In the wake of the recently growing global financial crisis, the Bank of Tanzania has issued a statement assuring investors that Tanzania Banking is still secure.
“In Tanzania, despite the ongoing global financial crisis, the banking sector continues to be safe, stable and sound,” said Prof. Benno Ndulu, Governor of the Bank of Tanzania (BoT) in a statement.
“The sector is adequately capitalized and profitable,” Prof. Ndulu continued, “on the basis of financial indicators, the sector is considered resilient to the current shocks emanating from the global financial crisis.”
According to Prof. Ndulu, liquidity in the Tanzania banking sector remains high, which ensures that the banks are able to meet any maturing obligations.
In addition, growth in credit given to the private sector continues to occur at very high rates, 48% in the month of September, while banks continue to lend to each other at low rates of approximately 5%.
For the last 18 months, the foreign exchange reserves of the Bank of Tanzania has maintained a level of approximately USD 2.7 billion, which is a higher level than most other neighboring African countries.
“[This] robustness of foreign reserves is important for the stability of the Tanzanian Shilling and confidence in the economy,” said Prof. Ndulu of the Bank of Tanzania.
One of the roles of the Bank of Tanzania is to promote an orderly market by intervening in the market in order to control any excessive volatility in the exchange rates.
In a statement issued by the Bank of Tanzania, Prof. Ndulu assured the public that, in spite of the ongoing global crisis, the Tanzania banking system has enough foreign exchange to meet normal business needs.
“There is no need to panic or speculate,” said Prof. Ndulu.
President Kikwete has indicated that the long term effects of the financial crisis will be felt indirectly in Tanzania in the form of a decline in the demand for Tanzanian exports to the developed countries with declining incomes; a decrease in the amount of funds available from these developed countries for assistance, as most of their funds will be spent on bailing out their own financial institutions; decreased FDI based on the decline in foreign loans; and a decrease in both the number and the level of spending of tourists in the Tanzania.
In response to these concerns, the Bank of Tanzania has said that it will continue to take steps in order to preserve the current stability of the Tanzania banking sector, including maintaining strict surveillance over the daily activities of the banks, ensuring the employment of early warning systems, and guaranteeing the highest levels of liquidity by the banks.
Overall, Prof. Ndulu of the Bank of Tanzania said that, regardless of the current global banking environment, the Tanzania banking sector remains secure and stable.
“The Bank of Tanzania would like to reassure the public and the market that the situation in the domestic financial markets remains sound and stable,” said Prof. Ndulu, “I would, therefore, urge all market players and the public to continue to do business with the banking system normally. The Bank of Tanzania is in position of dealing with any situation that may arise.”
