The Tanzanian banking sector recorded strong growth in 2019, with profits before tax reaching TZS 590 billion, +88% more than TZS 313 billion in 2018.
In 2020, there were 49 licensed banks in Tanzania. Their total assets reached TZS 33 trillion in 2019; a growth of 9% from TZS 30 trillion in 2018.
With so many banks, and a population largely unbanked, Tanzania has been recorded significant growth in the level of financial inclusion over the last decade.
Meanwhile, according to the Bank of Tanzania (BoT), overall, the banking sector remained sound and stable in terms of profitability, capital adequacy, liquidity, and asset quality.
Tanzania Banking Sector Performances
According to the latest Financial Sector Supervision Annual Report of the Bank of Tanzania (BoT), in 2019 the Tanzanian banking sector grew in terms of assets, loans, deposits, and profits compared to 2018.
Banking Sector Earnings
During 2019, the sector remained profitable as depicted by Return on Assets (ROA) and Return on Equity (ROE) ratios, which increased to 1.86% and 7.13% from 1.04% and 2.88% in 2018, respectively. The increase in profitability was driven by increase in interest income consistent with growth in loan portfolio, and decrease in interest expenses.
The sector recorded a record profit before tax of TZS 590 billion in 2019, compared to TZS 313 billion in 2018 (+88%).
In 2019, the sector remained adequately capitalized. Core and total capital adequacy ratios stood at 17.04% and 18.06% compared to 16.20% and 18.14% in 2018, respectively. Both ratios were above the minimum legal requirements of 10% and 12% for core and total capital, respectively.
The increase in core capital adequacy ratio is partly explained by retention of profit and additional capital injection. The decrease in total capital adequacy ratio is ascribed to regulatory measure to remove one percent general provision requirement on unclassified loans. The measure was taken to enable banks and financial institutions to play a more active role in provision of credit to private sector.
The banking sector continued to maintain adequate liquidity levels well above the minimum regulatory requirement of 20%; the amount was sufficient to meet maturing obligations and fund growth in assets.
During 2019, the ratio of liquid assets to demand liabilities stood at 32.14% compared to 35.22% in 2018, and was attributed to change in portfolio mix in favour of loans, advances and overdrafts.
The ratio of gross loans to total deposits increased to 88.24% in December 2019 from 85.07% reported in 2018, indicating that deposits remained the main source of funding.
Assets Growth & Quality
The sector’s total assets grew by 9.15% to TZS 33,161.80 billion in 2019, mainly financed by an increase in deposits, borrowings and retained earnings.
In the same year, earning assets recorded an increase of 9.32% to TZS 26,435 billion, implying improved ability of the sector to generate income from operations.
The ratio of earning assets to total assets remained broadly unchanged at around 80%, indicating that significant part of the sector’s assets continued to be channelled to productive sectors of the economy
Loans, advances and overdrafts accounted for 53.93% of total assets, while deposits accounted for 84.66% of total liabilities in 2019. Loans, advances and overdrafts recorded a growth rate of 10.42% to reach TZS 17,884.03 billion in 2019 compared to a growth of 6.83% registered in 2018. Deposits increased by 7.16% to TZS 23,818.11 billion.
The observed growth was attributed to favourable macroeconomic environment, BoT’s sustained accommodative monetary policy, and other regulatory measures taken to support private sector’s credit growth.
Balances with other banks, cash and items for clearing decreased by 3.43% in 2019 compared to 0.21% recorded in 2018. The decrease was associated with portfolio shift to more profitable investments such as loans, advances and overdrafts.
Investment in debt securities increased by 4.04% compared to a decline of 10.52% recorded in 2018.
Tanzania Banks’ Loan Portfolio
In 2019, the loan portfolio continued to be diversified in various sub-sectors of the economy. Personal loans accounted for 29.04% of total loans, followed by Trade (16.15%), Building, Construction and Real estates (10.88%), Manufacturing (9.89%) and Agriculture (9.64%). The remaining sectors accounted for 24.40% of the loan portfolio.
The average lending rates by banks remained stable with a gradual downward trend over the last two years. The rate declined to 16.9% in 2019 from to 17.0% in 2018 and 18.0% in 2017.
