IFC invests in Tanzania affordable housing

To help increase access to longer-term, affordable mortgages and housing in Tanzania, IFC subscribed to a corporate bond issued by the Tanzania Mortgage Refinance Company (TMRC).

TMRC was listed today on the Dar es Salaam Stock Exchange. The TMRC bond will support access to mortgages, helping Tanzanians more easily purchase homes in a country where access to longer-term financing has traditionally been constrained.

The listing follows approval granted by the Capital Markets and Securities Authority and a successful offer that raised over TZS 8.9 billion ($3.8 million) against a target of TZS 7 billion ($3 million), representing an oversubscription of 27 percent. IFC invested roughly $1.2 million (TZS 2.8 billion) in the oversubscribed bond offer.

“IFC’s participation in the third tranche of TMRC’s medium-term note program will support the continued growth of the housing finance market in Tanzania. Additionally, it will enable us to diversify our funding sources,” said Oscar Mgaya, Chief Executive Officer, TMRC.

“TMRC’s medium-term note program is contributing to the development of the debt capital markets in Tanzania and providing alternative investment instruments to institutional and private investors,” said Frank Ajilore, IFC’s Resident Representative for Tanzania. “Increasing access to affordable housing finance, with longer repayment schedules, will make home ownership more attainable for Tanzania’s emerging middle class.”

The bond listed today is the third tranche in TMRC’s TZS 120 billion ($54 million) Medium-Term Note (MTN) program designed to develop the housing market in Tanzania. TMRC is leveraging the bond to obtain long-term and more diverse funding by attracting institutional and private investors and encouraging private sector participation in the capital markets. TMRC will redeem this five-year MTN in 2026. By gradually shifting the bulk of its financing needs to capital markets sources, the MTN program is expected to reduce TMRC’s dependence on public sector funding.

IFC has been a shareholder of TMRC since 2019. IFC’s investment in the company is supported by the International Development Association’s (IDA) Private Sector Window Local Currency Facility and Blended Finance Facility.

Tanzania Mortgage Refinance Company Limited (TMRC) is a specialized private-sector financial institution that provides long-term funding to financial institutions for mortgage lending purposes. Since its inception, TMRC has helped to extend the mortgage tenors available in the market from 5-7 years in 2011 to up to 25 years today.

It has the objective of supporting financial institutions to do mortgage lending by refinancing Primary Mortgage Lenders’ (PMLs’) mortgage portfolios. This type of lending is also known as wholesale or secondary market lending. TMRC is neither taking deposits nor lending directly to individuals. It refinances mortgage loan portfolios rather than individuals mortgage loans and caters to banks rather than individual borrowers.

As part of the record $75 billion IDA18 replenishment, the World Bank Group created the $2.5 billion IDA Private Sector Window to catalyze private sector investment in the poorest and most fragile countries.

Recognizing the key role of the private sector in achieving IDA18 objectives and the Sustainable Development Goals, the window provides concessional funds for co-investment alongside IFC and Multilateral Investment Guarantee Agency (MIGA) private investments. Concessional funds help to mitigate risk and reduce barriers, which unlocks and crowds in private investment in emerging markets.