Dar es Salaam. Despite facing an annual housing demand of about 200,000 units per year, the appetite of the privates sector for Tanzania’s real estate development remains low.
This, real estate developers say, is due to a number of factors, including the absence of a clear definition of what an affordable housing project entails, financing hurdles, unsupportive policies and difficulties in acquiring land.
In the wake of such challenges, developers now say the government should address the challenges to boost the private sector’s interest in meeting the demand.
Currently, only three state-owned institutions are developing affordable houses, which include the National Housing Corporation (NHC), Watumishi Housing Investment (WHI) and Tanzania Building Agency, which jointly build only 5000 houses per year.
With little investment in the sector, the 2022 Population and Housing Census show that the actual housing gap has widened from three million in 2012 to 3.8 million houses in 2022.
A property management strategist, Mr Andrew Kato, told The Citizen recently that several challenges were discouraging the private sector from participating in the development of affordable houses.
These, he said, include the lack of a housing policy that would assist in providing guidance and no fiscal incentives such as the removal of Value Added Tax (VAT) for selling houses from the government. The incentive, he said, could woo investors and enable them to get a return on their investments.
“We lack a clear definition of what constitutes affordable housing. For instance, we see houses being sold for Sh70 million, making it impossible for someone earning a minimum wage to afford a home and still have enough left to live on. That’s why we believe the housing policy needs to establish a precise definition,” he stressed.
Mr Kato added that the housing sector can contribute greatly to the growth of the national income, but there must be a definition of the type of affordable housing.
Watumishi Housing Investment (WHI) chief executive officer, Dr Fred Msemwa, said the main challenge facing the provision of affordable homes in Tanzania and generally in the East African region is the limited availability of construction finance, which limits the quantity of houses that can be supplied in the market.
Likewise, the lack of serviced land adds to the cost of houses as developers have to incur costs for infrastructure services such as roads, electricity, and water, hence making the prices of homes too high to afford for ordinary citizens.
The process for land is still a challenge, despite the good work that the government continues to do to streamline this process.
“The real estate industry is just picking up, and we are in discussions with potential investors to join forces to jointly deliver some housing units,” he said.
He said so far, WHI has built 1003 houses in 19 regions across the country, plans are to embark on the second phase of building 500 housing units in the cities of Dodoma and Dar es Salaam.
Furthermore, commencing the new financial year, we are set to implement the Public Servant Housing Scheme (PSHS) by building houses in districts to cater to public servants working in schools and health centres.
For his part, NHC Public Affairs and Information manager, Mr Muungano Saguya, said one of the major challenges in the provision of affordable housing in Tanzania is the availability of funding.
“The involvement of the private sector is paramount in resolving this challenge and therefore we have been encouraging the private sector to collaborate with NHC,” he said.
He said, unfortunately, mostly the private sector has more appetite for middle- to high-end developments, adding that NHC will continue to encourage and attract the private sector to invest in affordable housing.
In addition, NHC has constructed about 30,000 affordable housing units in Tanzania in 2023 since its inception, mainly built under slum clearance schemes in the major urban centres in the District Councils.
On the other hand, the managing director for Vijay Contractors, Mr Joseph Magida, said many challenges prevent the private sector from venturing into the business of affordable houses, including land issues and the lack of a housing policy that will protect low-income people.
Another challenge is the availability of funds. Banks are not yet ready to provide loans in that area, and the interest rate is still high, so investors see that they cannot get a return on investment.
“We think the government is the main stakeholder in this area who can deliver things that have attracted private investors; the land policy is unpredictable; conflicts are increasing all the time; this takes away the appetite of many investors,” he said.
Mr Magida added: “Currently, the government is building low-priced houses and not affordable housing as they are mentioned because they do not reflect the lives of Tanzanians. The house is sold for between Sh60 million and Sh100 million, so how many can buy it?”
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Tanzania: Exim to Raise Fund for Mental Health Facilities Upgrades
EXIM Bank to raise 300m/- over the next three years for financing essential services and infrastructure upgrades in mental health facilities.
The bank’s Head of Marketing and Communications Stanley Kafu unveiled this when introducing Exim Bima Festival 2024 as a platform for bringing together individuals, organisations and various sectors for raising the funds.
