When John**, a Tanzania Revenue Authority employee, planned to build his house, it took him about two years without finishing it, due to lack of finance. But, surprisingly, his neighbour, who is also his workmate, during the same period, had built two houses worth $1,000,000 without borrowing money from any local bank or housing financing companies.
John, a 43-year-old graduate from the University of Dar es Salaam, finally established that his workmate has used ‘his office’ to facilitate the construction of the two palatial homes located at Mbezi Beach suburb.
To put things into perspective, John’s workmate decided to use his position at the Dar es Salaam port to receive corrupt money, which he then used to build the posh houses, which he rented mid last year at a cost of $60,000 per house a year.
Finally John decided to follow his colleague’s path and raised corruption money through his office to finance a four-bedroom home. Through that scheme today he owns a home worth $300,000.
His monthly net income can’t exceed $1,500, while his colleague’s monthly salary is estimated to be $1,800 per month before tax deductions.
There are many ‘Johns’ in this country whose dreams of owning homes have landed them into corrupt practices after they have failed to secure enough savings to buy a house for their families.
Dishonest traffic police will use their uniforms to finance their homes, some magistrates sell justice to own posh houses, some banker, too, will steal to finance their mansions and journalists are not spared; they will use their pens to finance their dream homes, and so goes the shameful game! To some of the business communities the shortcut way to own a palatial home is through tax evasion, frauds or dirty business like drugs trafficking. While in a country like South Africa buying a $1 million home without borrowing from the bank or having clear source of funds can land you in jail, in Tanzania, the situation is the opposite.
Though some Tanzanians, including employees and businesspeople, have used their clean incomes to finance their homes, statistics show that many people still use dirty billions to acquire the dream homes.
It’s a housing nightmare, a crisis in the making, though to our top leaders home ownership is not on their political agenda because most of them got public houses at a throwaway price or have access to looted billions which they finally use to invest in real estates.
John and his colleagues are among 99 percent of Tanzanians who build their homes from their pocket, sometime through their hard earned coins or through corruption, which in Tanzania dents about a third of the country annually budget.
According to reliable details from National Housing Corporation, about 99 percent of houses in Tanzania were built by money from the pocket, casting bleak future on mortgage and financing of houses in the country.
Not only that but it takes a Tanzanian, especially those who have no access to dirty money, an average of 5-10 years to complete a house, while experts say it’s supposed to consume just between 9-12 months to have your home.
Following this situation, the dead stock or money value held in unfinished houses in Tanzania is bigger than the total deposits of all banks in Tanzania.
According to a well detailed report issued by NHC Managing Director, Nehemia Mchechu, Tanzania has housing deficit estimated at 3 million units valued at $180 billion by the end of 2007, while the current annual demand for houses in urban areas is 200,000 units estimated to cost $12 billion. With the current population growth at urban areas of about 35.7 percent, Tanzania could soon find itself in a housing crisis if measures are not taken to address the situation, warns the NHC managing director.
But perhaps the most striking fact is that, only 1 percent ($50million) of the total loans issued by the banks in Tanzania is set aside for financing homes, putting many future home owners at the crossroads.
While Julius Nyerere saw the problem in post independence Tanzania during his era, and introduced Tanzania Housing Bank, none of our leaders have made it a priority ever since. Instead President Mwinyi spearheaded the natural death of THB, leaving the country without any other official means to finance homes ownership.
When Benjamin Mkapa took over, he introduced a flawed policy that allowed the auction of government houses at throwaway price, a move that mainly benefited senior public servants. In a fragile economy like Tanzania, the only option available to finance your home today is obtained under the philosophy of ‘survival of the fittest’, where those who have power or positions use that as a conduit to earn dirty money to fund their dream homes.
While in countries like Kenya or South Africa banks are competing heavily to finance home ownership, in Tanzania some banks have either closed the doors or just deal with chosen customers who build commercial houses like hotels, apartments and office premises.
Some few banks have introduced personal loans at exorbitant interest rates of up to 25 percent per annum, which many borrowers use to buy the used or second hand Japanese vehicles.
This situation has created an opportunity for greedy real estate developers who sell their houses at prices that many in poor countries like Tanzania can’t afford.
But finally, the salvation for home ownership is underway, thanks to the new grand proposal by the National Housing Corporation (NHC) aimed at turning looming housing crisis into a golden opportunity.
Given its strong balance sheet valued at $1 billion, NHC will embark on major real estates business in major cities starting with the country’s commercial capital, Dar es Salaam, early next year.
According to Managing Director Mchechu, in the next five years, the NHC will build a total of 50,000 houses, a situation that would also create 200,000 direct jobs and another 500,000 indirect jobs.
The plan if fully completed will give the taxman about $100 million minimum, while pushing the lending into housing sector from the current $50 million to $950 million or 11 percent of the total lending.
The move would also increase mortgage sector contribution to the economy from the current 0 percent to 4 percent of the country’s Gross Domestic Product (GDP).
In South Africa the mortgage contributes about 25 percent of the GDP, while in USA it equates 75 percent and in Europe its contribution stands at 25 percent. To finance this project, NHC will borrow from various local banks as well as collecting its rents, annually valued at Sh30billion ($24million).
“There are local banks which are ready to give us money anytime we are ready…we want to make NHC the saviour of many in this country.” The MD told a group of Editors last Saturday.
NHC will also borrow from the domestic infrastructure bond issued by the Bank of Tanzania in order to finance its grand housing project.
** Names of the employees cited in this report have been changed to avoid legal wrangles.
SOURCE: GUARDIAN ON SUNDAY