 47 percent of the population is below theage of 30 with females constituting 52 percent of the total (males 48percent).11Life expectancy currently averages approximately 53 years andthe literacy rate hovers at approximately 70 percent with governmentexpense on education making up 6.7 percent of GDP. The population is63% Christian and 35% Muslim, with the balance holding traditional11(CIA, 2011)animist beliefs. Ninety-five percent of Zanzibar’s population is Muslim.Tanzania is also home to about 130 tribal groups.1.7 Labor MarketThe labor market continues to grow in the wake of continued foreign directinvestment (FDI) particularly in the mining and agricultural sectors.Agriculture employs 80% of the labor force, which is dominated bysmallholder farming, with manufacturing and services employing asubstantial portion of the balance. Historical recorded trends show theincrease of graduates from Higher Learning Institutions (HLI) rising from22,437 in 2002 to 38,774 in 2005 with a doubling of employed persons from10,889,205 in 1990/91 to 20,536,000 in 2005/06 (annual averaging ofroughly 48,000 new jobs). (Tanzania Investment Centre, 2008) Many jobs,which are usually low paying and uncertain, are held within the informalsector as private corporate companies in various modern sectors such asmanufacturing, finance and tourism demand and practice hand picking ofemployees based on the strength of skills and work experience. Suchpractice has traditionally made it difficult for new graduates to get jobs. Assuch, the inability of the formal sector to absorb increasing numbers ofyoung people looking for employment has increased the importance of theinformal sector as a source of self-employment.Table 1: Labor force and employment in TanzaniaLabor Force and EmploymentYear Latest dataPopulation ages 15-64, total 2008 23,250,033Unemployment, total (% of total labor force) 2008 11.3Labor force, female (% of total labor force) 2008 31.2Labor force, total 2008 14,478,825.3Labor force with primary education (% of total) 2004 50.4Employees, agriculture, female (% of female employment) 2004 22.3
9HousingStudy-TanzaniaEmployees, agriculture, male (% of male employment) 2004 20.4Source: World BankThe lack of finance or start up capital coupled with minimal technical andentrepreneurial skills has resulted in overall lowered productivity andearning power. Trading, in the form of buying and selling goods, has beenthe preferred choice of entry into the self employment market. This hashistorically made the informal sector risky due to lack of safety and securitylimiting credible market opportunities. Overall, there exists a lack ofeffective implementation of public policies as applies to the labor market.1.8 Capital MarketsAs a strategy to help Tanzanians mobilise savings and direct them intoinvesting, the capital market was established in 1994 through theestablishment of the Capital Markets and Securities Authority (CMSA) thatwas created to promote and regulate the securities business in Tanzania.However, marginal progress has been made with the listing of only 16 firms(five of which are cross listings) on the Dar es Salaam Stock Exchange(DSE) over the last 15 years. With 7 corporate bonds valued at TZS 77.7billion12and 73 Treasury bonds (valued at TZS 1.62 trillion)13currently beingtraded, market capitalization still remains very low at TZS TZS 4.895trillion14(USD 3.19 billion). Overall, the market has seen foreign investorparticipation in the equity secondary market grow from the previous 3.4%of revenue contribution in 2009 to 22.7% in 2010.Steps continue to be taken towards integration with the rest of the stockexchanges of the member countries of the East African Community (EAC)evidenced by continued cross listings (now five) and integration of12(The Dar es Salaam Stock Exchange, 2010)13(The Dar es Salaam Stock Exchange, 2010)14(The Dar es Salaam Stock Exchange, 2010)procedures and processes in the wake to the emerging EAC financialframework through the establishment of a common market. Efforts arealso being made to ensure that the capital account restrictions are lifted inthe next year or two to allow for the acquisition of shares from citizens ofpartner states and vice versa along with the establishment of a ratingsystem for all listed companies to ease and facilitate cross border tradingand sale of shares.Overall, portfolio inflows remain fairly negligible despite government’smove to establish the stock exchange to foreign investors. With a lack of areasonable number of shares to trade and the limited liquidity, it is notsurprising that the Capital Market still has a long way to go before it canmake a serious impact on the mobilization of savings and investments.
10HousingStudy-Tanzania2.0 Situational Analysis of Housing in TanzaniaTo understand the housing situation in Tanzania, one must first understandthat the supply of land is perhaps the most crucial component in theproduction of shelter. One of the objectives of this report is to outline theelements involved in land acquisition in the country, which notably isowned by the State. The government remains the sole and primaryinstrument for land delivery. With notable inefficiencies, land acquisition,although improving, has been a hurdle in many aspects towards thedevelopment of an efficient housing market along with the limitedavailability of mortgage financing to support housing development. Inrecent years, the GOT through Ministry of Lands, Housing, and HumanSettlements Division has undertaken a drive towards implementing keysteps such as improved plot allocation in greenfield areas, landregularization and titling in existing informal settlements, that will enable itto encourage land development.Presently, the total housing deficit is estimated at 3 million units up from2.2 million in 2000. Rural to urban migration has been a key driver increating this deficit as the urban population increased from a low base of5.7 percent to 22.6 percent over the period 1967-2002, based on censusdata. Annual demand for formal land was 150,000 plots between 1991 and2001 while supply averaged roughly 8,000 surveyed plots annually, inessence creating an annual shortfall of 95 percent. Between 1990 and 2001however, the average annual demand for plots in Dar es Salaam was20,000 units while average annual supply was a dismal 700 units (Ministryof Lands, 2007). To this end, with few or hardly any housing optionsavailable in the formal sector, over 70 percent of all urban residents, residein informal settlements. In this regard, housing development, as practisedin Tanzania, has historically meant that individuals undertake constructionover a period of years. As one would note from a visit to Dar es Salaam,the uncompleted/unfinished residential housing stock is substantial withthe typical form of tenure being rental. A study undertaken in 1990indicated that tenants make up 73 percent of households (Hoek-Smit 1991)and this extends to include a substantial proportion of low and lowermiddle income households.