The ratio of non-performing loans (NPLs) to gross loans decreased to 9.58% from 10.51% in 2018 but was above the desirable level. The ratio further declined to 9.3% in December 2020. The improvement was attributed to various measures taken by BoT, including requiring banks and financial institutions to enhance credit-underwriting standards and loan recovery efforts. Banks were also required to adhere to the Tanzania Banker’s Association Code of Conduct to, among others, enhance staff integrity.
In addition, BoT continued to sensitize banks and financial institutions on the importance of sharing credit information and usage of credit reference bureau services to reduce information asymmetry in their credit underwriting processes and eventually reduce the level of NPLs.
According to the Tanzania Mortgage Refinance Company Limited (TMRC)-a financial institution owned by banks and non-bank Tanzanian institutions to support banks to do mortgage lending-the outstanding mortgage debt as of 31st December 2019 stood at TZS 439 billion, compared to TZS 421 billion at the end of 2018. It further increased to TZS 464 billion as of 31st December 2020.
In 2019, the ratio of mortgage debt outstanding to Gross Domestic Product (GDP) stood at 0.36% and decreased to 0.30% in 2020. The typical interest rates offered by mortgage lenders ranged between 15% and 19% in 2020, compared to 22% and 24% in 2010.
The mortgage market is dominated by five top lenders, who command 69% of the market. CRDB Bank is the market leader commanding 39.73% of the mortgage market share, followed by Stanbic Bank (11.36%), Azania Bank (6.15%), NCBA Bank (5.95%) and NMB Bank (5.60%).
In 2017, BoT licensed Tanzania’s first dedicated mortgage lender, First Housing Finance. The bank is a joint effort by Azania Bank, Armut Limited of Mauritius, India’s Housing Development Finance Corporation, and the International Finance Corporation (IFC) of the World Bank Group.
The number of mortgage lenders further increased to 32 in 2018, and to 34 in 2019 following the entrance of Ecobank Tanzania and the Tanzania Postal Bank during the year. It then returned to 32 banks in Q4 2020 due to the merger of Mwanga Community Bank, Hakika Microfinance Bank, and EFC Microfinance Bank.
Tanzania Banking Sector Market Players
The Tanzanian banking sector embarked on a plan for financial liberalization in the 90’s to sustain the country’s economic growth. This has been accomplished through the mobilization of financial resources as well as by increasing competition in the financial markets and by enhancing the quality and efficiency of credit allocation.
As a result of the liberalization, new merchant banks, commercial banks, bureaus de change, credit bureaus and other financial institutions have entered the market.
As of April 2021, there are 47 banks operating in Tanzania: 36 commercial banks, 5 village community banks (VICOBAs), 4 microfinance banks, and 2 development banks.
Ten largest banks- with at least TZS 1 trillion in assets-dominated the market in 2019, accounting for 72.20% of total assets, 72.98% of total loans and 74.50% of total deposits. These banks are CRDB, NMB, NBC, Stanbic, Standard Chartered, Absa, DTB, Exim, Azania, and Citi.
And the top five banks- CRDB, NMB, NBC, Stanbic, and Standard Chartered-accounted for 55.1% and 57.0% of total assets and deposits respectively. The dominance was on account of a large customer base and wide branch network. Meanwhile, locally-owned banks continued to hold more assets compared to foreign-owned banks.
