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Thousands of low income people facing eviction as NHC goes commercial

With more than 16,000 housing units and apartments country-wide, NHC has not only become the largest real estate owner in the country, but an important part of the majority poor’s daily lives.

IN its popular television programme christened, "Maisha ni Nyumba" which can casually translate into meaningful life is having a decent home, National Housing Corporation (NHC) seems to be embracing the principle which forced founder President, Julius Nyerere to establish it in 1962 through Act No. 45 of Parliament. 

“It is envisaged that NHC will enable many of our people access decent houses with support from the government,” Mwl. Nyerere was quoted as saying soon after assenting the NHC Act.

Dr Nyerere popularly adored by his trade mark name, Mwalimu, went on to nationalize key sectors of the economy in 1967 through the Arusha Declaration, stressing that for a man to survive under his administration three key things are necessary with housing as a priority.

Mwl mentioned other necessities as food and clothing. With more than 16,000 housing units and apartments country wide, NHC has not only become the largest real estate owner in the country, but an important part of the majority poor’s daily lives.

Until 2007, the Corporation’s monthly housing rent was the lowest in the market which forced management and board to increase the amount by close to 200 percent triggering protests from tenants.  “We formed this committee in 2007 soon after rent was increased to unimaginable levels while most of the tenants who are either retired public servants or those still at work cannot afford because of their income,” said Ilala NHC tenants committee Chairman, Mujengi Gwao. 

The committee was formed to liaise with Ministry of Lands, Housing and Human Settlements Development on NHC management’s unilateral decision to hike monthly rent without consulting the minister of tenants, a key requirement included when the corporation was established.  After many years of consultation with NHC management, board and former Lands Minister, John Chiligati, consensus was reached that no further rent increases would be announced till thorough consultations are made. 

It was pure politics because since former President Benjamin Mkapa’s decision to allow NHC which was failing to deliver because of low revenue and a backlog of debts owed by tenants led by government ministries, departments and agencies, the amended 2005 NHC Act gave the management and board powers to run the corporation commercially.  

Without improving the poorly maintained houses and flats, NHC leadership which was cash strapped chose to start hiking rent and collect over 2.1bn/- debts by 2007 to enable it carry out meaningful renovation and construct new structures where old buildings were beyond repair. 

“I am a retired civil servant who has been living here since 1974 while working for Air Tanzania Corporation (ATC),” said Asha Makame, a mother of three who lives along Sokoine Drive in Dar es Salaam, a prime area which NHC is targeting to put up a new flat probably an office block or residential apartments which will only be accessible by a few high class people. 

“Where will we go now? NHC is becoming a company for the greedy targeting to serve the rich contrary to Mwalimu Nyerere’s thinking when he nationalized most of the Asian Tanzanian flats in 1967,” Ms Makame who earns 50,000/- as monthly pension.   But NHC management and board argue that for a long time, tenants have held the corporation hostage by not paying even the little rent that was being charged and that despite former President Mkapa abolishing Rent Restriction Act of 1984 in 1995, it continues to collect monthly rent and not leasing as most other developers do. 

“But as you can see, most of our tenants who are complaining against our debt collection drive are not low income people, in fact they are well off people owning mansions in Mbezi beach and other up market areas of the city,” said the Corporation’s Director of Branch Operations and Administration, Raymond Mndolwa when announcing a three month grace period to defaulting tenants whose bill peaked over 9bn/- by last October.  

Mr Mndolwa said tenants in Dar es Salaam alone owed the corporation a whopping 7bn/- and they included Ministry of Foreign Affairs and International Co-operation, Ministry of Defence and National Service and Ministry of Information, Sports and Culture.  “After the three-month ultimatum, we will publish names of defaulting tenants and take other stipulated measures which include eviction,” Mndolwa warned but kept his word when contracted court brokers started kicking out defaulting tenants including Department of Information Services under Ministry of Information, Sports and Culture.  