11HousingStudy-TanzaniaA young girl on her way to school from her apartment in Zanzibar15.In the case of Dar es Salaam, the number of informal settlements hasgrown from 40 in 1990 to 54 major unplanned and unserviced settlementsin 2007 with over 100 settlements when peri-urban areas are included.16The formal housing construction sector remains very small and is largely15www.oikocredit.org16(HABITAT, 2007)being undertaken by the public sector either through the NHC or theTanzania Building Agency (TBA), who develop housing for civil servants orthrough the pension funds. The private property developer market isvirtually absent with the existing development aimed at luxurydevelopments catering to expatriates, wealth individuals or the Tanzaniandiaspora overseas.Typical Semi-Modern Swahili House (UN HABITAT, 2010)
12HousingStudy-Tanzania3.0 Institutional and Political Context of Housing In Tanzania3.1 Institutional OrganizationsThe Ministry of Lands, Housing and Human Settlements Development(MLHHSD) has been mandated to administer land and human settlementin Tanzania on behalf of the President of Tanzania who serves as thetrustee of all land. The Ministry currently has four major Departmentsnamely Land Administration, Survey and Mapping, Physical Planning andHousing. Within the Ministry also lie four core sector units namely theRegistration of Titles Agency, Property Valuation, and the District Landand Housing Tribunal. The Ministry also has an agency dealing withHousing and Building materials research (the National Housing BuildingResearch Agency), a commission dealing with Land Use Planning (NationalLand Use Planning Commission) and the National Housing Corporation.173.2 National Housing CorporationEstablished by Act of Parliament No. 45 of 1962, the National HousingCorporation (NHC) was for a long time the main property developer in thecountry having constructed 14,145 housing units between 1962 and 1974before registering significant decline in the construction of housing stockas a result of limited government budget, increased construction costs andhigh inflation rates. Many of the properties which were constructed duringthe mentioned period were under slum clearance, rental and tenantpurchase (TP) schemes and were funded largely from Donor funding.Between 1975 and 1989, the Corporation constructed 1,894 units at a costof about TZS 360 million. Subsequently thereafter, NHC constructed amere 762 units between 1990 and 2007.18NHC has equally been responsible for managing its rental housing stockaside from building houses. However due to rent control being a17(Background: Ministry of Lands, Housing and Human Settlements Development)18(The Ministry of Lands, Housing and Human Settlements Development, 2007)
13HousingStudy-Tanzaniagovernment institution and limited ability to access longer term finance,the company was largely unsuccessful in delivering its mandate. A majoroverhaul of the National Housing Corporation was carried out last year andincluded the recruitment of a new board and executive team to spearheadthe Corporation’s effort to become a master estate developer by 2015through a strategy that would incorporate the acquisition anddevelopment of key land parcels. According to the company’s five yearstrategic plan, which envisages increasing the housing sector GDPcontribution to 4 per cent (currently at 1 per cent)19, the organizationexpects to develop a minimum of 15,000 houses for sale and lease by June2015. This would encompass the construction of 10,000 medium and highclass homes and an additional 5,000 homes aimed at low income bracketbuyers.3.3 Housing PolicyHaving inherited no housing policy from its colonial master, Tanzania hasstruggled to develop its own Housing policy. Despite government’scontinued confirmation that housing is a priority, insufficient attentiontowards the establishment of a proper housing directorate that wouldsupport and facilitate the creation of a national and comprehensivehousing policy, has been historically been found wanting. A policy waspreviously formulated in 1981 with the intention of creating the muchneeded framework for the housing sector development but it was neitherapproved nor implemented due to government budgetary constraints anda change in the country’s economic policy from a central to market driveneconomy.20While housing development in Tanzania is guided by theNational Human Settlements Development Policy of 2000, the policy’s19(Luhwago, 2010)20(Ministry of Lands, 2007)objectives largely caters towards the provision of adequate shelter, anefficient land delivery system, service provision and better rural housingwithout specifically addressing the problems within the housing sector.Efforts are currently underway towards developing a housing policy thatwill aim to the address key issues surrounding the housing sector.Table 2: Summary Evolution of the Housing Department since inceptionYears Ministry1964 - 1965 Ministry of Local Government and Housing1965 - 1969 Ministry of Health and Housing1970 - 1984 Ministry of Lands, Housing and Urban Development1984 - 1992 Was housed in various ministries including:Local GovernmentCommunity DevelopmentCooperatives and MarketingThe Prime Minister’s OfficeLocal Government and CooperativesLands, Water, Housing and Urban DevelopmentNatural Resources and TourismPresently Ministry of Lands, Housing and Human SettlementsDevelopmentTable 2 above demonstrates the level of priority that has been granted tohousing. Despite these shortcomings however, the Government in itsefforts to intervene on the housing situation, has prompted variousinitiatives to spur housing development. Some of the initiatives have in thepast included:-
14HousingStudy-TanzaniaThe creation of the Registrar of Buildings (RoB) which was created by Actof Parliament No. 13 of 1971 and was later dissolved into the present NHCin 1990. The institution turned out to be grossly underperforming havingconstructed a total of 530 housing units in its 18 years of operationbetween 1971 and 1989 .The Better Rural Housing Campaign – Launched in 1974, this campaign wasgeared towards getting rural inhabitants to construct better housingthrough a system that comprised the creation of a Village ManagementTraining Programme (VMTP) and Rural and Urban Construction Units(RUCU). 84 RUCUs in 84 districts across the country were set up buteventually, due to lack of proper management and poor training in the useof equipment, the programme was equally dissolved.The creation of the present day University College of Lands andArchitectural Studies (UCLAS) to train and build capacity for housingresearch and development has been largely successful in churning outprofessional for the industry.These efforts also included other initiatives such as encouragingparastatals and other public institutions to construct employer basedhousing but failed following economic difficulties. Housing cooperativeswhom, given their strong influence back in the 60s and 70s, receivedgovernment support through various subsidies but eventually fell victim tomismanagement and administrative weaknesses.4.0 Legal and Regulatory Framework on LandFollowing independence in 1961 from Great Britain, Tanzania adopted“African socialism” that one would argue completely redefined theproperty rights regime in the country. As such, the current legalframework governing land is best understood in relation to the post-independence history of Tanzania. Due to the adoption of the Africansocialism ideology, all land was considered public land with the Presidentserving as trustee for the people, largely abolishing the chieftain andindividual rights held under customary law. With all previous customaryland rights abolished, the district and village governance systems (villagecouncils) were established to administer both land allocation andmanagement. Operation Vijiji, which effectively operationalized theujamaa system, went into effect in 1973 with the intention of bringingtogether rural and scattered residents into communal villages servingbetween 2000 and 4000 people. A large cross section of society (roughly75% of the total population) was affected by this policy which aimed atbringing about better efficiency in the delivery of public services whilecreating large scale collective farms that would ensure a balancedapproach to the creation of improved standards of living for the ruralcommunities and the nation at large.With the change in government in 1985, a reversal of this policy was putinto place having recognized as a Ujamaa as a failure in many aspects.
15HousingStudy-TanzaniaWhen the villagization project was abandoned, many people opted tosettle back in their original homeland, only to find other people had settledthere, effectively creating confusion over land tenure issues with manydisputes all over the country. The government swiftly moved to institutemajor changes that led to the formation of a Land Commission to reviewexisting laws, gather input from key stakeholders and to provide itsrecommendations to government on a proposed new legal framework.After three years of work, the Commission issued a report in 1994 withrecommendations that brought about changes that are still being put inplace today. Customary law and individual rights were once againreinstituted. In 1995, the government adopted a Land Policy that set outthe fundamental principles guiding land rights and management. Membersof the Land Commission and civil society challenged the policy for failing totake into account all the recommendations of the Commission and theinterests of civil-society groups such as the Gender Task Force. Centralcontrol of land was maintained by the Government which reaffirmed thatall land in Tanzania is considered public land vested in the President astrustee on behalf of all citizens. Observers also criticized the policy assupporting foreign and commercial interests by providing for broad landacquisition rights and failing to adequately recognize and address the needfor affirmative measures to change patrimonial and male-dominatedpractices that prevented women from realizing equal land rights.21Presently however, the principles set forth in the Land Policy (and again inthe Land Act enacted four years later) are as follows:-1. The law shall recognize existing rights to land and longstandingoccupation or use of land.21(United States Agency for International Development (USAID), 2010)2. Land legislation shall facilitate an equitable distribution of and access toland by all citizens.3. Land legislation shall encourage