1. SOCIO-ECONOMIC STUDIES IN
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 NNKYA
ARDHI UNIVERSITY, DAR ES SALAAM

2. 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

3. 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

4. COVERAGE OF INFORMAL SETTLEMENTS IN DAR ES SALAAM CITY

5. A TYPICAL INFORMAL SETTLEMENT SHOWING FORMALIZED PROPERTY BOUNDARIES

6. A TYPICAL MULTI-FAMILY (6 ROOMS) SWAHILI HOUSE

7. ONE FAMILY HOUSE

8. 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

9. 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

10. FINDINGS: HOUSEHOLDS DEMONSTRATED CAPACITY TO FINANCE HOUSING
Land for housing was bought: 97% of all house owners bought land for building
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
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%)
Household savings was the main source of finance: 87% of all the houses were financed by savings
Savings financed also available infrastructure

11. 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

12. Table 1: HOUSEHOLD SAVINGS AS THE MAIN SOURCE OF HOUSING FINANCE
Mwana-nyamala %
Buguruni
Makanga-rawe
Average
Savings and
selling of assets 87 84 90
Friends and
relatives 1 5 2
Loan from
employer 3
2.6
SACCOS
Others 6 11
5.6

13. Table 2: HOUSEHOLD MONTHLY INCOME BY TENURE STATUS (Tsh
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
Overall
Settle-ment
Mean
(Tsh)
(thousands)
Median
Mwana-nyamala
118.3
90.0
154.7
120.0
129.7
100.0
Buguruni
121.7
151.1
129.0
97.5
Makangarawe
122.1
87.5
197..2
96.0
142.6
119.8
162.1
110.0
132.2

14. Table 3: COMBINED EXPENDITURE FIGURES WERE MUCH HIGHER THAN INCOME, SUGGESTING UNDECLARED INCOME
Buguruni
(Tsh.)
Makanga-rawe
Mwana-
nyamala
Average of all
Average income
129,039
142,591
129,692
132,175
Average expenditure
302,782
208,137
160,999
198,907

15. FINDINGS (cont.)
11. To supplement income, particularly for housing finance households borrowed money from friends, relatives and to some extent employers.
12. Borrowing from formal financial institutions, banks particularly was insignificant. However, if loans were to be available, 46% of willing borrowers would borrow up to Tsh. 5 mill; 24% Tsh mill; and the rest up to Tsh. 25 mill.
13. Households saved (about 70%), primarily for emergency purposes (41%). Others include to build a house including buying land (17%); to establish income source (15%), school fees (7%) and others (18%)
14 Saving in form of building materials did not count as part of household savings, yet it was a common practice among the house builders to accumulate building materials.

16. 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
5.3
2.3
>1,000, ,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

17. Table 5: CAPACITY FOR UPFRONT PAYMENT
Amount
(Tsh.)
BUGURUNI %
MAKANGA-RAWE %
MWANA-NYAMALA %
AVERAGE OF ALL %
10, ,000
31.4
44.2
29.0
32.7
>50, ,000
14.4
13.0
21.2
18.1
>100, ,000
19.7
16.3
16.4
>200,000 – 500,000
13.2
10.4
15.9
11.9
>500,000 – 1,000,000
9.1
8.7
9.2

18. Monthly repayment (Tsh)
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
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

19. 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.

20. 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.