Elite bankers dominate TMRC’s mortgage loan beneficiary list

29Jun 2020
The Guardian Reporter
Dar es Salaam
The Guardian
Elite bankers dominate TMRC’s mortgage loan beneficiary list

ELITE banking officials are biggest beneficiaries of mortgage loans disbursed by Tanzania Mortgage Refinancing Company’s concessional loans aimed at first tie home owners, a new report has said.

Tanzania Mortgage Refinancing Company’s CEO, Oscar Mgaya.

TMRC which was established in 2010 with a U$40 million (over 92.6bn/-) World Bank loan with an objective of easing the country’s mortgage market targeting mainly low and middle income first time home owners, has seen senior banking officials dominate the list of beneficiaries with most of them investing in second home acquisition or renovation of existing homes.

The company which is under Bank of Tanzania but has banks as its shareholders received another U$30 million (over 69.4bn/-) disbursement for World Bank’s International Development Agency in 2015. “Many Tanzanians struggle in achieving a lifelong dream of owning their home. The Government of Tanzania has tried to work in unlocking this challenge through the Housing Finance Project. Some banks have been noted to be using government monies aimed at supporting first time home ownership to Tanzanians for other purposes,” the report stated.

Banks such as Absa Bank Tanzania (formerly Barclays Tanzania) and I&M Bank have taken concessional loans to run staff welfare programmes largely benefiting senior banking officials with foreigners having a field day.

Absa Tanzania which has received 5bn/- of the concessional funds under its first phase allocation, had top management officials take mortgage loans of between 300m/- and 500m/-. “An onsite review of some of the houses financed under Absa 1-portfolio can reveal some strange things, loans of 300/- to 500m/- but only incomplete structures that one cannot yet live in raising questions if monies were applied for fully to the purpose,” the report added.

It accused TMRC’s top management of working in collaboration with such elite bankers who get big sum of money through concessional loans aimed at first time home owners to invest in government securities such as Treasury Bonds.

The report said while Bank of Tanzania lends TMRC cash at six percent interest, TMRC give it to banks at between 7.5 and 8.5 percent paid quarterly targeting first time home owners but banks get the concessional loans and use the money to generate more profit through Treasury instruments.

“Some banks are accessing these concessionary funds under the guise of going to do mortgage lending but instead taking the funds to be utilised towards investing in government securities where they get very good risk free yields of 16 percent against cost of between 7.5 and 8.5 percent,” the report noted.

It further censures queer relations between TMRC senior management officials with banks some of which involve their private companies which work with such banks hence favour each other when it comes to decisions on disbursement of funds.

Banks such as KCB Tanzania Limited and Commercial Bank of Africa have been enjoying favours with TMRC’s management because of queer relations among senior officials. The report gave an example of CBA which has failed to provide sufficient cover for a 3bn/- disbursement due to bleak business but has already been given an additional 7bn/-.

“Some banks go further and report United States dollar loans while knowing well that the Housing Finance Project does not allow financing of US dollar loans but only Tanzanian shillings loans. The mortgage data states that all loans should be in local currency even though some of the loans are in US dollars,” the report noted.

KCB Bank which has struggled to meet conversion of both its loans amounting to 10bn/-, has resorted to loan reclassification where business and personal bank staff loans have been submitted to TMRC as first time home ownership mortgage loans thanks to good relations with the refinancing company’s top management.

In order to ensure that it compensates failures of its member banks, TMRC management has resorted to seeking interest rate reduction from Bank of Tanzania with such requests being successful in April last year when the rate was reduced from 7.5 to six percent. TMRC also requested BoT for a penalty waiver in July 2019 in favour of Bank of Africa Tanzania Limited’s 5bn/- pre-finance facility.