productive and sustainable use of land.4. Each interest in land has value that should be taken into consideration inany transaction affecting that interest.5. Citizens shall participate in decision-making on matters connected withtheir occupation or use of land.6. A land market shall be facilitated in such a manner that rural and urbansmall-holders and pastoralists are not disadvantaged.7. A system of land dispute resolution shall be established that isindependent, expeditious and just;8. Land information shall be accessible to the population.9. Women shall have the same rights as men have to acquire, hold, use,deal with, and transfer land. (GOT Land Policy 1995)4.1 Legal Environment Governing LandTanzania’s Land Act adopted from the Land Policy in 1999 classifies landas: (1) reserved land; (2) village land, which falls under the Village Land Act;and (3) general land. Reserved land includes land protected by law ordesignated land such as national parks, land for public utilities (i.ehighways and those under the Town and Country Planning Ordinance),wildlife reserves and land classified as hazardous, which designates landwhose development would pose a hazard to the environment (e.g., riverbanks, mangrove swamps). Village land, on the other hand, includesregistered village land (i.e. land that belongs to registered villages), landdemarcated and agreed to as village land by relevant village councils, andland (other than reserved land) that villages have been occupying andusing as village land for 12 or more years (including pastoral uses) undercustomary law. It is important to note that the village councils do not own
16HousingStudy-Tanzaniathe land, they only manage it. A village is an administrative unit in the localgovernment system and usually has a population between two and fourthousand.All other land is classified as general land, that is to say all land that is notreserved land or Village Land. However, the act opens up for ambiguity:“‘general land’ means all public land which is not reserved land or villageland and includes unoccupied or unused village land” (Sundet, 2005). Thedefinition of General Land in the Village Land Act does not include the lastpart of the sentence.KEY LEGISLATION GOVERNING LANDAlong with policy, legislation has been enacted to set legal a framework forimplementing the policy objectives. The land development related legislationsalready in place are:-1. The Land Act, No. 4 of 1999 which provides for the basic law in relation to landother than the village land and sets the legal framework for implementing theobjectives of the National Land Policy for granted Right of Occupancy. The LandAct as amended in 2004 created the platform for review of the legal framework formortgage finance in Tanzania for the purpose of redressing the balance betweenthe interests of the mortgagor (borrower) and those of the mortgagee (lender).2. The Village Land Act, No.5 of 1999 provides a legal framework for themanagement and administration of land in the village and other related matters(i.e. the formalisation of customary land rights).3. The Land Disputes Act No. 2 of 2002 which creates a conflict resolutionmechanism for issues concerning land4. The Urban Planning Act No. 8 of 2007 which replaced the Town and CountryPlanning Ordinance, Cap 378 of 1956 as amended in 1961. This Act provides for theorderly and sustainable development of land in urban areas.5. The Land Use Planning Act No. 6 of 2007 provides for procedure for thepreparation, administration and enforcement of land use plans in rural areas.6. The Town Planners Registration Act No. 7 of 2007 oversees the practice of theTown Planning Profession.7. The Unit Titles Act no. 16 of 2008 sets out the rules and procedures for themanagement and regulation of divisions of buildings into units, clusters, blocksand sections, owned individually or in common use for the purpose of promotingefficient and effective use of landed property in Tanzania. In other territories, itwould be referred to as the Condominium Law.8. Mortgage Finance Act No. 17 of 2008 provides for amendments to the Land Act,the Land Registration Act and Civil Procedure Act to make needed provisions toallow for development, promotion and more efficient management of themortgage financial market.With a surface area of 94.3 million ha, Tanzania only has 5 percent(approximately 5.1 million ha) cultivated. An area twice this size, (10million ha.), is arable land that is not cultivated, but to a large degree usedas pasture, first of all by pastoralists. Almost a quarter of the surface area,23%, is reserves, a larger share than any other country in Sub-SaharanAfrica (Lange, 2008).The Village Land Act 1999, which governs village land, falls into one ofthree categories: (1) communal land (e.g., public markets and meetingareas, grazing land, burial grounds); (2) occupied land, which is usually anindividualized holding or grazing land held by a group; and (3) vacant land,which is available for future use as individualized or communal land(specifically encompassing unoccupied land within the ambit of villageland, as opposed to general land). The Act does not recognize grazing landas a separate category, but pastoralists can assert customary rights ofoccupancy to grazing land (United States Agency for InternationalDevelopment (USAID), 2010)
17HousingStudy-TanzaniaEach village has a Village Government. Village land is administered by theVillage Council on behalf of the Village Assembly (all members of a village18+ years). Members of the village government are hamlet/sub-villagechairpersons, a Village Chairperson, and a hired Village ExecutiveTable 3: Land Use in TanzaniaLand use Million haForest Reserves 10.1Arable land, not cultivated 10.0Game Reserves 7.7Cultivated Land 5.1National Parks 4.2Source: (Lange, 2008)Officer. Three to four villages make up a ward although there remains a lotof uncertainty concerning the borders and size of village land.. At the wardlevel, there is a Ward Development Committee, and a hired WardExecutive Officer. During local elections, citizens elect a councillor whorepresents the ward in the Full Council meetings at the District Council. Inelections up to 1980’s traditional leaders were often elected sub-villageleaders and councillors, and in some areas former chiefs became VillageCouncil Chairmen. Over the two last decades this trend has changed, sincecommunities increasingly elect educated, younger persons (United StatesAgency for International Development (USAID), 2010).Land GovernanceTanzania’s 26 regions (21 Mainland and 5 Zanzibar) are divided into ninetynine (99) districts and further subdivided into divisions. On the mainland,urban authorities consist of city councils, municipal councils and towncouncils while district councils, township councils and village councils makeup the rural authorities. In Zanzibar, the framework consists of towncouncils, municipalities and district councils. District councils coordinatethe activities of the township authorities while village councils, approvevillage council bylaws and coordinate land use planning district-wide. Thevillage and township councils have the responsibility for formulating plansfor their respective areas which extends to managing village forest reservesand collecting revenue. Village councils are elected by the village assemblymade up of adult residents above the legal age. One-quarter of the councilmust be female. The urban and district councils are comprised of memberselected from each ward, plus women appointed by the National ElectoralCommission in proportion to the number of elected positions held on thecouncil (not less than one-third.Village land use and allocations are the responsibility of the village council.A village adjudication committee marks land boundaries, sets aside landfor rights-of-way and settles boundary disputes between villagers. Thevillage assembly serves as the main authority on all matters with respect topolicy making for the affairs of the village. To such end, approval for theallocation of land must be sought from the village assembly followingidentification of land by the village council. The village council’s authorityis also circumscribed by the district council, which will hear appeals fromdecisions of the village council, and by the Land Commissioner (URT,Village Land Act, 1999).4.2 Land Delivery MechanismsLand purchase, informal land transactions, municipal land allocations,inheritance are some of the more common avenues of obtaining formaland informal land. Historically, squatting has led to the creation of many
18HousingStudy-Tanzaniainformal sectors and was particularly prevalent particularly in urban areas.However, Government, over the past decade, has been carrying out bestefforts to try and formalize where possible. Historically also, where land isabundant, an occupier could very easily take possession by clearing andcultivating the land particularly in areas where inhabitants are few.Generally, companies do obtain land use rights through the central or localgovernment when seeking land for either commercial or industrialdevelopment opportunities.In urban areas, a business wishing to register rights to purchased land mustpay a fee equal to 4.4% of the property value. The registration processtakes an average of 73 days and requires nine steps: (1) conduct an officialsearch at the Land Registry; (2) obtain documentation from the Ministry ofLands verifying payment of land tax for 10 years; (3) obtain a property taxclearance from the municipality for the 10-year period; (4) obtain avaluation report; (5) arrange for inspection of the property by agovernment valuer to determine its value; (6) draft the land- salesagreement and have it notarized; (7) obtain approval for the transfer fromthe relevant municipal authority; (8) obtain a capital-gain tax certificate;and (9) deliver the transfer deed to the Land Officer for its recording underthe buyer’s name in the land registry. (The World Bank, 2011) The LandAct recognizes the validity of customary rights of occupancy without theneed to issue and register a formal certificate. In theory, however,certificates are required to mortgage the land right to secure a loan.As a passing remark, the Village Land Act provides a process for villagecouncils to issue certificates for customary rights of occupancy. Accordingto the Act, the steps for obtaining a certificate of customary right ofoccupancy to village land are: (1) application for a certificate to the villagecouncil by the landholder; (2) council review of the