Study to Identify Needs and Barriers of Women and Youth towards Access and Usage of Housing Finance in Tanzania

1. About Habitat for Humanity International (HFHI)

HFHI is strongly committed to ensuring a world where everyone has a decent place to live. To reach sustainability and scale in this complex sector, Habitat’s strategy is to address housing from an eco-systems perspective by looking at housing from a long-term perspective, understanding housing as a process (not just a product), looking at social norms applicable by the beneficiaries, formal and informal institutions, disruptive trends which influence how people act/react and make changes that they value in their housing situation.

HFHI is anchored on a fundamental vision of a world where everyone has a decent place to live. This vision has been the driving force in all HFHI’s actions and activities that have seen more than 29 million people around the world supported to build or improve the place they call home. To further fulfil this vision, HFHI established the Terwilliger Center for Innovation in Shelter (TCIS) to build and expand inclusive housing markets by supporting local firms to innovate and expand client-responsive services and products.

At HFHI, we understand that our idea of strong, functioning, and supportive local market is critical in closing adequate housing gaps among the low-and middle-income and incremental market segment. Among our efforts over the past years include engaging stakeholders in the affordable housing market system to facilitate efforts to drive housing quality up and housing costs down, while remaining cognizant of contextual realities in-country. The aim is to stimulate inclusive housing markets while expanding benefits to low-and middle-income households sustainably. The thrust of interventions is the market system development approach that focuses on systemic change aimed at stimulating the low-cost housing market system to innovate and replicate promising practices on a sustainable basis.

One of the significant barriers to housing affordability is the availability of and access to housing finance. Habitat for Humanity Tanzania (HFHT) which is affiliated to HFHI is looking to conduct a study in Tanzania to identify the needs and critical barriers that hinder the housing finance growth for women and youth particularly those that are involved within the informal/formal group structures. HFHT works with Micro Finance Institutions (MFI’s )to make improved shelter affordable to low-income families in Tanzania. HFHT has been partnering with Makazi Bora Finance Limited (MBFL), a microfinance institution that has been extending loans to low and medium-income earners significantly in housing through housing microfinance. They provide loans targeting women and youth who are largely served within groups.

2. About Makazi Bora

Makazi Bora Finance Limited (MBFL) is a microfinance institution providing loans targeting specifically low and medium income earners, including women and youth who are largely served through groups.

MBFL has a number loan products as follows:

• House construction and renovation loans to enable households that are not able to acquire lump sum financing for housing construction, to build their houses incrementally.
• Housing improvement loan to support clients in need of financing housing improvements including renovations and repairs and related services along the housing value chain such as water, sanitation, electricity, solar systems and furniture.
• Groups loans which are short-term loans to groups of 5 to 10 people, with regular weekly/bi-weekly business turn over earnings so that they can smoothly run or expand their existing business activities and/or finance a wide range of their business’s needs.
• Business loans to finance improvement of clients’ businesses to expand earning avenues.

Even though MBFL has several products most clients fall in the housing construction categoryand MBFL has received a grant from HFHT to support women and youth.

3. Background

Global housing supply falls short of demand with more than a billion people living in slums or informal settlements with 80% attributed to; Eastern and South-Eastern Asia (370 million), Sub-Saharan Africa (238 million) and Central and Southern Asia (227 million). The United Nations further estimates that 3 billion people will require adequate and affordable housing by 2030. Rapid urbanisation is the key demographic force shaping current and future housing needs in most developing economies. The United Nations Department of Economic and Social Affairs (UN DESA) projects that the proportion of the world population living in urban areas will increase from 55% to 68% by 2050. An estimated 65% of Sub-Saharan Africa’s population is expected to live in urban areas by 2050[1]. Sub-Saharan African economies are faced with growing housing deficits and affordable housing crisis. The continent’s housing backlog is estimated to account for at least 51 million units, while an estimated urban population of at least 238 million live in slum conditions[2]. The majority of the projected urban population will join existing residents in inadequate housing or overcrowded conditions in urban peripheries. The World Bank estimates that there will be 4.5 million new residents every year in informal settlements across Africa.

