Tanzania in global pilot housing plan

UN-Habitat has signed a housing finance facility with six commercial partners in a landmark deal for pro-poor lending that does not require government guarantees.

The UN-Habitat executive director, Prof Anna Tibaijuka, told journalists during the signing ceremony yesterday that its initial capital was contributed by Spain, the Kingdom of Bahrain and Rockefeller Foundation. The fund is known as: "Experimental Reimbursable Seeding Operations (ERSO).

"The primary function of the ERSO Trust Fund is to look at new ways and means of financing pro-poor housing and infrastructure, and slum upgrading. Our aim is to induce, encourage and enable existing local financial institutions to serve low-income market segments in a sustainable manner," she said.

The pilot countries are Tanzania, Argentina, Bangladesh, Nepal and Uganda. The money would also be available through Habitat for Humanity International, a global non-profit body, to provide affordable housing for the world's poor.

Loans would be in national currencies fixed to exchange rates at the time of disbursement, said Mr Charles Singili, managing director of Azania Bank Limited, who signed as a partner with UN-Habitat.

A strict condition was that repayment interests were not to shoot into double digit figures, said Prof Tibaijuka.

The ceremony was also witnessed by the minister for Housing, Human Settlements and Urban Development, Mr John Chilligati.

Mrs Tibaijuka said the current economic crisis was sparked off by a housing financial crisis. She noted that the lesson was "a stark reminder that in a globalised world economy, housing and urban development were not just local issues; they are issues of global concern that cannot be left to the marketplace alone."

She said the Fund was in line with objectives of the UN Habitat and Human Settlements Foundation, which was created in 1972 but had never been capitalised. "It has been a battle to win hearts and minds," she said, referring to the efforts get donors for ERSO.

The UN General Assembly, she said, has sanctioned ERSO to operate on a commercial basis without requiring governments to commit to repayment of the money in the event of failure to repay the loans. The license, she said, was the first of its kind within the UN system.

"The intention is also to show national governments how this can be done and what changes are required to government policies, strategies and business processes to help such initiatives go to scale," she said.

In an earlier press conference, the Zimbabwe minister for National Housing and Social Amenities, Mr Fidelis Mhashu, called on the international community to help his country reconstruct.

He said the people had been successful in forming an "All Inclusive Government." He was referring to the coalition between Zanu-PF, led by President Robert Mugabe and the Movement for Democratic Change (MDC), led by Prime Minister Morgan Tsivangrai.

Towns and cities in his country grew at an average of seven per cent, he said. It would require massive infusion of resources to provide affordable housing, water and sanitation to ever growing urban populations, and the government could not do it alone, he added.