Banks Operating in Tanzania in 2021
Bank Type Title Name
Commercial Banks: 36 Absa Bank
MD/CEO Abdi Mohamed
Commercial Bank CEO
Akiba Commercial Bank (ACB) Commercial Bank MD Augustine Akowuah
Commercial Bank MD
Commercial Bank MD
Charles Jackson Itembe
Bank of Africa (BOA)
Commercial Bank MD/CEO
Joseph Iha Wanje
Bank of Baroda Commercial Bank MD Rajendra Mohrir
Bank of India Commercial Bank MD Ashwani Kumar Negi
Commercial Bank CEO
China Dasheng Bank
Commercial Bank MD
Citibank Commercial Bank MD/CEO
Commercial Bank of Africa (CBA) Commercial Bank CEO
CRDB Bank Commercial Bank MD/CEO
Abdulmajid Mussa Nsekela
DCB Commercial Bank Commercial Bank MD Godfrey Ndalahwa
Diamond Trust Bank (DTB) Commercial Bank CEO Viju Cherian
Commercial Bank MD Charles Asiedu
Equity bank Commercial Bank MD Robert Gatimu Kiboti
Exim Bank Commercial Bank CEO Jaffari Matundu
First National Bank (FNB) Commercial Bank CEO
Guaranty Trust Bank (GTBank)
Commercial Bank MD Jubril Adeniji
Habib African Bank Commercial Bank MD Shaheen Hasan Rizvi
Commercial Bank CEO
International Commercial Bank (ICB) Commercial Bank CEO Villy Vellayappan
KCB Bank Commercial Bank MD
Letshego Bank Commercial Bank CEO
Mkombozi Commercial Bank Commercial Bank MD Respige Kimati
Mwalimu Commercial Bank
Commercial Bank CEO
Richard Louis Makungwa
National Bank of Commerce (NBC) Commercial Bank MD
National Microfinance Bank (NMB) Commercial Bank CEO
NIC Bank Commercial Bank MD Margaret Karume
Peoples' Bank of Zanzibar Commercial Bank MD Juma Hafidh
Stanbic Bank Commercial Bank CEO
Standard Chartered Bank Commercial Bank CEO
TIB Corporate Bank Commercial Bank CEO
TPB Bank Commercial Bank CEO
United Bank for Africa (UBA) Commercial Bank MD/CEO
Community Banks: 5 Kilimanjaro Cooperative Bank Community Bank
Maendeleo Bank Community Bank
Mufindi Community Bank (MuCoBa) Community Bank GM
Tandahimba Community Bank Community Bank GM
Uchumi Commercial Bank Community Bank MD
Microfinance Banks: 4 Finca Microfinance Bank Microfinance Bank
Mwanga Hakika Microfinance Bank
MD Jagit Singh
VisionFund Tanzania Microfinance Bank Microfinance Bank
Yetu Microfinance Bank Microfinance Bank
Development Banks: 2 TIB Development Bank Development Bank
Tanzania Agricultural Development Bank (TADB) Development Bank
MD Japhet Justine
Mortgage Banks: 2 First Housing Company Tanzania Mortgage Bank CEO Sasa M. Chonza
Tanzania Mortgage Refinance Company Mortgage Bank CEO Oscar Mgaya
Financial Inclusion: Microfinance, Agency Banking, Mobile Money, Credit and Forex Bureaus
Following the financial liberalization in the 90’s to sustain the country’s economic growth, many new lenders including merchant banks, commercial banks, bureaus de change, credit bureaus and other financial institutions have entered the Tanzanian market.
Consequently, Tanzania has recorded a significant growth in the level of financial inclusion in the last decade. According to the Financial Sector Deeping Trust (FSDT), a programme aimed at increasing financial inclusion in Tanzania, the percentage of adult Tanzanians who access formal financial services increased from 16% in 2009, to 58% in 2013 and 65% in 2017. And accessibility, measured by the proportion of the population living within 5 kilometres from where financial services are provided, has grown from 45% to 86% nationally and is at 78% for those living in rural areas. In the same year however, only 16.7% of adults have or use bank services (9% in 2009).
FSDT’s second National Financial Inclusion Framework (NFIF) 2018-2022 aims at increasing the percent of adult Tanzanians using formal financial services to 75% by 2022. Unlike the previous framework which put more emphasis on accessibility, the current Framework focuses on achieving the financial inclusion vision through the usage of financial products and services, without losing sight of access.
To achieve this, the core enablers identified are conducive infrastructures and enabling legal and regulatory frameworks.
Conducive infrastructure includes verifiable identification, credit reference system and collateral registry, and efficient payments ecosystem thanks to improving digital payment platforms and enabling full interoperability among service providers.
Improved legal and regulatory frameworks should ease business licensing requirements, promote innovations in the financial sector, develop proportional prudential requirements while maintaining an appropriate balance between financial inclusion objectives and other policies, such as financial stability and consumer protection.