application; (3) issuanceof a letter of offer stipulating development conditions, yearly rent andother conditions; (4) the landowner’s written agreement to theseconditions on a prescribed form; and (5) issuance of the certificate.Nevertheless, the validity of many certificates should be discounted giventhat issuance is usually precipitated by personal ties and connections andhence it does not form for good collateral for a lending arrangement. Inboth cases, spouses registering land must co-register. The registrar isrequired to register both spouses as occupiers in common, which grantseach spouse rights to half of the undivided whole of the property. Even ifland is registered in the name of one spouse, the other spouse has a legalinterest in the land.Overall, a lack of resources and capacity within government and localauthorities with respect to land administration and delivery has causedinefficiencies in the creation of a formal land market. Rapid urbanizationhas equally allowed for an informal land market, through the creation ofunplanned and unserviced settlements, to blossom. Although progress hasbeen made to ensure better procedures are in place for acquisition andregistration of land, transfer and disposition of such land still remains ahurdle.4.3 Plot Size and Distribution of LandThe existing standards for urban residential plots at 400-800m2, 801-1,200m2and above 1,201m2for high, medium and low density plotsrespectively have also created challenges in overall planning standards.Based on the 2002 Population and Housing Census, the average householdsize was estimated at 4.9 while the population density was estimated to be39 persons per sq. km overall (National Bureau of Statistics). It is estimated
19HousingStudy-Tanzaniathat approximately 10.5 million people live in urban areas, and of those,between 70% and 80% of urban residents live in informal settlements.4.4 Security of TenureAll land in Tanzania is considered public land. As such, there is no freeholdland. The President of the country serves as the trustee of the land asprescribed in the Land Act. Legally, there are two main types of land tenuresystems in the country: statutory and customary. Statutory tenure rightscan further be subdivided into three categories, namely granted right ofoccupancy; occupancy under Letter of Offer; and derivative right whileunder customary tenure, classification can categorically be subdivided intoquasi-customary and informal tenure.Granted right of occupancyGranted rights of occupancy are available for general and reserved land,and may be subject to any statutory restrictions outlined in the terms ofthe grant. The Government grants its citizens renewable rights ofoccupancy on land that has been surveyed of up to 99 years (or withperiodic grants of fixed terms such as 33 or 66 years) at a premium andrevisable annual land rent. To be valid, the right has to be registered underthe Land Registration Ordinance Chapter 334. This is what is recognized asa proper title deed. Holders of registered granted rights ofFigure 2: Existing Land Tenure Systems in TanzaniaSource: (UN HABITAT, 2010)occupancy may lease that right of occupancy or part of it to any person fora definite or indefinite period, provided that the maximum term must be atleast ten days less than the term of the granted right of occupancy. Leasesshall be in writing and registered. Short-term leases are defined as leasesfor one year or less; they may be written or oral and need not be registered.Occupancy under Letter of OfferOnce a citizen is issued with and accepts a letter of offer, he/she canregister the duly signed and sealed letter of offer under Registration ofdocuments Ordinance Chapter 117 which becomes a valid document thatcreates notice of ownership. The premiums, survey fees and the land rentfees under the Granted right of occupancy and Occupancy under Letter ofOffer, differ from one place to another within the same city or municipalitydepending on a number of factors including location (for example, primeareas are priced highly; size of the plot; use to which the land is put;availability of basic infrastructure and services; etc). (UN HABITAT, 2010)Derivative rightExistingTenureSystemsStatutoryGranted Rightof OccupancyOccupancyunder Letter ofOfferDerivativeRightCustomaryCustomaryQuasi-CustomaryInformal
20HousingStudy-TanzaniaUnder the Land Act (1999) the government offers a “residential licence”,which is a right derivative of a granted right of occupancy on general orreserved land. According to the Act, a residential licence is a rightconferred upon the licensee to occupy land in urban and peri-urban non-hazardous land, land reserved for public utilities and surveyed land for aterm not less than six months and not more than two years. The term can,however, be renewed for the same period. Like occupancy under letter ofoffer, the residential residence is issued under Registration of documentsOrdinance Chapter 117.Customary tenureThis is acquired by virtue of being a member of a community and is basedon traditional acceptance. The system has no formal documents and noland transfer takes place without the blessings of the clan/communitymembers. This land belongs to registered villages although the councils donot own the land but only manage it on behalf of the village assembly (allmembers of a village of adult age (18 years and above). To this end,villages can demarcate the land, register ownership rights and issuecertificates to support such ownership.22 23Holders of customary rights ofoccupancy may lease and rent their land, subject to any restrictionsimposed by the village council.Quasi-customary tenure22Government of Tanzania 1999, Village Land Act No. 523(United States Agency for International Development (USAID), 2010; Sundet, 2005)As the name suggests, the influence of the clan/community in land transferis, among other things, diminished. While local leaders and adjoininglandowners are consulted when the need to transfer land arises, the rightto sell lies mainly with the individual right holder. Customary and quasicustomary forms of tenure are commonly found in peri-urban unplannedareas of the city of Dar es Salaam (UN HABITAT, 2010)Informal tenureIn the case of informal tenure, land transfer is not guided by customary orquasi-customary norms and rules. It can take place between any personseeking land and the respective owner of the land. Buyer interests areprotected, albeit in informal ways, through a system that is set in suchmanner that the ownership is deemed to be authentic.The above Government’s approach to upgrading settlements in lieu ofclearing entire settlements for redevelopment has helped encouragegreater security of tenure in urban centres. Urban growth, peri-urbanexpansion and commercial development have created tenure insecuritygiven the lack of proper planning and service provision of key infrastructuresupport systems like water and waste management in certain areas.Occasional land acquisition by Government for infrastructure-developmenthas also created a sense of tenure insecurity although prudence inobserving road leeways and a grasp of possible future developments withinan area can help mitigate that insecurity.4.5 Ownership of LandWhile in principle, rights of occupancy can be bought, sold, leased andmortgaged in Tanzania, the land market is inhibited by many layers ofgovernment control, in practise. The formal market for transfers requires
21HousingStudy-Tanzaniagovernment approval, and land received through grants must be held forthree years before the landholder can sell the rights. The transfer of agranted right of occupancy must be approved by the municipality andregistered. A holder of a customary right of occupancy can sell the right,subject to the approval of (and subject to any restrictions imposed by) thevillage council. Mortgages are regulated by formal law, and land rightsmust be registered before they can be mortgaged (URT, Land(Amendment) Act, 2004). There is a very limited formal land sale market inTanzania, and little information is available concerning its operation. Onlya small percentage of land is registered, and most of what is registered is inurban areas. Most land transactions occur on the informal market, andthese tend to be leases. In rural areas, land sales were historicallyconducted between members of families or clans; landholders tended notto sell rights toInscription on house wall stating “Hapauzwi, ogopa matapeli” which in Englishreads, “Not for sale, Beware of conmen”24buyers from outside the village. Since the end of the villagization project,and in keeping with the growing commoditization of land, the informalmarket has expanded; there is increasing demand for land in productiveareas and areas with high potential for commercial development. In somecases investors and land speculators follow formal procedures to obtainland rights, but in many cases buyers proceed informally, negotiating withtraditional village authorities and government bodies, with the transactionevidenced by an informal deed signed by representatives of the official ortraditional village authorities (United States Agency for InternationalDevelopment (USAID), 2010)4.6 Forced Acquisition of Land by the GovernmentForced acquisition of land by Government is usually carried out whereGovernment wishes to pave way for infrastructure development or in somecases, the redistribution of land. The legislation governing landacquisitions provide for notice to be provided at least six weeks prior toacquisition. The President is provided with the mandate to shorten thatperiod if necessary. The government is required to promptly paylandholders fair compensation, which includes an annual interest of 6% forany delay in payment. Historically however, Government has on manyoccasions been unfair in its compensation especially where village land hasbeen converted into general land. The Land Act identifies seven factors tobe considered in determining fair compensation: (1) the market value ofthe property; (2) disturbance allowance; (3) transport allowance; (4) loss ofprofits or accommodation; (5) cost of acquiring the subject land; and (7)24Photograph from www.greatmirror.com
