When making capital market interventions, World Bank Group investments generally support liquidity facilities in order to provide long-term funding through bond issuance of a centralized issuer, which also catalyzes capital market development. However, adequate measures and conditions have to be in place for an intervention to have positive effects. In Tanzania, this was not the case, and led to a lack of success.
The Tanzanian Mortgage Refinance Company (TMRC) was aimed at providing medium and long-term liquidity to mortgage lenders, but demand for TMRC’s loans didn’t come as expected because of the reluctance of banks to accept any kind of maturity mismatch. Though TMRC was restructured to address this issue, by the time it was fixed, there was a significant change in the macro environment, and high interest rate levels made bond issuance difficult.
Source:
World Bank Group. (2016) World Bank Group Support to Housing Finance. International Bank for Reconstruction and Development / The World Bank.
Link: https://ieg.worldbankgroup.org/evaluations/world-bank-group-support-housing-finance