assessment of housing finance capacity and needs of households in informal settlements
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ASSESSMENT OF HOUSING FINANCE CAPACITY AND NEEDS OF HOUSEHOLDS IN
INFORMAL SETTLEMENTS
SOCIO-ECONOMIC STUDIES IN MWANANYAMALA KISIWANI, BUGURUNI
MNYAMANI, AND MAKANGARAWE INFORMAL SETTLEMENTS IN
DAR ES SALAAM, TANZANIA
PRESENTATION TO AUHF-AGM SEPTEMBER 21, 2007
TUMSIFU JONAS NNKYAARDHI UNIVERSITY, DAR ES SALAAM
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TANZANIA
• Total population: 35 million people• About 30% live in urban places where the
average annual growth rate is 4.5%• 30% of the urban population live in Dar es
Salaam City• All the land in Tanzania is state owned • Formal access to urban land is thus through
granted right of occupancy for 33 or 99 years government lease
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INFORMAL SETTLEMENTS IN DAR ES SALAAM CITY
• Habitat for 70-80% of the 3.5 million city residents (different social and economic status)
• Recognized and earmarked for infrastructure upgrading since 1972
• Permanent incrementally built houses as a result of secure land tenure
• Modest infrastructure upgrading through individual initiatives, sometimes in collaboration with local authorities
• Property registration and issuance of residential license (2004); infrastructure upgrading and regularization to follow
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COVERAGE OF INFORMAL SETTLEMENTSIN DAR ES SALAAM CITY
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A TYPICAL INFORMAL SETTLEMENT SHOWING FORMALIZED PROPERTY BOUNDARIES
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A TYPICAL MULTI-FAMILY (6 ROOMS) SWAHILI HOUSE
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ONE FAMILY HOUSE
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INTRODUCTION
• Results from a housing survey of 3 informal settlements• Data on the household capacity and demand for housing
finance• Purpose: to inform the development of appropriate
housing finance products, a project by African Union for Housing Finance – AUHF with funding by Cities Alliance
• Selection of settlements• There are differences which influence the demand and
capacity for housing finance: Proximity to employment and income opportunities; Economic vibrancy; Tenure status of the residents; Level of investments in housing and hence quality
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INTRODUCTION (cont.)
• MWANANYAMALA KISIWANI – a fair mixture of different house types, habitat for all tenure groups, substantial economic activities
• BUGURUNI MNYAMANI – a higher economic vibrancy, proximity to CBD and other employment centres
• MAKANGARAWE – urban fringe settlement• Sample size: 380 households• 8 enumerators trained, tested questionnaire• Selection of houses from each housing cluster
facilitated by up to date maps and property registers• Interviewed all households in the selected houses
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FINDINGS: HOUSEHOLDS DEMONSTRATED CAPACITY TO FINANCE HOUSING
1. Land for housing was bought: 97% of all house owners bought land for building
2. Houses were permanent: 85% of all the houses were built of sand-cement blocks, 90% of them with sand-cement floor and 97% roofed with CI sheets
3. Houses had basic facilities: a private or shared cooking space, toilet, bathroom, electricity and connection to clean water (14%), from vendors or neighbours(68%), wells (12%)
4. Household savings was the main source of finance: 87% of all the houses were financed by savings
5. Savings financed also available infrastructure
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HOUSEHOLDS HAD CAPACITY TO FINANCE HOUSING (cont…)
6. Informal and formal employment activities were the sources of income for 65% and 35% of households respectively regardless of tenure status
7. Average declared household income was Tshs. 132,175 while expenditure was Tsh. 198,907
8. The feeling of security was the corner stone of the demonstrated capacity to finance housing
9. This was most likely the outcome of the Government policy in support of informal settlements over the last 35 years
10. There was a huge unexploited potential for housing finance upgrading
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Table 1: HOUSEHOLD SAVINGS AS THE MAIN SOURCE OF HOUSING FINANCE
Source
Mwana-nyamala%
Buguruni%
Makanga-rawe%
Average%
Savings andselling of assets
87 84 90 87
Friends andrelatives
1 5 0 2
Loan fromemployer
3 0 5 2.6
Loan fromSACCOS
3 0 5 2.6
Others 6 11 0 5.6
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Table 2: HOUSEHOLD MONTHLY INCOME BY TENURE STATUS
(Tsh. 1,250 was equivalent to US$ 1 at the time of survey)
Renter
House-hold
Owner
House-hold
Overall
Settle-ment
Mean
(Tsh)
(thousands)
Median
(Tsh)
(thousands)
Mean
(Tsh)
(thousands)
Median
(Tsh)
(thousands)
Mean
(Tsh)
(thousands)
Median
(Tsh)
(thousands)
Mwana-nyamala
118.3 90.0 154.7 120.0 129.7 100.0
Buguruni 121.7 90.0 151.1 120.0 129.0 97.5
Makangarawe
122.1 87.5 197..2 96.0 142.6 90.0
Overall 119.8 90.0 162.1 110.0 132.2 100.0
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Table 3: COMBINED EXPENDITURE FIGURES WERE MUCH HIGHER
THAN INCOME, SUGGESTING UNDECLARED INCOME
Buguruni
(Tsh.)
