Unit 13: Secured transactions (solution)

This search query provides a mixture of links to tourism sites, home sale advertisements and discussions regarding financing and capital markets, etc.

Before you continue, consider the following:
• Which of the links is likely to provide the most reliable information concerning the availability of mortgages in Tanzania?
• Why?
• What criteria do you use personally to assess the value of the information contained in a website?

Consider the link: Houses / homes for sale or for rent in Tanzania – Vacation Rental.
What kind of information will be contained in the website? Will it include the kind of information you require for your report?

Now click on the link to see what information can be found at the website.

This site is a .com site, and has been designed to serve a commercial agenda. The primary aim of the site is not to provide objective information; rather, it is to encourage potential clients to invest through the www.propertyworld.com service.

At first viewing it may seem to contain much useful information about investing in property in Tanzania.
Scroll down the page until you find the box labelled Regions within Tanzania.

Now click on Dar es Salaam and try to find out by how much the houses in that region appreciate (rise) in value.

The website tells us the following:

“Investment – Generally speaking homes appreciate in value by approximately 4% or 5% per year, however this will vary from year to year and from neighborhood to neighborhood. Your rate of return on real estate in Dar es Salaam may be higher than many other investments you make.”

Now click on your browser’s back button to compare the appreciation in value of houses in Dar es Salaam with any other region in Tanzania.

You will see that the answer given is identical. In fact, whichever region of whichever country you choose using www.propertyworld.com, the information given is the same.

The website includes many links in its section on Tanzania. However, more often than not the information to which it leads is very general and not detailed enough for the serious investor. Furthermore, the website does not give details as to when the information included was updated, or details as to the authority and credentials of the author.

Evaluation and verification of a source

There are several widely-accepted criteria for evaluating the reliability of a website.
Return to Google and scroll down until you find the link entitled Tanzania (http://www.state.gov/e/eb/ifd/2006/62039.htm). This takes us to the website of the US Department of State, and provides details on the 2006 investment climate in Tanzania.

a) Authorship & authenticity
Identifying the author is an important step in evaluating the expertise and objectivity of the source. In this case, the author is the US Department of State. Among other things, the Department of State’s primary objective is to promote long-range security in US foreign relations. Accordingly, the State Department is likely to be motivated to obtain reliable information.

In addition, the authenticity of the site may be checked by following links on the page to other State Department links, as well as links to other US Government resources online. Importantly, at the very bottom of the page, there is a link to Updates. Following this link gives us significant information about when the site was last updated, and also contains information about what is not included on the site. Combined, this information is valuable in assessing the currency of the information (how up-to-date, valid and reliable it is).

Another important indicator of authorship is the URL (Web address) of the site. The website address includes the .gov top level domain (see task 3 regarding top level domains). The .gov top level domain is reserved for the United States Federal Government. Your assessment of the website may be different if the domain is .com, which is designated for commercially-sponsored sites (see www.propertyworld.com above).
Finally, the web page includes a Contact Us link. Where necessary, it is possible to call to confirm the content of the site or, at least, trace its origins.

b) Content
The accuracy of information on a site may be determined by analysing the expertise, objectivity and currency.

Expertise may be determined by analysing the source of the information, credentials of the author and the information relied upon by the author to present the information. The Department of State has access to resources from the US Congress, other US departments and agencies, foreign governments, etc. Accordingly, it is likely that the information will be reliable. In addition, the bottom of the article indicates that the source of the information was, at least in part, the Bank of Tanzania.

The objectivity is affected by the purpose of providing the information. Is the author objective or biased? In this case, an important question may be: is the source promoting a political agenda?

The currency may be determined by various means. The title of the document itself, “2006 INVESTMENT CLIMATE STATEMENT — TANZANIA” is a clear indication of the date of the resource.

It is up to the individual researcher to determine if the date of the article is sufficiently recent for the purposes of their research.

Compare, for example, the link Accessing Off-shore Sources and Capital Markets (http://pdf.dec.org/pdf_docs/PNACB769.pdf), an article from December 1997 which states that “there are no institutional and legal frameworks to support mortgage institutions in Tanzania”.

Once you are satisfied that the information contained in the US Department of State website is reliable, try to find one more site that meets the above evaluation criteria using the same Google search query:

mortgages Tanzania

Do any of the sites listed in the first two or three pages meet the above evaluation criteria? If so, would they be of any use to you in preparing your report?

Among the authoritative sources listed are: info.worldbank.org, www.publications.parliament.uk and www.undp.org. These may contain useful information, but each of the documents listed focuses on a single issue and tends to be rather academic (e.g. “Legal Pluralism as a Policy Option: Is it Desirable? Is it Doable?”).

Let us now see if we can find an authoritative site detailing some more practical information which may be used in the report.

Our original search query (mortgages Tanzania) was relatively limited. A broader search query may produce a wider range of useful links.

