Housing finance strategies of informal settlement dwellers. Factors of influence and the impacts of planned interventions in Dar es Salaam


Dr. Christiane Rudic, née Kryck

Research Area:


The process of rapid and uncontrolled urbanisation in Africa with the consequence of expanding informal settlements has attracted the interest of development co-operation for decades, willing to improve living conditions in these urban areas. In accordance with shifting ideas of development theories, different – partly overlapping – phases of strategies to increase the supply of affordable housing were pursued. With the global shift towards market liberalisation, democratisation and participation the focus on how to deal with the housing crisis increasingly shifted to the provision of housing finance. This discussion is heavily influenced by the booming microfinance sector and microfinance for housing developed to the new dominant strategy propagated by international agencies, like UN Habitat and the World Bank to reach low-income groups.

Within this context the city of Dar es Salaam, Tanzania, with support from Cities Alliance and UN Habitat has elaborated the citywide upgrading strategy of all unplanned and un-serviced settlements. One of the major foci of this strategy concentrates on the provision of housing microfinance for the extension, repair or improvement of informally built houses. However, the microfinance sector in Africa is still largely underdeveloped and housing microfinance as a specific product in Africa is still new and only starting to be documented, while knowledge about informal ways of housing finance is comparably scarce. The main research questions, therefore, are: how do people finance housing without access to microfinance institutions and other formal lenders? How important is investment in housing compared to other expenses? How effective are microfinance approaches for housing? What is financed by micro-credits and how do borrowers cope with debts? How do social networks influence the access to housing (micro-) finance? And which effects can microfinance initiatives or other measures of the citywide upgrading strategy have on housing conditions and housing markets in the respective settlements? These questions will be investigated by combining qualitative and quantitative empirical social research methods in three selected research areas in Dar es Salaam.