Makanga-rawe
(Tsh.)
Mwana-
nyamala
(Tsh.)
Average of all
(Tsh.)
Average income
129,039 142,591 129,692 132,175
Average expenditure
302,782 208,137 160,999 198,907
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Table 4: SIZE OF A LOAN HOUSEHOLDS WISHED TO BORROW
Amount
(Tsh.)
BUGURUNI
%
MAKANGA-RAWE %
MWANA-NYAMALA %
AVERAGE OF ALL %
Up to 1,0000 2.6 2.6 5.3 2.3
>1,000,000 -10,000,000
28.9 48.1 46.6 43.5
>5,000,000-10,000,000
27.6 29.9 21.5 24.4
>10,000,000 – 20,000,000
22.4 13.0 15.9 16.6
>20,000,000 18.4 3.9 9.1 10.2
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Table 5: CAPACITY FOR UPFRONT PAYMENT
Amount
(Tsh.)
BUGURUNI
%
MAKANGA-RAWE %
MWANA-NYAMALA %
AVERAGE OF ALL %
10,000 -50,000
31.4 44.2 29.0 32.7
>50,000 -100,000
14.4 13.0 21.2 18.1
>100,000 -200,000
19.7 13.0 16.3 16.4
>200,000 – 500,000
13.2 10.4 15.9 11.9
>500,000 – 1,000,000
10.4 9.1 8.7 9.2
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Table 6: AMOUNT THAT HOUSHOLDS WERE ABLE AND WILLING TO PAY MONTHLY TO SERVICE A HOUSING LOAN
Monthly repayment
(Tsh)
Buguruni
%
Makanga-rawe
%
Mwananya-mala
%
Average of all
%
Up to 15,000 30.1 42.9 22.4 28.0
>15,000 to 50,000
52.6 42.9 56.8 53.3
>50,000 to 100,000
7.9 7.8 13.6 11.5
Above 100,000
5.2 3.9 3.0 3.7
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CONCLUSION• The relatively good quality of houses and infrastructure in the informal
settlements demonstrates a capacity to finance housing and feeling of security to invest in housing.
• The demonstrated capacity to finance housing constitute a ‘building block’ for an innovative, affordable and sustainable housing finance system.
• Thus, there is a need to recognize, organize and build on this capacity as a way of addressing the thorny issue of housing finance for the majority of Tanzanians.
• However, appropriate housing finance upgrading strategy and action plan need to recognize the peculiar characteristics of the housing markets: the incremental and subsistence nature of housing delivery; the informal sources of employment and income; dynamic affordability and willingness to borrow and repay; and savings in form of building materials.
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AUTHOR’S BIO DATA
• Tumsifu Jonas Nnkya (PhD), a Tanzania citizen educated as town planner, has 27 years of experience as a trainer, researcher and consultant in urban development planning, urban design and housing.
He has published papers, books and contributed to several UN-Habitat publications as a member of the UN-Habitat Advisory Board on Human Settlements Research Network (HS-Net). His forthcoming planning practice research based publications include: Collaborative Turn in Planning Practice, and Why Planning Does Not Work in Tanzania.
As a consultant and advisor, Dr. Nnkya has worked for the Government, International Development Agencies, Embassies and participated in several national and global meetings. He is a member of several local and international professional associations and policy making bodies.
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