In the modern world, affordable housing is becoming a complex issue for many people, especially in Africa. Across the region, rapid urbanization, which has boomed over the past decade, has made affordable, decent housing challenging precipitating the emergence of informal settlements.
In the case of Tanzania, Dar es Salaam, the commercial pulse of Tanzania, is struggling to develop cities that bring inclusive growth and job opportunities for people, the Kigamboni City Project tried by failed..
A December 2015 publication by the World Bank argued that Africa could have as many as 1.2 billion urban dwellers by 2050 and 4.5 million new residents in informal settlements each year, most of whom cannot afford basic formal housing or access mortgage loans.
The informal settlements or slums is particularly pronounced in big African cities. In 2020, 24.2 percent of the global urban population lived in slums. In Sub-Saharan Africa, the slum population amounted to 50.2 percent of the total population, the highest out of all major regions.
There have been several multi-million housing projects in Tanzania aimed at solving a shortage of affordable housing in Dar es Salaam and other cities.
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Housing in Tanzania
Housing in Tanzania is dominated by individual home-builders who account for over 70 percent of the total supply.
The rest of the market is catered for by the public sector through local governments, the National Housing Corporation (NHC), the Tanzania Building Agency (TBA), the Watumishi Housing Company (WHC), and pension funds such as National Social Security Fund (NSSF), and by private residential developers.
World Bank Group’s Acting Vice President for Africa, Mamta Murthi, has argued that governments need to join hands with the private sector to facilitate investments in housing by expanding access to and improving the quality of existing stock, while at the same time making it easier for people to access land and housing finance.
However, numbers bring the Tanzania housing situation from a different perspective. According to Tanzania Invest, Tanzania’s housing demand (affordable housing) is estimated at 200,000 housing units per annum with an existing housing deficit of 3,000,000 housing units. In 2018, there were 12.3 million households in Tanzania, of which 8.2 million (67 percent) were rural and 4.2 million (33 percent) were urban.
Like any market, Tanzania has its own characteristics and situations that dictate the trajectory of the housing market, thus understanding the dynamics is critical to addressing the shortage.
In 2018, there were 12.3 million households in Tanzania, of which 8.2 million (67 percent) were rural and 4.2 million (33 percent) were urban. Tanzania’s urban housing market is dominated by the commercial capital Dar es Salaam where an estimated 51 percent of households rent.
“The most expensive residential properties in the city are located in the Oyster Bay and the Msasani Peninsula. Prime residential rents in Dar es Salaam declined by 72 percent over the past five years, from $ 5,000 per month in 2015 to about USD 2,900 in 2019 for a three-bedroom apartment. The decline is due to an increased supply of residential units accompanied by a slower demand. Housing prices in Dar es Salaam range between $ 300,000 to $ 500,000 for a 3-bedroom property in prime locations and start from $ 50,000 for other areas,” Tanzania Invest October 2020 publication commented.
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On the other hand, Tanzania’s capital Dodoma is considered an emerging market for residential properties after sustained efforts by the Tanzanian government six years ago to relocate all ministries and institutions from Dar es Salaam to Dodoma.
“Demand has increased also due to a growing expat community. Prime residential rents in Dodoma are between $ 2,500 and $ 3,000 per month on average for a three-bedroom apartment. For low and middle-income households, the NHC launched the Iyumbu satelite centre in 2016 which offers 300 three-bedroom stand-alone houses and other facilities. Prices range between $ 25,109 and $ 36,551,” Tanzania Invest stated.
The Kigamboni City Project
Kigamboni city project is a multi-billion housing project introduced in the late 2000s by the government of Tanzania and was aimed at transforming the peri-urban Dar suburb.
The Kigamboni City Project is argued to have failed to take off due to lack of involvement of experts especially real estate valuers.
The project was touted to be the first green housing project of 190 sustainable homes in a mixed development ecosystem that included schools and a health centre.
Under it, modern residential houses and other properties were to be put up and later rented out or sold for them to be managed as commercial entities.However, the government abandoned the projectin 2016 after realizing it was no longer viable.
Securing housing for all
Tanzania’s population stands at more than 60 million, making it one of the most Populous countries in East Africa. This means more housing is required for the growing population.
However, recent reports show that the sector has been building an average of 1,153 new houses annually in the last 12 years.
The ministry of Lands, Housing and Human Settlement Development is collaborating with stakeholders across the sector to address various core issues including reviewing legal frameworks, rehabilitation of run down public houses and land use changes.
Bureaucracy is another bottleneck to be handled. Local stakeholders (Watumishi Housing Investment (WHI) pointed out that the slow provision of housing documents and title deeds and lack of coordination between the Central and Local Government Authorities (LGAs) frustrates citizens and mars the credibility of the market.
Access to finance has also been an obstacle to expanding the housing sector. According to NMB Plc one of the competitive banks in Tanzania, the central bank of Tanzania (BoT) restricts mortgages to developers with Debt Service Ratio (DSR) above 40 percent as compared to 66.6 percent of gross loans for regular loans, which are far less secure compared to mortgage loans.
The Tanzanian housing industry needs a serious push for it to stand as a nation with affordable housing, especially after Kigamboni City project failure. Stakeholders in the real estate sector stand a chance to reap the rewards as long as the necessary efforts are placed.
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