By Business Insider Reporter
The overwhelming success of the Makazi Bond issued by First Housing Finance (FHF) Tanzania has reinforced confidence in the country’s housing finance sector and the growing maturity of its capital markets.
The bond attracted TSh 33.08 billion in subscriptions against a target of TSh 5 billion, demonstrating strong investor appetite for long-term investment opportunities and development financing.
Arranged by Stanbic Bank Tanzania, the bond is being seen as more than a successful fundraising exercise. It offers fresh evidence that capital markets are increasingly becoming a viable source of long-term finance for Tanzania’s development priorities, including housing, where demand continues to outstrip supply.
According to FHF, the overwhelming response from investors represents one of the strongest performances by a Tanzanian shilling-denominated corporate bond in recent years.
“The success reflects the high level of confidence investors have in our institution and the continued growth of Tanzania’s capital markets,” said FHF Board Chairman Charles Mugila. “As a Board, we are committed to ensuring that these funds are utilised prudently, transparently, and efficiently to achieve their intended purpose.”
Following the strong demand, the Capital Markets and Securities Authority (CMSA) approved the company to accept TSh 28.15 billion, funds that will be used to expand mortgage lending across the country.
The development comes at a critical time for Tanzania’s housing sector. Rapid urbanisation, population growth and expanding economic activity continue to drive demand for residential housing, particularly in cities such as Dar es Salaam, Dodoma, Mwanza and Arusha. Yet access to affordable housing finance remains one of the sector’s biggest constraints.
Although mortgage financing has expanded in recent years, penetration remains relatively low, leaving many Tanzanians reliant on self-construction, often building homes incrementally over many years.
Industry observers say the Makazi Bond demonstrates how capital markets can help bridge that financing gap by mobilising long-term funds that can be channelled into housing development and mortgage lending.
The bond’s success also carries wider implications for Tanzania’s financial sector. According to CMSA, retail investors accounted for 96.63 percent of total subscriptions, highlighting growing participation by ordinary Tanzanians in investment products traditionally dominated by institutional investors.
CMSA Chief Executive Officer Nicodemus Mkama said the strong response demonstrates increasing confidence in both First Housing Finance and the country’s capital markets.
“The achievement has been supported by various incentives, including the removal of withholding tax on returns from corporate bonds, which has made such investment products more attractive to investors,” he said.
Mr Mkama added that the issuance supports implementation of the Financial Sector Development Master Plan, which seeks to improve access to long-term financing for development projects across the economy.
The listing of the bond on the Dar es Salaam Stock Exchange (DSE) on June 9 also increased the value of investments in corporate bonds to TSh 2.06 trillion from TSh 2.03 trillion, further deepening the country’s capital market.
For Stanbic Bank, which acted as lead arranger, the transaction reinforces the growing role of capital markets in financing economic development.
Stanbic Bank Head of Investment Banking, Sarah Mkiramweni, said the successful issuance strengthens Tanzania’s position as a leading capital market destination in East Africa.
“Capital markets continue to be a critical source of fundraising for institutions, and Stanbic remains committed to supporting organisations seeking alternative financing through bond issuances and other market instruments,” she said.
Beyond housing finance, analysts believe the transaction could encourage more non-bank institutions to tap the capital markets for funding, broadening financing options for businesses and supporting market development.
As Tanzania’s urban population continues to expand, the housing and real estate sectors are expected to play an increasingly important role in economic growth, job creation, investment attraction and improvements in living standards.
The Makazi Bond’s success suggests that investors are increasingly willing to finance that future, providing a powerful example of how capital markets can help address some of the country’s most pressing development challenges. “Housing development is a key component of Tanzania’s Vision 2050 aspirations. As one of the country’s leading banks, we are committed to supporting long-term financing solutions that expand home ownership and contribute to economic growth,” Ms Mkiramweni said.