22HousingStudy-Tanzaniaany other cost loss or capital expenditure incurred in the development ofthe subject land. The government can offer landholders alternate land inlieu of or in addition to monetary compensation (GOT Village Land Act1999b; GOT Land Act 1999a).In some cases, investors have circumvented the requirement forgovernment land expropriation and dealt directly with villages. Villagecouncils may be incentivized to negotiate directly with investors ratherthan wait for government intervention because the councils have anopportunity to set annual rent and request premium payments from theinvestors (United States Agency for International Development (USAID),2010)4.7 Women’s Rights to LandThe Constitution and formal law provide for equal rights to property andprohibit discrimination on the basis of sex. Furthermore, the Land Act isclear that women shall have the same rights as men have to acquire, hold,use, deal with, and transfer land while stating that customary law cannotbe used to discriminate against women. Women’s representation is dulyrequired and is mandatory in the various administrative institutionsgoverning land as in the case of village councils. Tanzania’s Marriage Act(1971) requires registration of both monogamous and polygamousmarriages. Married women are permitted to hold property individually, andpolygamous wives have individual rights to hold property. Married couplesare presumed to hold land jointly in the case of a marital property which isco-registered with spousal consent being required where marital propertyis transferred or mortgaged. Where Shari’a law applies, as in the case ofmuslims, that women would generally receive one-half the share of men,and a widow with children receives a one-eighth share of her deceasedhusband’s estate (one-fourth if there are no children).4.8 Foreign Ownership of LandUnder the Tanzania Investment Act 1997, non-citizens are legallypermitted to own land solely for the purpose of investment and have to doit through the Tanzania Investment Centre or where an interest in landunder a partial transfer of interest by a citizen for purposes of investment,as in the case of a joint venture, seek approval from the TanzaniaInvestment Centre. In principle this is done through the TanzaniaInvestment Centre which plays the role of a broker. The 2004 Land(Amendment) Act permits the sale of bare land and allowsThe Constitution and formal law provide for equal rights to property andprohibits discrimination on the basis of sex.2525Photograph from www.greatmirror.com
23HousingStudy-Tanzaniamortgage financing as a means of encouraging domestic and foreigninvestment. It should be noted however, that only 50,000 hectares weretransferred to foreign investors for the five year period between 2004 and2009 despite the government holding 2.5 million hectares under theTanzania Land Bank Scheme which was created under the Investment Act.The underlying problem has been the inability of the government toprovide sizeable tracts of land that is not scattered effectively making it adisincentive for foreign investors.4.9 Primary Constraints to the Development of a Formal LandMarketIn summary, the key constraints to development of the formal land marketinclude: (1) the requirement for pre-sale notification to the LandCommissioner about the intended transaction; (2) the requirement thatthe Commissioner acknowledge such notification as a condition forregistering the transaction; (3) prohibition of sale of land rights held for lessthan three years; and (4) the ability of the Land Commissioner to void aland transaction anytime within two years of the transaction, if theCommissioner has reasonable cause to believe there has been fraud, undueinfluence or lack of good faith in the transaction (URT, Land Act, 1999),(URT, Village Land Act, 1999)
24HousingStudy-TanzaniaNew commercial development in a Dar es Salaam suburb.2626Photograph from www.greatmirror.com5.0 Legal Environment governing housingThe following policy and legal instruments provide guidance for acquisitionof land and associated properties coupled with necessary compensationand resettlement procedures, when required, in Tanzania. (Juma & Abdul,2009)Constitution of the United Republic of Tanzania (1977 - as amended)The Constitution provides for the protection of the rights and interest ofcitizens in matters concerning their property and acquisition. Under article24 (1), every person is entitled to own property, and has a right to theprotection of his property held in accordance with the law. Sub article (2)prescribes that it is unlawful for any person to be deprived of property forany purposes without the authority of law, which makes provision for fairand adequate compensation.The National Human Settlements Development Policy (2000)The policy promotes the development of sustainable human settlementswith a remit to make serviced land available for shelter and humansettlements development to all sections of the communities through theimprovement and provision of infrastructure and social services. Althoughit does not cover housing adequately, it remains the principal legislationgoverning housing in Tanzania. A Tanzania Housing Policy, currently infinal draft, will be enacted with specific reference to the housing situationin Tanzania albeit in parity with this prevailing policy.National Land Policy (1996)The overall aim of the National Land Policy among other things is topromote and ensure a secure land tenure system in Tanzania that protects
25HousingStudy-Tanzaniathe rights in land for all its citizens. The policy provides that a dual systemof tenure, which recognizes both customary and statutory rights ofoccupancy as being equal in law be established. The Land Policy directsthat land be graded as a Constitutional category. That compensationshould be paid to any person whose right of occupancy or recognizedlongstanding occupation or customary use of land is revoked or otherwiseinterfered with to their detriment by the state and the Acts or is acquiredunder the Land Acquisition Act Cap 118. In principle the Ministerresponsible for land matters is the sole authority in land issues. To addressthe problem of multiple land allocations, and its resultant disputes, theCommissioner for lands is the delegated sole authority for administrationof land. However, the policy stipulates involvement of the public andprivate institutions whose functions are associated with land i.e. localauthorities, communities, non-governmental organizations andcommunity based development organizations – to participate andcooperate with the Minister at different levels during the implementationof the policy and utilization of land. According to the policy, land in townsis governed by the City, Municipal or Town Councils. The administration ofvillage land is vested in the village councils the councils have to consentbefore any alienation of village land is affected. In case of land allocations,the village councils should report to respective village assemblies.The Land Act, 1999 (Act No 4/1999)/ Land (Amendment) Act 2004The Land Act is the principle land legislation on all land matters and coversthe underlying legislation surrounding mortgages in Tanzania underChapter X of the Act. The Land Act signifies that land in Tanzania is publicland and remain vested in the President as trustee for and on behalf of allcitizens of Tanzania. For the purposes of the management of land underthe Land Act and all other laws applicable to land, public land is in thefollowing categories: (1) general land; (2) village land and (3) reserved land.The transfer of land from one category to another is provided in the Act.The Act specifies that an interest in land has a value and that value is takeninto consideration in any transaction affecting that interest. Therecognized land ownership is the granted right of occupancy andcustomary ownership. The act states that where persons with a right ofoccupancy (including land which is occupied by persons under customarylaw) are to be moved or relocated, they must be compensated for loss ofinterest in the land and for other losses. They also have the right to reapcrops that are sown before any notice for vacating that land is given.Assessment of compensation on land acquired shall be based on thefollowing:i) Market value of the real property;ii) Disturbance allowance; iii) Transport allowance;iii) Loss of profit or accommodation;iv) Cost of acquiring or getting the subject land;v) Any other cost loss or capital expenditure incurred to the developmentof the subject landvi) Interest shall be charged at market rate.Mortgage Finance (Special Provisions) Act, 2008The passing of this act has created a lot of momentum in government forthe development of housing finance. The act amended certain written lawswith a view to providing further provisions for mortgage financing andenables Estate Developers to access long term loans from the banks tobuild houses and sell to buyers. The act also intended to help to providefunds for acquisition of low cost housing and not just for mansions andskyscrapers. Formerly the procedure for transfer of mortgaged propertywas long and cumbersome. Under this act, this process involves only three
26HousingStudy-Tanzaniaparties, the mortgagor, the Bank and the Registrar of Titles. All otherinterested parties, including the Commissioner for Lands are notified bythe Registrar after the completion of the mortgage process. Under this act,the bank and the borrower enter into a contract and if the borrowerbreaches the contract, they are given a notice of 60 days to pay, afterwhich his/her property are sold (to pay back the loan) without involving thecourt.The Unit Titles Act, 2008 (Act No. 16 /2008)The enactment of this act has significantly improved the prospects formass housing production and the demand for mortgages. The act enables,Estate Developers to construct high rise and buildings and multi-facestructures with a big number of flats (or units) and sell each unit to as manybuyers; and each unit buyer is eligible to get a title deed after completingthe sales agreement. This act provide for the management of the divisionof buildings into units, clusters, blocks and sections owned individually ofco-owned and use of designated areas; to provide for issuance ofcertificate of unit titles for the individual ownership of the units, clusters orsections of the building, management and resolution of disputes arisingfrom the use of common property; to provide for use of common propertyby occupiers other than owners and to provide for related matters.The Village Land Act, 1999 (Act No.5/1999)The act provides that the Village Council, the organ upon which thePresident has delegated powers to manage village land is obliged to ensurethat the village prepare an appropriate village land use plan for sustainabledevelopment, to enter into agreement with neighbouring villages, toensure