Potential prospects and challenges of formalization of informal properties and capital creation in Tanzania: the case of Manzese Midizini in Dar es Salaam

Lack of formal property ownership has increasingly been documented as one of the major barriers for many people in developing countries to participate in the formal economy. Recently, efforts to remove the barrier by giving formal recognition have become a topical issue and being implemented in many developing countries including Tanzania. This study aimed at finding out existing challenges and opportunities of formalising existing informal properties for capital creation in Tanzania. Desk study and fieldwork survey was done in Midizini sub- ward of Manzese located in Kinondoni district few months after beginning of implementation of the formalization programme in the area, resulting in issuing residential licenses to selected houses earlier identified as being acceptable and meet the criteria for formal registration . the study involved 68 property owners including some already acquired formal residential license of ownership . The study found out that , the society consider formalization of informal properties as a positive move that will address social and economic needs of the people . Participants of the study recognize the importance of formal ownership in particular the importance of legal documents. However, lack of knowledge regarding formal market, lack of stable income, old age, cultural aspects of some owners pose challenge in creating the link to capital formation. Property owners’ especially women do not like the idea of using of house property as collateral to secure loan or any credit transaction. The study also found out that, property value given during this the survey and registration processes raise a lot of question in the community. The study suggests further efforts in increasing awareness of the public regarding formal economy. The study also suggests reconsidering the valuation method used in valuing the existing informal properties in order to avoid misunderstanding and disappointments to property owners in early stages of registration.