The government is engaging the financial sector in a bid to accelerate financing for industries-led economic growth, which is expected to transform Tanzania into a middle income country come 2025.
This comes at a time when Bank of Tanzania (BoT) figures show that the manufacturing sector – which is meant to spur the country’s industrialisation dream – accounts for only 11 per cent of commercial banks’ total loans to various economic activities.
The rate compares poorly with 27.2 per cent and 20.7 per cent for personal and trade activities respectively.
In a deliberate move to see the commercial banks play an increasingly important role in the advancement of an industrialised Tanzania, the Ministry of Finance and Planning convened a workshop here yesterday that brought together financial sector regulators and stakeholders from insurance, capital markets, banks and microfinance institutions.
The private and government institutions’ officials held a conversation over how they would play theie role in the much-touted industrialisation.
Government officials highlighted areas they said were not yet well addressed and gave assurance that the political commitment, which normally determines the economic base of a country, was available. “I hope you will come up with strategies that prioritise financing industrial development through creative products,” said the Bank of Tanzania governor, Prof Florens Luoga, who read the opening speech on behalf of Finance minister Philip Mpango.
“You must also discuss why agricultural insurance does not exist in Tanzania, why there is high cost of borrowing and why only a small percentage of Tanzanians have access to insurance services.
“The financial institutions should continue with their creativity to attract more banking customers. There must be awareness on agricultural insurance and financing opportunities for small companies through Entreprise Growth Market of the Dar es Salaam Stock Exchange,” he added.
Deputy permanent secretary in the Ministry of Finance, Dr Khatib Kazungu, also highlighted similar issues adding that the sector should facilitate financing of commercial agriculture and increase uptake of manufacturing loans.
“We should also discuss why the lending interest rates are still expensive even as the Central Bank has lowered its statutory rates to stimulate credit growth,” said Dr Kazungu.
The permanent secretary in the Prime Minister’s Office, (Policy and Coordination), Prof Faustine Kamuzora, said the financial sector was the oxygen of the economy, meaning that without it being strong there would be no strong economy.
Prof Kamuzora who remembered his time as an economics lecturer recalled some concepts and theories, asking banks to deliver more credit to consumers and the Treasury to pay its debts quickly for Money Multiplier.
“When you spend more money, expenditure increases and that way the government gets more taxes and the Treasury understands this,” he said.
The permanent secretary in the Ministry of Industry, Trade and Investment, Prof Elisante Ole Gabriel, stressed the importance of the financial sector towards industrialisation and value-addition to Tanzanian products before exporting.
“My request to financial institutions is to design windows for lending industrial machines… the government is happy to work with you through its Small Industries Development Organisation (Sido). There are people who borrow to finance economic activities and others just need money,” he said.
Prof Gabriel said political force is the strongest determinant of economic base among social and technological forces and added that Tanzania’s political force was stable and strong for now.
“Our politicians are committed to the industrial economy and I also request them to help campaign for loan repayment,” he added.