that joint Village Land use plans are prepared for areas which areused jointly. Preparation of such plans among other things includes settingaside areas for community uses including areas for schools, dispensaries,water catchments, water supply utilities, market places, burial areas,offices etc.The Urban Planning Act, 2007 (Act No. 8/2007)The Urban Planning Act No 8 of 2007 provides power for creating plans inadvance of development and a comprehensive system of developmentcontrol. It provides for the declaration of planning urban areas by theMinister responsible for Urban Planning in consultation with LocalAuthorities and constituting area Urban Planning committees andprocedures for preparation of schemes and the approval by the Minister.The general planning schemes which came to be known popularly asmaster plans continued to be the primary planning and management toolfor guiding urban development in Tanzania for more than forty years.These provided for overall planning of planning are facilitating preparationof detailed schemes and project plans.The Land Acquisition Act, 1967 (Act No 47/1967)The Land Acquisition Act of 1967 stipulates the power and procedures foracquiring land and the required degree of compensation. Section 3 and 4 ofthe Act gives the President of Tanzania powers to acquire any land for anyestate or term where such land is required for public purpose such asexclusive government use, general public use, any government scheme,development of social services or commercial development of any kindincluding declamation. The act makes provision for the procedures andmethod of compulsory acquisition of land for public purposes whether fortemporary or permanent use. The Minister responsible for land may
27HousingStudy-Tanzaniaauthorize any person to enter upon the land and survey the land todetermine its suitability for a public purpose. The Government of Tanzaniais supposed to pay compensation to any person who suffers damage as aresult of any action. Any dispute as to compensation payable is to bereferred to the Attorney General or court for decision. The LandAcquisition Act does not go beyond compensation. It is not required underthe Act to provide alternative land for the affected people by the project.Each affected person entitled to be compensated; on receipt of his/hercompensation is expected to move and has no further claim. Once they arepromptly and adequately compensated, then the obligations stop there.This act also sets out the legal process for payment of compensation.Land (Assessment of the Value of Land for Compensation) Regulations, 2001Land (Assessment of the Value of Compensation) Regulations, 2001 weremade under section 179 of Land Act no. 4 of 1999. Regulation 3 of the Land(Assessment of the Value of Land for Compensation) Regulations, 2001and Part III of the Village Land Regulations, 2002 provide for practicalguidelines on assessment of compensation. The full and fair compensationis assessed by including all components of land quality and the marketvalue should be used as basis for valuation of land and properties.Presently in assessing the value of the unexhausted improvements forcompensation purposes, the law emphasizes that the value should be theprice that which the said improvements can fetch if sold in the openmarket. But this in normal circumstances is lower than the replacementvalue but higher than the initial construction cost of the saidimprovements. According to the regulation, the valuation of the affectedproperties must be done by a qualified and authorized Valuer.The Land (Compensation Claims) Regulations, 2001The regulations apply to all application or claims for compensation againstthe government or Local authority or any public body or Institution andthey also cover compensation which may be claimed by occupier.The Land (Schemes Of Regularization) Regulation, 2001Under the Land Act, 1999 Section 60(1) an area can be declared to be aregularization area. Regularization of an area involves the following:a) Arrangements for the survey, adjudication and recording of interests inland claimed by those persons occupying land in the regularization area.b) Arrangements for the readjustment of boundaries of plots of land.c) Better planning and layout of the land including pooling, sharing andredistribution of rights in land.d) Arrangements for the involvement of the local authorities havingjurisdiction in the regularization area in the implementation of the scheme.e) Arrangement for involvement of the people whose land is the subject ofthe scheme of regularization in the implementation of the scheme.f) Arrangement for the assessment and payment of any compensation thatmay be payable in connection with the implementation of the scheme.Section 60(3) emphasizes that “For avoidance of doubt, no scheme orregularization shall be implemented until occupation and use of land bythose persons living and working in the area have been recorded,adjudicated, classified and registered.”The Land Disputes Court Act. 2002 (Act No.2/2002)This act provides the respective courts and their functions. Beforeimplementation of sub projects, any land conflicts existing in the areasshall be resolved through the appropriate land courts to ensure thatharmony prevails in the intended undertaking. Project beneficiaries willtherefore be bound by these Acts.
28HousingStudy-TanzaniaThe Land Use Planning Act, 2007 (Act No.6/2007)The Act provides for the procedures for preparation, administration andenforcement of land use plans; to repeal the National Land Use PlanningCommission and to provide for related matters. The Act has distinctiveauthorities of land use planning in Tanzania laid down with their functionsand powers. The power vested to authorities which give them teeth to biteis to enforce approved land use plans including taking defaulters to court oflaw.6.0 Judicial context of the housing sector with respect to mortgagesThe most important laws governing the mortgage market are Chapter X ofthe Land Act, as amended in 2004, and the Mortgage Financing (SpecialProvisions) Act No. 17 of 2008 (which is read in conjuction with the LandAct which remains the principal act).Civil ProcedureIn Tanzania, all mortgage foreclosures of a family residence require courtintervention. Historically, in view of the inefficiencies and biases of thelegal system, this has prompted the widespread perception among lendinginstitutions that the legal and institutional framework does not adequatelyallow for the creation and enforcement of mortgages, especially bearing inmind that in the past, the law had been heavily weighted in favour of therights of the borrower. That perception created by not having non-judicialforeclosure to obtain possession of a mortgaged property, has been, alongwith other key issues such as spousal consent, at the core of lendinginstitutions choosing to stay away from the mortgage market save thoseinstitutions that were willing to take the risk. The perception however wasnot necessarily unfounded, as there are known cases where lendersexperienced difficulties in their rights to obtain possession of and or to sell
29HousingStudy-Tanzaniaa mortgaged property as a result of injuctions or court interventions basedon baseless extra-legal claims. However, in the wake of the amendmentsto the Land Act, by way of the enactment of the Mortgage Financing(Special Provision) Act, which has addressed some of the key concerns forlenders, lending institutions are now positioning themselves for marketentry to what is largely a nascent mortgage market with a substantialhousing deficit in excess of three million homes.It should be noted that many knowledgeable people believe that there isno such thing as foreclosure in Tanzania. While there was foreclosure bypower of sale in effect before the adoption of amendments to Chapter X ofthe Land Act in 2004, Chapter X provides that court action is necessary forforeclosure of a family home and, in Section 125, states that “any rule oflaw, written or unwritten, entitling a mortgagee to foreclose the equity ofredemption in mortgage land is abolished.” In fact, the law allows forforeclosure through repossession and/or sale of the property. “Foreclosure”is simply the termination of the debtor’s rights to pay what he owes,reinstate good standing under the loan, and retain ownership of theproperty used to secure the loan, which ends upon sale of the property to athird party. What Tanzania does not have is "strict foreclosure," underwhich a court may deliver possession of a property free of the debtorsright of redemption prior to execution sale, or “non-judicial foreclosure.”(Rabenhorst & Butler, 2007)It should be noted that the exclusion of family homes from non-judicialforeclosure apparently was included in the law in an effort to protectindividual borrowers and their families from banks that might be over-eager to take away their property. This is clearly an element adopted fromthe socialist past of the country since experience around the world showsthat lenders examine the law to determine if execution procedures areefficient and predictable when they are deciding whether to enter themarket. The availability of non-judicial foreclosure thus results in a morecompetitive market. Ease of enforcement is also a factor in determiningcredit risk, so that a strong system results in lower interest rates, longerterms, lower down payments, and willingness to lend to persons other thanthe wealthy. So an enforcement system that requires long and expensivelitigation before a lender can get access to the collateral securing a badloan results in a smaller, less competitive market and less favorable termsfor borrowers. (Rabenhorst & Butler, 2007)Court JurisdictionsOverall, there is a need to establish what court actually holds jurisdictionover mortgage-related claims. Under the procedural provisions outlined inChapter X of the Land (Amendment) Act 2004 which is further amended byway of the Mortgage Financing (Special Provisions) Act 2008, it is statesunder Section 140 (1) that:-“All proceedings instituted in court in relation to the exercise by themortgagee of powers to sell or enter in possession of the mortgaged landshall be brought in accordance with the provisions of the Civil ProcedureAct,1966 and tried by way of summary proceedings”.Subsequently thereafter, under subsection (2) it states “Notwithstandingany other provisions of this Act an action for exercise of a power of sale or forpossession of a mortgaged property may be brought in the Land Division ofthe High Court.”
