TMRC expands shareholder base with Absa Bank Tanzania's Sh1.6 billion investment

From left, the chairman of the TMRC Board, Mr Theobald Sabi, CEO of TMRC, Mr Oscar Mgaya, CEO of Absa Bank, Mr Obedi Laiser, and the representative of the chairman of the Board of Absa Bank, Mr Richard Magongo, display a dummy check. The check signals the receipt of Sh1.62 billion from Absa as a new TMRC’s shareholder. The event took place on Monday, February 5, 2024, in Dar es Salaam. PHOTO | COURTESY

What you need to know:

  • The entry of Absa as a new shareholder of TMRC is likely to boost the mortgage market in Tanzania, which has grown by 672 percent over the past 12 years

Dar ea Salaam. Tanzania Mortgage Refinance Company Limited (TMRC) has expanded its shareholder base with a Sh1.6 billion investment from Absa Bank Tanzania.

TMRC is a specialised financial institution that provides long-term funding to financial institutions for the purposes of mortgage lending.

As a private sector entity jointly owned by banks and non-bank financial institutions, TMRC's primary objective is to facilitate mortgage lending for banks through the refinancing of their portfolios.

The entry of Absa as a new shareholder of TMRC is likely to boost the mortgage market in Tanzania, which has grown by 672 percent over the past 12 years.

The market stood at Sh76.7 billion in 2011 but leapfrogged to Sh587.2 billion in 2023.

More financing for lenders could also propel a reduction in interest rates, which ranged between 13 and 17 percent for the good part of 2023, compared with averages of 22 percent to 24 percent in 2010.

TMRC CEO Oscar Mgaya said in Dar es Salaam on Monday, February 5, that Absa’s entry has increased the number of shareholders to 19.

"We now have a total of 19 financial institutions with a total of Sh27.5 billion in shareholding capital," he said.

He further noted that following Absa's investment, TMRC will be able to get more funding and strengthen its capital to be able to loan more banks for issuing mortgage loans to the public.

He said the investment enables TMRC to lend Absa around Sh32 billion at an interest rate of between 7.5 and 8.5 percent.

"We support banks to do mortgage lending by refinancing their mortgage portfolios,” he said, noting that the aim was to expand home ownership in Tanzania by providing long-term financing to banks and financial institutions.

The managing director for Absa Bank Tanzania, Obedi Laiser, said the arrangement gives his bank access to long-term funding that will raise its mortgage lending portfolio from Sh5 billion to Sh32 billion.

The aim is to satisfy their customers’ appetite for housing loans and address the housing challenge facing many Tanzanians.

"In the pursuit of fulfilling our organisational purpose, we put our customers at the centre of everything we do," he said.

The increased funding will make housing loans more accessible to their customers in the long run, he noted.

It will also reduce the liquidity funding risk incurred in the provision of long-term loans for housing and therefore reach more mortgage customers.

According to Mr Mgaya, when more financial institutions join TMRC and inject capital, it strengthens TMRC and enables it to mobilise more funding through fundraising for mortgage loans in the market.

He said they are happy to see more banks joining TMRC and even more banks offering home loans to their customers.

Mortgage loans for commercial banks and financial institutions are repaid in a period that ranges between 15 and 25 years.