On allegations that rent was being hiked arbitrarily, Mndolwa said the corporation’s houses remain the least costly rented units in a market which is facing acute shortage of houses. Ministry of Lands, Housing and Human Settlements Development estimates that current housing deficit in the country is estimated at three million units and growing at a rate of 200,000 units per annum. 

“The problem is more pronounced in urban areas where according to statistics, the urban population has grown from 14.8 percent in 1980 to 37.5 percent in 2005and it is expected to reach 46.8 percent by 2015,” said Minister for Lands, Housing and Human Settlement Development, Professor Anna Tibaijuka, a former UN Habitat Executive Director and advocate of decent homes globally.

Youthful NHC Director General, Nehemia Mchechu argued that without increasing rent and collecting it aggressively through tenants who are traditionally used to living in such houses free of charge, plans of building 15,000 new housing units which will include 5,000 low income houses by 2015, will only be a dream.

“Our goal is to construct more houses and allow more people own their own house or rent better houses which we can’t do without having enough funds,” argued Mr. Mchechu, a former banker who many tenants accuse of importing a banking culture in the housing market.  

Banks have been criticized for charging hiked interest rates in a mortgage financing arrangement signed between NHC and eight commercial banks the majority of which are shareholders of Tanzania Mortgage Refinance Company Limited, a World Bank loan established company to kick-start a sustainable mortgage financing framework in the country. 

NHC tenants who were promised by the government through President Kikwete during the 2005 election campaigns that they will be given priority to buy apartments in which they are occupying after the Mortgage Financing Act comes into being, accuse the corporation and banks of shortchanging them. 

Apart from the hiked prices which NHC blames taxes such as value added tax, tenants argue that commercial banks’ interest rates are behind the hiked mortgage loans which attract between 15 to 18 per cent interest and 18 per cent VAT, among several other costs. “They are inviting us to buy new apartments at 100m/- each, are such the low cost houses which the government ordered,” argued Adam Batengas, a tenant at Ilala TBL flats in Dar es Salaam.

Mr Batengas like many other tenants who have lived in NHC flats for more than 30 years, wants the corporation to make good President Jakaya Kikwete’s campaign pledge that existing NHC residential houses will be sold to existing tenants.  Some of such houses like Ms Makame’s apartment is in a prime area where the corporation is resisting to sell them as they will attract less compared to when the old fashioned poorly maintained block is demolished to pave way for a new state of the art building.  

At Ubungo where angry tenants pulled down a corrugated iron sheet fencing around an 80 residential apartments block construction site with a minimum price of 67m/- each minus VAT and bank interest rates, NHC offered 40 of the units to tenants currently occupying its dilapidated Ubungo blocks, more than 50 families many earning less than 500,000/- a month.

Requiring buyers to deposit 10 per cent of the price while applying for the apartment, NHC required that the balance be settled in 90 days, courtesy of its signed mortgage loan facility with TMRC members which are commercial banks charging between 15 and 19 per cent interest rate. 

“They just want to get rid of us because of their greed for profits, who sais that the government should make profit out of its poor people for sensitive matters such as housing,” charged a fiery Batengas during an NHC Dar es Salaam tenants meeting held a fortnight ago.

In its Strategic Plan covering 2010/11 to 2014/15 presented to parliament in July 2010, the corporation said it targets to develop a minimum of 15,000 houses for sale and lease by June 2015 but pointed out that to survive commercially, low income people will have to be backed by some sort of government funding. 

“It might sound prudent to construct more houses to the low income group than to the high and medium income groups. However, in a situation where NHC is expected to operate commercially while utilizing funds from financial institutions and banks, it is also expected to repay the loans in time. Houses constructed for the low income group will not be able to sustain the needed funding arrangement.   

Therefore, NHC intends to construct more houses for the high and middle income groups so as to be to make profit and possibly subsidize the construction of a minimum of 5000 houses for the low income group,” an executive summary in the Strategic Plan said.   Sensing the danger that NHC is increasingly becoming a commercial entity, tenants in Dar es Salaam have resolve to convene a country-wide conference mid next January to come up with a common position to lobby policy makers to allow them buy or continue living in affordable existing houses.