30HousingStudy-TanzaniaIt would appear, as in the case above, that there are parts of the legislationthat create an element of doubt over jurisdiction issues. There are expertswho believe, however, that the procedural provisions of Chapter X aredetailed enough to evidence the legislature’s intention that mortgageenforcement would take place under Chapter X itself rather than the CivilProcedure Act, and that the procedures in the Civil Procedure Act are nolonger in effect. Moreover, it is not clear whether the summary proceduresare in effect; in any case, they are often ignored in practice (Rabenhorst &Butler, 2007). The spirit of the law however, seems to move away from itsprevious past. Amendments incorporated under the Mortgage Financing(Special Provisions) Act seem to be trying to address principal matters thatensure that the rights of both the mortgagor and the mortgagee arepreserved.Third Party InterestsKey changes have been implemented in the revised legislation surroundingwhat was previously a major hurdle to the issuance of mortgages in themarket. Previously, although spousal consent was required, one couldeasily, by non disclosure, especially where polygamous marriage was thecase, create the space for a spouse to request for an injunction from thecourts particularly where no initial assent was provided by one spouse overthe use of their matrimonial home as collateral for a mortgage. In effect,the Act recognized the rights of a spouse under the Law of Marriages Act,1971 without providing total clarity on whether say, as in the case ofpolygamous marriages, spousal consent was required from all spouses.The law was also silent on deemed marriages where a person may havebeen cohabiting with a woman over a long enough duration to customarilybe regarded as husband and wife. Furthermore, the law also made itdifficult for the lender to verify and ascertain the truth especially where aborrower deliberately hid the fact about having a spouse.Under the Mortgage Finance (Special Provisions) Act, 2008, the law nowstates under Section 114(2) that it shall be the responsibility of themortgagor to disclose whether they have a spouse or not and it shall be theresponsibility of a mortgagee to take reasonable steps to ascertainwhether the applicant for a mortgage has a spouse or spouses. As such thelaw provides that on the strength of an affidavit or written and witnesseddocument declaring as such, which also applies to any other third partyholding interest in the said property, the Mortgagee is deemed to havetaken all reasonable measures. Should the applicant commit the offenseof non-disclosure or knowing provide false information to the mortgageethey are liable for a fine not less than 50 percent of the loan value or toimprisonment of not less than twelve months.Under the previous legislation, delaying tactics and unnecessary appealswere prevalent and with the institution of the Mortgage Finance (SpecialProvisions) Act No. 17, the strengthening of the creditor’s ability to enforcecollateral has been made possible. The provisions of the Act now clearlystipulate that the only reasons for a court to throw out a foreclosure claimare if (i) a mortgage loan was never taken, or (ii) the loan has already beenfully repaid.It should be noted that the Act contains a consumer protection sectionrequiring clear disclosure of pre-contractual information such as interestrate, early repayment penalties, and full disclosure of costs.6.1 Judicial context of the housing sector with respect to land
31HousingStudy-TanzaniaThe formal court system has a more adjudicatory approach and includesdistrict-level land courts, housing tribunals in urban areas, the landdivisions of the high courts and the courts of appeal. Regardless of thetribunal, customary law will be applied to resolve disputes over land heldunder a right of customary occupancy. In addition to the informal andformal tribunals, the Commissioner of Lands can operate as anindependent adjudicator given that the Commissioner has authority tocommission an inquiry on land matters, conduct proceedings and reachdeterminations. The proceedings do not require adherence to rules ofevidence, and the procedure is distrusted by many rural communities,which prefer to find local solutions to conflicts (United States Agency forInternational Development (USAID), 2010).7.0 Banking and Financial System with reference to the housing sectorThe financial sector in Tanzania has undergone substantial structuralchange since the liberalization of the sector in 1991. The financiallandscape in Tanzania is comprised of mainly banks, pension funds,insurance companies, and other financial intermediaries. However, thesector is dominated by banking institutions which account for about 75percent of the total assets of the financial system, followed by pensionfunds whose assets account for about 21 percent while the insurance sectorand remaining financial intermediaries hold about 2 percent each (Bank of
32HousingStudy-TanzaniaTanzania, 2010). Foreign owned banks in Tanzania account for about 48percent of the banking industry’s total assets.Chart 1: Financial Sector Asset-Based Composition – June 2010Source: Bank of TanzaniaFinancial sector assets have expanded rapidly in the past decade from atotal of TZS 1,637 billion at end of December 2001 to TZS 15,376 billion inDecember 2010 (Serengeti Advisers Limited, 2011). More considerably, thebanking sector total assets have expanded 2.8 times since 2006precipitated by increased lending to the private sector with loansexpanding almost 3½ times over the same period to TZS 5.9 trillion fromTZS 1.7 trillion. Equally investments in government securities doubledfrom TZS 1.2 trillion in 2006 to 2.37 trillion in 2010 (Serengeti AdvisersLimited, 2011). The results are a demonstration of the efforts that thegovernment has been taking to strengthen the banking system to maintainfinancial sector stability. However, based on the end-June 2009 bankingsector review carried out by the BOT, four banks fell below the capitaladequacy ratio (CAR) threshold of 12 percent. Non-performing loans(NPLs) averaged 7.67 percent across the banking sector, compared with6.33 percent at the end-June 2008. Fourteen banks had NPLs above theaverage, in part due to their exposure to the agricultural sector, which hasaccumulated a NPL ratio of almost 27 percent (Bank of Tanzania, 2010).By end of June 2010, the banking sector was made up of 41 bankinginstitutions, out of which 19 were foreign owned. The banking systemshowed a high concentration of total assets - 57 percent - being held byfour big banks, while 43 percent were accounted for by the remaining 37banks. It should be noted that 3 of the four big banks are eithershareholders or have made applications to acquire equity in TMRC. This toa measure may be indicative of their intended strategy to equally dominatethe mortgage market. Investment in TMRC is viewed to be within the coreobjective of delivering banking services to the general public, although itshould be made clear that the existing banking laws in Tanzania restrictbanks from engaging in non-banking financial services. Banks which intendto diversify into other financial services are required to establish separatesubsidiaries. As such, the separation of banking services from otherfinancial services provides some cushion against the transmission of shocksacross different sectors in the financial systemPension funds deposits in the top ten banks in Tanzania represented about10 percent of total private sector deposits in the banking system as at endJune 2010. Equally pension funds along with insurance companies holdbetween 30 percent and 20 percent of the total amount of outstandingPensionFunds21%Insurance2%MicrofinanceInstitutions1%Mutual Funds1%Banks75%Composition
