Access to housing finance by the urban poor: the case of WAT-SACCOS in Dar es Salaam, Tanzania

Purpose – Any attempt to improve housing quality goes concurrently with improvement of income level and with economic development. The purpose of this paper is to assess the viability of microfinance institutions (MFIs) in financing housing improvement for the urban poor. Design/methodology/approach – In order to understand in great depth the viability of MFIs in housing finance for the urban poor in Tanzania, the case study strategy was applied, with five subcases, which form the smallest unit of analysis. Findings – Most housing financing initiatives carried out by governments and large financial institutions often end up benefiting the high/middle income segment. Administrative procedures, terms and conditions set up by the government and banking institutions exclude the poor due to their low affordability levels. As the poor cannot meet the set stringent conditions; the MFIs that are growing in numbers in Tanzania and other developing countries have been their alternative strategy for housing finance. Research limitations/implications – Close linkage exists between the housing loans, housing improvement and poverty alleviation among the urban poor in informal housing settlement. Practical implications – WATSACCOS, a housing MFI, has devised a repayment schedule, which is viable, compatible and affordable for the poor. These types of institutions can be used as intermediaries between large financial institutions, including commercial banks and the poor, to make it easier for the latter to access housing loans. Publicprivate and popular partnerships facilitate the availability of financial services for the urban poor. Originality/value – The paper adds to the literature in that, whilst housing issues should continue to be at the top of development and political agenda, housing MFI assists in ensuring that the poor get access to housing, which is regarded as a poverty reduction asset.