The availability of and access to housing finance is a significant determinant in a household’s decision to acquire, build, or rent a house. It is estimated that less than 15% of Africa’s urban population can afford to purchase developer-built housing. In many countries in Global South, mortgage-finance systems tend to be underdeveloped, thereby limiting access to finance and contributing to higher borrowing costs. Only few African countries have huge mortgage markets, where mortgage loans as a percentage of GDP is; Morocco (18%), Tunisia (9.2%), Namibia (19%) and South Africa (34%). In Nigeria, Cameroon, Egypt, Côte d’Ivoire, Ghana and Tanzania for instance, housing finance amounts to less than 1% of GDP[3]. Limited and expensive mortgages limit access to finance for housing.

On the supply side, developers need financing to build the mass housing projects that are needed to address the continent’s housing deficit. The financial service sector needs to diversify the breadth of products and services offered so that they increasingly target low-and middle-income households.

It is presumed that most of the African population build incrementally hence financing through proceeds from business and farming, savings and credit from a variety of financial service providers and other mechanisms including family and friends and social groups. There are only a handful of formal financial institutions offering credit for incremental construction. Various market and institutional capacity challenges for developing and expanding the Housing Microfinance (HMF) product have been widely documented[4]

In Tanzania, housing finance demand is very high. The need for decent shelter is noted in both rural and urban areas, and particularly for women and youth. Most women and youth are excluded from accessing of formal financial services. With 65% of formal financial inclusion the country, with only 18% of the included still utilizing the Savings groups as a channel to access financing. While almost half of Tanzanians men are sole owners of the piece of land they live on, less than a third of Tanzanian women own the land they live on. Different challenges still persist that make women and youth being left behind, these include; high levels of informality among women and youth, poor financial infrastructure to reach rural areas, lack of appropriate products (example only 1% of deposit products are intended for women), lack of collateral needed to access credit and limitation to onboarding financial services for youth (only 4% of youth aged between 16-17 years have some sort of ID). [5]Other challenges that are identified include inadequately serviced land for shelter and human settlements, especially for women, youth, the elderly, disabled and disadvantaged.

HFHT is seeking to engage a company/consultant to study and identify needs and barriers of women and youth towards access and usage of housing finance in Tanzania.

5. Objective

The main objective of this consultancy is to study the women and youth lending product supported by MBFL as an entry point for the identification of the needs and barriers preventing women and youth accessing and using housing finance in Tanzania.

Specific objectives are:

• To understand the housing finance needs (both current and future) of women and youth who are in group structures
• To assess the current level and future trajectory of demand for housing finance for women and youth
• To identify constraints impending the access and usage of housing finance by women and youth
• To assess the housing finance product(s) for group structure in the market. This includes;
  • Review the current housing finance product(s) offered by Makazi Bora and others in terms of its effectiveness in addressing the needs of women and youth
  • Sample other housing finance products available for women and youth in the groups structures (stand-alone products, tagged along products and undefined housing products), in the market to compare with what is offered by Makazi bora and build on what should be improved
• Unpack the housing finance needs, challenges and opportunities available to promote affordable housing finance for women and youth in Tanzania;
• Give recommendations on opportunities to address the housing finance needs of women and youth within the group structures
• develop a roadmap of interventions that can be adopted by Makazi Bora or other financial institutions to create an enabling environment for improving access to housing finance in Tanzania

Results from this study will help the HFHT and its partners to develop their short-, medium- and long-term strategic plans to address issues related to access and usage of the housing finance specifically for the women and youth involved in group structures. The study will provide important insights regarding the needs and barriers that hinder development and growth of housing finance solutions for women and youth, and opportunities to address those challenges, enabling the partners to collaborate in addressing those challenges to bring maximum impact in the Tanzanian market.

6. Scope of Work

The selected company/consultant is expected to undertake the following activities:

• Map out all the governmental and non-governmental agencies, financial and non-finance service providers in the market and other actors involved in the housing finance solutions for women and youth in group structures.
• Map out all the products/solutions related to housing finance being offered in the market for the women and youth participating in group structures;
• Identify women and youth needs and opportunities in housing finance at the group level
• Through a defined sample size, identify the current and future housing finance needs for women and youth within the group structures;
• Identify barriers that hinder access to housing finance solutions for women and youth who are within the group structures;
• Identify barriers that hinder provision of housing finance solutions from the supply-side (MFI’s, Saccos, other Group structures example Roscas etc.)
• Propose how HFHT, its partners and other players can work to address the needs and barriers identified
• Propose how HFHT and its partners can deepen their engagement with relevant agencies and other market players in a structured and measurable manner towards tangible effect in stimulating the accelerated growth of affordable housing finance for women and youth in Tanzania
• Dissemination of research results to HFHT and its partners. This will be discussed and agreed upon with HFHT during the inception reporting.

