Residential housing finance: an appraisal of specialised housing institutions for Tanzania mainland.

This study concerns housing finance required to meet lumpy expenditures on erecting residential buildings. Specifically, the study is limited to Tanzania institutional housing finance meant for solving the housing problem now manifesting itself through the acute housing shortage in the urban areas, and in the form of horrifying dilapidated buildings both in the rural and in the rings of the peripheral shanty towns. The key institutions involved are the Tanzania Housing Bank (THB), and the National Housing Corporation (NHC). Coming to the grip of the core problem, the study attempts to answer the question as to why Tanzanian housing institutions fail to dedicate adequate financial resources sufficient to keep pace with the country’s housing needs. A priori the provision of housing finance is postulated to be a function of the level and nature of savings, the availability of building materials, the effective demand for mortgage loans/new dwellings, and the return on housing financial investments. All the independent variables above, are hypothesized as having a positive influence on the dependent variable housing finance. The analysis involves qualitative and quantitative approaches to explain the trends in housing finance both by THB and NHC for the period 1973-1983. The quantitative analysis is subdivided into descriptive statistics and econometric technique using single equation regression model. The results from the analysis, with the exception of the return on housing financial investment variable agree with our a priori expectations mentioned above. So to achieve adequate financial investment results in housing among other things, this study stresses that restraints on housing agencies, in particular government regulatory controls on rents and interest charged on housing loans should be removed as these have retarding effects. Also in the case of effective demand, the government should correct some of the macro-economic variables necessary for improving the incomes of the majority poor. Furthermore, as our empirical findings suggest THB should concentrate on the mobilisation of savings with longer maturity periods rather than savings with shorter maturity periods to avoid the problem of borrowing short and lending long. And in addition, THB besides lending to house-builders, should also direct its lending thrust in housing back up industries to overcome the constraint in the building materials industry.