33HousingStudy-Tanzaniagovernment debt securities. Pension funds’ assets account for 21 percentof total assets of the financial system, while the investment portfolios ofthese pension funds are concentrated mainly in two areas, namely:government securities and in the illiquid commercial real estate. Thisstance of investment poses substantial threat to financial stability in theevent government debt market experiences a significant shock and/or thebust of the growing bubble in the commercial real estate sector. As withbanks, a similar trend of asset concentration is also observed in pensionfunds. The three largest pension funds hold about 85 percent of thesector’s total assets.On the real estate front, some of the public pension funds have investeddirectly in housing. In 2003, NSSF developed 194 houses in Kinyerezi, Dares Salaam and started the development of another 300 residential housesin Mtoni Kijichi, Dar es Salaam. Recent low income housing developmentprojects27include:a) Housing project for the Tanzania Peoples Defense Forces (TPDF)comprising accommodation for 242 families in Dar es Salaam andArushab) A similar residential project in Pemba, Unguja (Zanzibar) and Dar esSalaam for the Tanzania Police Force Phase I comprising of 120 flatsc) Planned projects include Tanzania Police Force residential housesPhase II – 120 flatsd) Affordable housing in Mtoni Kijichi area in Dar es Salaam.Where construction is not directly to government, first priority is normallygiven to its pensioners and where the uptake is slow the general public is27(National Social Security Fund, 2007/08)invited to purchase houses. Loans for houses are normally structured for15 year repayment terms. The Public Service Pension Fund, starting thislast year started an acquisition phase that will see it acquire plots in Dar esSalaam and other regions. These plots will be sold to members eitherthrough direct purchase agreements or through guaranteed loans fromAzania Bank, whose largest shareholders are the main pension funds. Loandeductions would be spread over 5 years. Initially 200 houses are plannedfor Dar es Salaam and 50 each for Morogoro, Mtwara, Shinyanga andTabora regions. Investment in low income housing is viewed as low risk asoutright purchase will be required and where loans are granted, there willbe substantial cash cover from pension savings accumulated by theborrowing member; this cover will meet liabilities in the event of default.The Parastatal Pension Fund PPF also ventured into low cost housing andin 2007 developed a project in Kiseke, Mwanza, comprising 580 houses.Members of the Fund bought 365 of these houses through bidding. Theremainder were reserved for the general public but the uptake has beenslower than expected primarily because the Fund raised the selling pricesto take into account higher construction and carrying costs.A study commissioned in 2006 by the Financial Services Deepening Trust(FSDT) to review the scope of access to financial services in Tanzania,under what is now known as the Finscope 2006 demand survey, revealedthat 54 percent of Tanzanians were excluded from any kind of access to afinancial service, be it formal, semi-formal, or informal. Furthermore, itrevealed that only 9 percent of Tanzanians maintained an in a commercialbank or credit institution (formal financial providers). Two percent to theadult population it was noted were, at the time, served by MicrofinanceInstitutions (MFIs) and SACCOs (semi- formal financial providers), and 3
34HousingStudy-Tanzaniapercent were served through informal groups such as Village CommunityBanks (VICOBA) as well as family and friends). Together with those whohave no access to any financial services, 89 percent have no access toformal or semiformal financial institutions. Commercial banks serve lessthan 10 percent of the population (or 1,382,000 people in an adultpopulation of 21 million)28yet attract more than 50 percent of those whotake out a loan or choose to save (Bank of Tanzania, 2010). SACCOs aretheir principal competitor, attracting almost 800,000 savers with MFIs andthe Postal Bank trailing behind.Overall, domestic lending to the building and construction industry hasbeen increasing year on year in shilling terms (see table 4) with lending tothe sector tripling since 2004. However, it has been registering a decliningas a percentage of gross domestic lending activity (see chart 2 below) inthe wake to increased lending to the agricultural andTable 4: Domestic lending activity (in shilling terms)2004 2005 2006 2007 2008 06/2009Real Estate &Leasing- - 54,443 50,028 88,352 95,082Building &Construction42,157 83,074 83,456 104,102 142,992 114,872Data Source: Bank of TanzaniaChart 2: Domestic lending activity to the Building & Constructionsector as a percentage of gross domestic lending activity28The latest Finscope report bullets highlights increased penetration with formalfinancial institutions now servicing 12.4 percent which represents about twomillion adults of the currently estimated at 20 million adult population.Data Source: Bank of Tanzaniamanufacturing sectors. Nevertheless, it is anticipated that this trend willreverse as banks seek to enter into the mortgage market.7.1 The mortgage market in TanzaniaIt is estimated that mortgage loans outstanding currently amount toaround USD 100 million, split between around 2,000 loans, making for theaverage loan size of around USD 50,000 (Hanai & Chambi, 2009).However, this amount is growing relatively rapidly as new entrants comeinto the market. Since independence in 1961, housing was approached byGovernment with a policy that drove towards universal state provision ofhousing in rural and urban areas. However, this proved unaffordable, andthe policy was changed in 1972 towards a slum improvement program(Hanai & Chambi, 2009). The Government also encouraged self-construction through the provision of land and subsidized credit finance. Itestablished the Tanzanian Housing Bank (THB) in 1973 for this purpose.0.00%1.00%2.00%3.00%4.00%5.00%6.00%7.00%2004 2005 2006 2007 2008 06/2009Domestic Lending - Building & ConstructionSector
35HousingStudy-TanzaniaTHB provided around 14,000 mortgages until its demise in August 1995.Since the collapse of THB, there has been no widespread provision ofhousing finance in Tanzania. Since the beginning of the 1990s’,considerable effort has been expended towards improving the financialservices sector primarily through the financial sector liberalization andreform program implemented following the adoption of the Banking andFinancial Institutions Act of 1991. The table below offers a comparison ofTanzania’s mortgage market size relative to some other sub-SaharanAfrican markets.Table 5: Mortgage Debt to GDP 2007Mortgage Debt toGDP$GDP/Head (2007)Tanzania 0.30% 392Nigeria 0.50% 944Uganda 1.00% 382Senegal 2.00% 941Ghana 3.90% 749Namibia 20.00% 3,502South Africa 34.00% 6,185Source: World Bank7.2 Key risks facing the Mortgage Market7.2.1 Insufficient stock of housing qualifying for mortgagesDue to the historical past of the country having no mortgage facilities,property development has been traditionally been conducted individuallyand incrementally over periods stretching beyond five years matched withcommensurate salary earnings. To this end, the supply of housing,particularly affordable housing, remain virtually non-existent. In thisregard however, immense opportunities exist in the housing developmentspace for the keen property developer.Mitigant: Due to the same fact that housing has primarily been doneincrementally and in situ over many years, there is a large stock of partiallyfinished homes that are capable of providing the needed equity for thedevelopment of a vibrant mortgage market. Furthermore, with therevamping of the NHC towards making it a Master Developer with fullsupport from Government, one would expect that in the next few years, ahousing stock of good and affordable houses will begin to emerge..7.2.2 High Cost of Land DevelopmentAs a result of poor town planning, access to sizeable parcels of land fordevelopment remains scarce. Where one would wish to leverage theircosts down with economies of scale, one would have to virtually seek alarge site in the peri-urban areas of a city or alternatively incur largeexpenses in acquiring dilapidated properties within key strategic areas.Given the inefficiencies within the local government of not being able todeliver the needed infrastructure i.e. roads, water etc in a timely manner,additional costs are incurred by developers in having to factor in thedevelopment of sites, services and required infrastructure adds to projectscosts which they obviously pass on to their clients.Mitigant: As mentioned earlier, the restructuring of NHC towards makingit a Master Developer, responsible for delivering larger parcels of servicedland will ultimately create the economies of scale to make housingaffordable in light of the larger projects that will be carried out. Ultimately,this ought to bring down the overall pricing of houses as well as managedown the prohibitive cost of trunk infrastructure.