The African Development Bank Group’s (AfDB) Board of Directors, on May 5, 2016 approved a Partial Credit Guarantee (PCG) of up to US $4 million in local currency to Tanzania Mortgage Refinance Company (TMRC).
The Partial Credit Guarantee (PCG) will support TMRC’s proposed Medium Term Note Program to raise long-term funding from the Tanzanian local currency bond markets on the Dar es Salaam Stock Exchange (DSE) for on-lending to local banks for mortgage finance operations. The Bank’s PCG will enable TMRC’s bond to meet minimum requirements for listing on the DSE thereby enhancing TMRC’s capacity to mobilize critical long-term funding required for the growth of Tanzania's housing finance markets, and catalyzing the construction of affordable housing.
The Bank intervention is in line with the High 5s agenda for the Bank Group, building on its existing 2013-2022 Strategy, and specifically on the 5th agenda of Improving the Quality of Life for the People of Africa. The five focus areas are essential in transforming the lives of the African people and therefore consistent with the United Nations agenda on Sustainable Development Goals (SDGs). The Bank’s intervention will also result in multiplier effects on industries related to the real estate sector and creation of jobs in the construction industry. It will also assist in deepening of Tanzania’s capital markets by increasing the number of listed corporate bonds in the local bond market as well as match assets and liabilities of the institution. The PCG will complement the Tanzanian Government’s efforts to develop a self-sustaining long-term mortgage market in Tanzania.
Stella Kilonzo, Division Chief, Financial Markets Division, of the Bank Group stated, “By extending this partial credit guarantee, the AfDB adds on its existing initiatives to support the development of local currency financial markets on the continent and the private sector.” As one of its priority objectives, the AfDB supports investments that contribute to the widening and deepening of financial markets in Africa, and enabling the private sector capacity to mobilize long-term funding from local financial markets.