MAKAZI BORA DIARY: Loan Use Verification

19 August 2009

Loan Use Verification

Above are some of pictures showing house projects before and after loan.

Last week, we started verifying loans to determine if were used for intended purposes. Four loans were scheduled for verification during the week. The loan verification is done by a different credit officer from one promoted the loan. The verification results were good, though one client didn’t complete his project in the given time, hence his loan was declared diverted. The other three borrowers completed their projects as indicated in their loan proposals. Three loans that passed verification were discounted from paying 5% interest per month to 2.5 % per month

Interestingly one client came to our office to ask her loan to be verified before her due date. This happened because the client wanted to travel outside Dar, she wanted to make payment before she left. However, there were some problems for clients who took loan for electricity connection. Although, all of them paid connection fee but the power company could not install electricity on time.

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MAKAZI BORA: A Housing Microfinance Program in Tanzania

Habitat for Humanity has been active in Tanzania since 1986. Up until 2008, it built low-cost houses at community-based projects across the country. The cost of each home was to be repaid into a revolving fund to build more houses. Repayment rates were very low and the annual average number of families served was less than 75. We felt we could do better.

In September 2008, the Board of Directors adopted housing finance for the poor as the organization’s core business. Out of this decision, a retail housing microfinance program called MAKAZI BORA was created as our entry point into the world of housing microfinance. MAKAZI BORA Diary is the story of how it develops - as it happens.

INCREMENTAL BUILDING

The photos below along the right column of our blog are of incremental building projects of people within the Mbagala Branch operating area, Temeke Municipality, Dar es Salaam. The houses would qualify for MAKAZI BORA home improvement loans, but all of the work seen was done prior to MAKAZI BORA being introduced to the area. They are examples of what people are doing on their own and projects to which an injection of affordable housing finance can add value and improve living conditions. Some of the houses in the photos belong to MAKAZI BORA applicants prior to receiving their loans. Others are simply houses viewed in the area.

People are already building.... Habitat is just helping them solve a finance gap to advance their own housing process with the MAKAZI BORA home improvement loan. In the absence of any realistic hope of formal housing assistance for the hundreds of thousands of households with low incomes in Temeke Municipality, we applaud and seek to support their individual efforts that are made with limited resources and using what is available locally in an effort to find housing solutions.