Prof. Florens Luoga, Governor of the Bank of Tanzania (BoT) has won The Banker Magazine’s Central Banker of the Year for Africa for 2022 Award that celebrates the officials that have best managed to stimulate growth and stabilize their economy.
Appointed as governor in 2018, Prof. Luoga wins the award in recognition of his efforts to install greater discipline among local lenders.
Since the start of his tenure, Prof. Luoga has overseen the continued consolidation of the sector that began in 2015 with the raising of minimum capital requirements.
In November 2020, the BoT took over the management of China Commercial Bank (CCB) and placed it into administration after it failed to meet the required capital standards.
Under the central bank’s guidance, CCB’s assets were acquired by NMB Bank in March 2021. BoT is in the process of overseeing several other potential mergers.
Under Luoga’s tenure, Tanzania’s banking sector has remained stable in the main, with a capital adequacy of 15.7% at the end of the year and lenders posting modest growth in assets.
The sector remains significantly oversupplied, despite recent consolidation, with more than 50 licensed banks and non-bank financial institutions (NBFIs) at the end-2020.
Perhaps more concerningly, non-performing loans (NPLs) have grown sharply, particularly among small and medium-sized banks and NBFIs, with overall NPLs increasing to 9.4% of total loans as of March 2021.
In a bid to help reduce NPL levels to the BoT’s target rate of 5%, Prof. Luoga announced a crackdown on irresponsible lending in November 2021, requiring banks to provide details of employees and government officials that had approved loans without following appropriate procedures. Such individuals face being blacklisted by the BoT and prevented from working in the country’s financial sector.
Prof. Luoga also took swift measures against COVID-19, shielding at-risk groups from financial shocks and fostering economic recovery by easing monetary policies and encouraging banks to implement payment holidays, lower interest rates, and extend loan restructuring periods to provide financial relief for customers.
Prof. Luoga is also guiding the BoT’s experimentation with a central bank digital currency, making it a pioneer on the continent.
In this regard, in November 2021, when hosting the 20th Conference on Financial Institutions, he said: “As far as we know crypto-currencies are not safe. We cannot give timelines when to issue regulations, we are still researching–we will give regulations when we have finished our research.”