Towards Urban Poverty Alleviation in Tanzania: A case for the Use of Housing Licences to Access Credit

"In Tanzania, mainstreaming or formalisation of the informal sector, was started with the aim of increasing participation of the informal businesses in the country’s economy. This policy brief highlights the willingness of the community to use housing licences obtained in the process of formalisation as collaterals for loans. The policy examines whether financial institutions accept housing licences as part of the documents requisite for collateral in order to access loans. Findings indicate that people who have been involved in the formalisation process in Dar es Salaam have been given formal licences to own their houses for a span of only two years but this was later extended to five years. Some of the financial institutions have expressed willingness to accept such licences. This is however on the condition that the licensed houses are insured before the housing licence document is accepted for loan processing. The phenomenon of insuring houses is not common in Tanzania, especially in the informal settlements. This paper highlights the challenges and how best the programme can be improved and implemented."