**Note:**Data Management: HFHI will own the data collected and hence be able to utilize the data after the study/contract is completed

7. Deliverables and Milestone

1.1 ) Inception report (2 weeks after contract signing)

Prepare an inception report, detailing on how the company/Consultant is planning to undertake the study. This should include deliverables, methodology (sampling approach, methods, analysis plan, and limitations) and work plan

1.2) Draft report (1 month after delivery and approval of inception report)

A draft report detailing the deliverables as per the scope of work

1.3) Final report (2 weeks after receiving comments on the draft report)

• Final report on findings and recommendations considering all the comments that would have been shared in the Draft report

8. Eligibility Criteria

The research company/consultant should:

• Have at least 3 experiences in conducting market systems research/studies, preferably in Africa
• Understanding of market systems approaches is an added advantage
• Experience working in housing/housing finance is an added advantage
• Understanding of the housing finance in the context of Africa
• Ability to achieve maximum scope of reach with limited resources
• Add experience in preferred methodology/ies once we have discussed

9. Research Methodology

Although we recommend the company/consultant to provide the methodologies used to conduct the study, it is proposed to first conduct a macroeconomic environment and policy analysis of constraints and opportunities on housing finance for women and youth, followed by mapping exercise and engagement with potential partner(s) and clients, and finally assess potential demand for affordable housing finance solutions for women and youth

At a minimum, HFHT anticipate the below to be covered within the methodology:

Diagnostic and segment assessment

• As a first step in the diagnostic and segment assessment, to conduct a brief analysis of the housing finance systems in Tanzania and explore the macroeconomic environment and its effect on access to housing finance for women and youth

Housing finance study for women and youth

• Identifying the needs and constraints preventing lending (housing loans) to women and youth in group structures, as well as opportunities for addressing these constraints and effectively serving them
• Understanding the variety of financial institutions in Tanzania (banks, financial institutions, SACCO’s, fintech firms etc) and their respective challenges in extending housing finance solutions for women and youth in group structures, including prohibitive regulations, lack of familiarity with housing needs and perceptions around lending to women and youth
• Understanding main sources of housing finance for women and youth within and outside of the group structures
• Utilising findings from the macroeconomic analysis and further desktop review of financial institution profiles and their offerings (available on their websites/annual reports/industry reports) to map the stakeholder landscape, highlighting types of institutions most likely to have the capacity and interest in serving the women and youth with housing finance products and services.
• Focusing on understanding the needs, preferences, and capacities of women and youth for acquiring their houses, as well as the dynamics around intra-household decision-making related to construction.
• Utilising the qualitative approach and semi-structured interviews of;
  • approximately 40% – 50% of Makazi Bora clients (women and youth as per Tanzania definition of youth which is between 15. and 35 years ). Makazi Bora has issued loans to more than 1,600 client.
  • 80 – 100 clients (women and youth) outside Makazi bora clients but who have need or potentially having a need for housing finance
  • Through key informant interviews with selected MFIs triangulate information collected

1. Proposal Evaluation

Proposals will be assessed according to:

• Relevant, demonstrated competence of firm and methodology proposed
• Demonstrated expertise of the company/key individuals
• Cost of the proposal (HFFT has very limited resource)

Submitted proposals must include:

• A response to the ToR demonstrating familiarity with the subject matter, proposed methodology and key issues for consideration in the research
• A detailed work plan, demonstrating the feasibility of the proposal
• Statement of qualifications of the firm(s) as relevant to the research project
• Name and CV of staff members responsible for i) overseeing the work and ii) undertaking the research
• Fee proposal and costs estimates, indicating the basis of calculation of fees, including cost of travel if necessary
• Supporting documents for registered firms including at a minimum; company registrations and tax clearance certificate(s).

[1] E.M, Bah, I, Faye, and Z.F. Geh (2018). Housing Market Dynamics in Africa. Palgrave Macmillan. Pg. 3. Ibid, Pg. 5

[2] UN Habitat.(2018). Sustainable Development Goals.https://unstats.un.org/sdgs/report/2021/goal-11

[3] Africa Housing Finance Yearbook 2021 – CAHF

[4] Habitat for Humanity (2018). Building the Business case for Housing Microfinance in Sub-Saharan Africa. Terwilliger Centre for Innovation in Shelter. Pg. 60

[5] Finscope 2017