Using the Google search engine, enter the following search query:

foreign investment Tanzania

This returns many useful hits, one of the first being for the Tanzania Investment Centre (www.tic.co.tz). Note the domain name (.tz). This indicates that the website is registered in Tanzania. The keywords listed under the Google link suggest that this site will contain exactly the kind of information you are looking for. As the site is not a .comsite, it may not be run by a commercial firm (and therefore free of commercial bias). However, you cannot be certain of this until clicking on the link and examining the website’s contents.

Now click on the link and find the About us section towards the bottom of the website. Is this site run by a commercial firm, or by the Tanzanian state? The answer to this is not immediately obvious, and in each case the author/s may have a certain bias towards encouraging foreign investment that may not be the case with a truly independent source. However, this does not necessarily mean that the site does not contain valuable information.

Scan through the information and links to see if there are any potentially useful sources of information for your report, assessing this information according to the evaluation criteria discussed earlier.

If you are satisfied that the website meets our criteria, use the Tanzania Investment Centre together with the US Department of State website to prepare your report. If you are not satisfied that the Tanzania Investment Centre meets the above criteria, try to find another website that does.

Verify each question you address in your report by cross-checking with at least one further website. Use the above criteria to assess the reliability of each website you use.

You may wish to try searching for further websites by using some of the following keywords:

Tanzania

portal

gateway

foreign investment

investment

Answer
The following websites meet the criteria discussed in task 13, and may be relied on when preparing your report.
N.B. This is only a selection of the available websites. You may have found other websites that also meet the required criteria.

1) Securing a mortgage on property purchased in Tanzania
The language used in this recent news article suggests that the source, an independent newspaper, is objective. The article makes it clear that at present general lending rates are very high, and that the mortgage industry in Tanzania is very young. Full introduction of mortgage financing is expected to take place during the financial year 2006-2007.
http://allafrica.com/stories/200607311040.html

2) Openness to foreign investment
The website below is hosted by the US department of state, and provides up-to-date information on investing in Tanzania. While the information may be more objective than that provided by the Tanzanian state, be aware that the US State Department aims to further the interests of American foreign policy. As such, it is worth considering the relations between the US and the country in question before relying too heavily on the information provided by the State Department.

Relations between the US and Tanzania are friendly, and an assessment of the information provided by the website reveals it to be up-to-date, objective and reliable.
http://www.state.gov/e/eb/ifd/2006/62039.htm

3) Corruption
A recent report into corruption in Tanzania, prepared for the OECD, NEPAD, UN Global Compact and Transparency International can be viewed at:
http://www.oecd.org/dataoecd/11/37/34571058.pdf

The Economic and Social Research Foundation’s discussion forum (newsgroup) includes postings on a wide range of topics concerning corruption in Tanzania, and can be accessed at:
http://www.esrftz.org/anticorruption/

Governmental efforts at tackling corruption are detailed at the Tanzanian Prevention of Corruption Bureau’s website:
http://www.tanzania.go.tz/pcb/corruption/welcome.html

4) Protection of property rights
The following link leads to detailed, reliable information on Tanzanian investment guarantees and laws and regulations governing investments in Tanzania:
http://www.tic.co.tz/IPA_Information.asp?hdnGroupID=28&hdnLevelID=5

5) Expropriation and compensation
A wealth of useful, objective information on investment opportunities in Tanzania, including full details on expropriation and compensation, can be found at the Royal Netherlands Embassy (Dar Es Salam) website:
http://www.netherlands-embassy.go.tz/finance_insurance.htm

6) Dispute settlement
The Lawyers’ Environmental Action Team website, although focused on environmental law, offers much valuable information concerning the Tanzanian legal system and dispute settlement:
http://www.leat.or.tz/

One particularly interesting document can be viewed at: http://www.leat.or.tz/activities/tarime/tarime.complaint.doc. This is a complaint prepared by a group of lawyers, providing valuable insight into the workings of the Tanzanian judicial system.

Further research
Recent and archived finance and business-related articles concerning Tanzania can be found at Business in Africa Online:
http://www.businessinafrica.net

Another useful website for potential investors is the Tanzanian Government’s Portal:
http://www.tanzania.go.tz/investiment.html

Mortgage Loan Financing – Finance Portal:
http://financesource.wouldashoulda.com/of-finance-management-tanzania.html
This is a .com site, so is likely to be run by a commercial firm. While this may indicate a certain bias, note the information detailed under the link Tanzania Online Gateway. The term gateway is often used as a synonym for portal so the link may lead us to a useful portal containing information relating to investing in Tanzania.
Now click on the link and scan through the information and links to see if there are any potentially useful sources of information for your report. You will notice that the site is not particularly well maintained, and includes several language errors. However, many of the links look promising.
Notice in particular the following link at the bottom of the screen:

Tanzania Online
Tanzania Online Gateway,Tanzania Online database, poverty reduction … Corruption & Good governance Economic Management Education … Banking and Finance …
www.tzonline.org/
This would seem to fit our needs perfectly. It is a .org site (generally used by non-profit making organizations) and clearly includes the kind of information needed for the report.