“Exim’s initiative aligns with the government’s broader goals to ensure that every citizen has access to quality healthcare, including mental health services,” he said.
The initiative, which is one of the events for celebrating the bank’s 27th anniversary is scheduled for Wednesday this week in Dar es Salaam.
Mr Kafu highlights that this year’s festival is not only about raising awareness of the importance of insurance in the society but also focuses on enhancing access to mental health services and improving the overall well-being of the nation.
Statistics from the Ministry of Health shows a staggering 82 per cent increase in mental health cases over the past decade.
Mental cases have risen from 386,358 in 2012 to 2,102,726 in 2021, making the need for mental health services more urgent than ever.
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Unfortunately, the country’s ability to address this growing challenge is hindered by a shortage of mental health professionals, infrastructure, medical equipment and essential medication.
For example, out of the 28 regions in the country, only five have facilities that provide adequate mental health services.
The most affected group is the youth aged 15 to 39, who represent the nation’s workforce, underscoring the need for intensified efforts to safeguard this generation for Tanzania’s future well-being and development.
Mr Kafu said by improving mental health services, Exim aims to contribute to the creation of a network of communities that can access care quickly and affordably.
Exim Insurance Department Manager Tike Mwakyoma said they are appreciating the support from partners in the insurance industry, who have stood by them since the last festival.
“Let’s continue this unity for the development of all Tanzanians and our nation as a whole,” the manager said.
Source: allafrica.com
Tanzania readying to talk to British developer over Zanzibar land lease revocation
Dar es Salaam. British firm Pennyroyal Limited has said it will sue the Tanzanian government over leasehold revocation in Zanzibar, but the Attorney General has confirmed that they are preparing to meet with the investor.Continue Reading
Britam half-year net profit hits Sh2bn on higher investment income
Insurer and financial services provider Britam posted a 22.5 percent jump in net earnings for the half-year ended June 2024, to Sh2 billion, buoyed by increased investment income.
The rise in half-year net profit from Sh1.64 billion posted in a similar period last year came on the back of net investment income rising 2.5 times to Sh13.27 billion from Sh5.3 billion.
“We are confident in the growth and performance trend that Britam has achieved, supported by its subsidiaries in Kenya and the region. Our business is expanding its revenue base while effectively managing costs,” Britam Chief Executive Officer Tom Gitogo said.
“Our customer-centric approach is fueling growth in our customer base and product uptake, particularly through micro-insurance, partnerships, and digital channels.”
The investment income growth was fueled by interest and dividend income rising 34 percent to Sh9.1 billion, which the insurer attributed to growth in revenue and the gains from the realignment of the group’s investment portfolio.
Britam also booked a Sh3.79 billion gain on financial assets at a fair value, compared with a Sh1.8 billion loss posted in a similar period last year.
The increased investment income helped offset the 12.7 percent decline in net insurance service result to Sh2.13 billion in the wake of claims paid out rising at a faster pace than that of premiums received.
Britam said insurance revenue, which is money from written premiums, increased to Sh17.8 billion from Sh16.6 billion, primarily driven by growth in the Kenya insurance business and regional general insurance businesses, which contributed 30 percent of the revenue.
The group has a presence in seven countries in Africa namely Kenya, Uganda, Tanzania, Rwanda, South Sudan, Mozambique, and Malawi.
Britam’s insurance service expense hit Sh13.6 billion from Sh11.3 billion, while net insurance finance expenses rose 2.6 times to Sh12.3 billion during the same period.
“Net insurance finance expenses increased mainly due to growth in interest cost for the deposit administration business driven by better investment performance. This has also been impacted by a decline in the yield curve, which has led to an increase in the insurance contract liabilities. The increase has been offset by a matching increase in fair value gain on assets,” said Britam.
Britam’s growth in profit is in line with that of other Nairobi Securities Exchange-listed insurers, which have seen a rise in profits.
Jubilee Holdings net profit in the six months increased by 22.7 percent to Sh2.5 billion on increased income from insurance, helping the insurer maintain Sh2 per share interim dividend.
CIC Insurance Group posted a 0.64 percent rise in net profit to Sh709.99 million in the same period as net earnings of Liberty Kenya nearly tripled to Sh632 million from Sh213 million, while Sanlam Kenya emerged from a loss to post a Sh282.2 million net profit.
