The AUHF 33rd Annual ConferenceMortgages liquidity facilities approaching the capital

markets17th - 19th October 2017

Kampala, Uganda

1. Tanzania Mortgage Company Limited (TMRC)

2. Shareholders

3. Role of TMRC

4. TMRC Operations

5. Funding Mechanism

6. Bond Issuance

7. Achievements

Tanzania Mortgage Refinance Company Limited (TMRC) is a privatesector financial institution with a sole purpose of supporting banksto do mortgage lending by refinancing and pre-financing banks'mortgage portfolios.

TMRC is a mortgage liquidity Company, designed to support longterm mortgage lending activities by Primary Mortgage Lenders(PML)

TMRC’s operation model was adopted from other successfulliquidity facilities

Egypt - Egyptian Mortgage Refinance Company (EMRC)

France - Caisse De Refinancement De Habitat (CRB)

Indonesia - PT Sarana Multgriya Finansial (SMF)

Malaysia - Cagamas Berhad

West Africa – Regional Mortgage Refinance Fund (CRRH UEMOA)

Nigeria - Nigeria Mortgage Refinance Company (NMRC)

Mongolia - Mongolian Mortgage Corporation (MMC)

Armenia - Armenian Mortgage Corporation (AMC)

Jordan - Jordan Mortgage Refinance Company (JMRC)

Pakistan – Pakistan Mortgage Refinance Company (PMRC)

Other Liquidity Facilities

TMRC was established on 29/01/2011 as part of the Tanzania HousingFinance project, an initiative of Government of Tanzania in partnershipwith World Bank.

All financial Institutions and housing finance stakeholders are allowed tobecome member of TMRC through subscribing of share capital to thecompany.

As at the end 30 September 2017 (Currently), TMRC had 15 Shareholderswith share capital of TZS 18.34 Billion.

TMRC re & pre finances all financial institutions registered by BOT

TMRC Shareholders as at the end of September 2017 are:

◦ Provision of secure long term funding at competitive ratesto mortgage lenders to continue lending to their clients

◦ Facilitating mortgage lenders to extend the mortgagematurity to be in line with normal mortgage products

◦ Contribute to the growth of Tanzanian capital marketsthrough the issuance of TMRC bonds to source funds forlong term lending to member banks

◦ Assist in the standardization of mortgage practice inTanzania through specialized training to mortgage lenderson the origination of mortgages

◦ Facilitating the entry of new mortgage lenders in the marketdue to the existence of MLF which provides the funding ofmortgage portfolios

◦ Allows for greater competition in the mortgage market

Marketing the service to banks

◦ Introduction to Banks through letter and our offerings

◦ Communicate through TBA and BOT

◦ Share mortgage market updates

◦ Creativity in evolving our product to fit prevailing conditions with best practices approach

Credit analysis on banks

◦ Computing PML credit limit using TMRC credit model taking into consideration banks financial and operational performance

◦ Obtain approval of the credit limits from TMRC MCC / BCC / Board of directors

◦ Communication of approved credit limits to banks

◦ Review of the credit limit periodically and on ad hoc basis

Transaction Processing

◦ Receiving of loan application from PML

◦ Performing due diligence of applicant bank

◦ Reviewing quality of security offered

◦ Apply for funds from BOT

◦ Preparation and filling of legal documentations such as; Indicative term sheet, offer letter, MRSA/MPSA, Debentures & addendum and other agreement

Repayment of loans

◦ Preparation of repayments schedules

◦ Sending reminder letters and e-mail before due date

◦ Follow-up on the due date

◦ Filling payments confirmation after physical confirmation of payment.

◦ Transfer corresponding repayment to BOT

TMRC Operations cont.

Periodic monitoring of loans

◦ Reviewing of submitted monthly report

◦ Conduct quarterly onsite review and preparation of quarterly review report

◦ Conducting annual onsite review and preparation of annual review report

◦ Share the report with corresponding banks, BOT and TMRC board

Loan renewals

◦ Request expression of interest at least 3-months in advance

◦ Perform Full review of the performance of the bank in compliance with the agreed terms

◦ Inform BOT of the intention to renew

◦ Performing processing of the renewal

TMRC Operations cont.

BorrowerInvestors

(BOT, Bond Holders, DFIs etc.)

TMRCMortgage Lenders

CollateralMortgage loans

Dwelling

Loan agreement

Collateral

Cash Securities

Cash (Finance)

Bank of Tanzania

Corporate Bond Market

TMRC

Mortgage Lenders

5 Year loan

at 10.0%

5 Year Bond

at 13.95% plus

0.50% margin

5 Year loan at 11.50% - 12.50%

Fully operational with 16 staff compliments.

Have 15 shareholders with total paid up capital of TZS 18.34 billion

By 30th September 2017, TMRC had total Asset of about TZS100.00 Billion.

TZS 78.10 billion was disbursed to PML’s as at 30th September,2017.

TMRC has issued its first corporate bonds through privateplacements with pension worth TZS 2.00 billion of TZS 1 billioneach.

TMRC played a key role in advocating for the change of RiskWeighted Capital from 100% to 50% for loans collateralized bymortgages, exemption of SMR for TMRC fund.

Absence of NPL’s in TMRC loan portfolio

TMRC has a perfect repayment history

TMRC played a key role in advocating for the change of LTV ratio from80% to 90%.

The 10% down payment can also be covered by either insurance cover orborrower pension benefits

TMRC played the key role in advocating for increase mortgage loanstenors from 20 to 25 years

TMRC has secured AFDB 50% bond issuance guarantee of up to 4millionUSD due to its track record as was determined by AFDB due diligence.

Currently, there are thirty (30) banks and financial institutions engaging in mortgage lending from Three (3) banks in 2010.

Mortgage loans interest rates range reduced from above 20% to start from 16% - 18%

Increase in mortgage tenor from 5-7 years to 15-25 years Mortgage outstanding debt in the market reported to BOT

increased from TZS 76.72 Billion in 2011 to TZS 446.33 Billion in 30th June 2017.

Thanks for your attention!