Micro financing in Tanzania started in 90’s with savings and credit cooperative organization (SACCOS) and NGOs. A National Microfinance Policy was implemented in 2000 to encourage and support microfinances in the country through better integration and regulation.
The microfinance sector came to serve a large portion of the population who would not have had access to credit and finance otherwise. While this has had a significant impact on the economy, a lack of regulation has left the sector vulnerable to financial irregularities and the target of fraudsters and money launderers.
This led to a revision of the Policy in 2017 and to the creation of the Tanzania Microfinance Act of 2018. The Bill ensures proper market conduct and consumer protection, hence contributing to promotion of financial inclusion. It regulates licensing and registration of deposit and non-deposit taking microfinance business in 4 tiers: Tier 1: Microfinance Banks; Tier 2: Non- deposit Taking Microfinance Service Providers; Tier 3: Savings and Credit Cooperative Societies; and Tier 4: Community Microfinance Groups.
As of 2021, there are four microfinance banks in Tanzania, a few banks that provide microfinance services, and several non-banking microfinance institutions and service providers.
In addition, Tanzania has several so-called Village Community Banks (VICOBAs) to assist those who do not have to possession and collaterals. Under this structure, poor people, especially those in the rural areas, combine their savings to create a community-based bank. Members can then take out loans to fund micro-enterprises and self-employment initiatives.
Banking Network and Agency Banking
During 2019, the banking sector continued to expand its outreach through branch network. The number of branches increased to 957 from 878 in 2018.
Most of the branches were located in major cities of Dar es Salaam, Arusha, Mwanza, Moshi and Dodoma. Dar es Salaam had 290 branches which constituted 30.3% of all branches, followed by Arusha with 68 branches (7.1%), Mwanza with 67 (7%), Moshi, with 46 (4.8%), and Dodoma with 41 (4.3%).
In 2013, BoT introduced comprehensive agent banking guidelines that permit licensed banks and financial institutions to appoint retail agents for their banking services. This provides a mechanism though which banks can profitably extend their services to previously unbanked lower-income individuals.
The total deposits through agents reached TZS 18,875.86 billion in 2019-84% more than in 2018-reflecting the increased effectiveness of agent banking in savings mobilization and expansion of bankable population.
Mobile Money, also know as M-Pesa, was introduced in Tanzania in 2008. The service, provided by mobile network operators (MNOs), allows users to deposit, withdraw, transfer money, pay for goods and services, but also access credit and savings, all with a simple mobile device via SMS.
Already in 2007, BoT through the 2007 Electronic Payment Systems Guideline created new rules for electronic payment schemes allowing non-bank
financial institutions to offer electronic payment schemes and money transfers. Although it did not accommodate mobile money, it opened the doors for MNOs to offer money transfer and payment services.
Since the law did not address licensing of MNOs, operators were required by BoT to apply for Letters of No Objection in conjunction with a bank in order to conduct payment services legally.
Realizing the potential of alternative payment instruments improving access to, and adoption of formal financial services, eventually increasing financial inclusion, BoT issued the first letters of no objection to the first MNO’s launching mobile money in Tanzania in 2008.
As the market has continued to develop more MNO’s launched mobile money services, BoT made concerted efforts to find a legal and regulatory framework that would provide sufficient legal certainty and consistency to support a stable mobile money market, promote financial inclusion, and protect customers.
In 2015, BoT introduced a number of laws to further regulate mobile money and payment systems. These allowed for interoperability between MNOs, for money to be transferred from bank accounts to mobile money accounts, and for banks to give small-scale loans via mobile platforms.
In 2016, Tanzania became the first country in the world to achieve full mobile money interoperability.
Today, Tanzania is one of the most advanced mobile money markets in Sub-Saharan Africa.
By September 2020, Tanzania had 30,586,806 mobile money accounts-via six MNOs-out of 49,143,053 mobile network subscriptions. These accounted for 299,258,504 mobile money transactions for a total value of TZS 11,5 Trillion per month.
Such high mobile network and mobile money penetration has clearly impacted the bank’s network strategy to reach the unbanked population and increase financial inclusion.
Abdulmajid Nsekela CEO & MD of CRDB, Tanzania’s largest bank with a network of 260 branches throughout the country, is clear in that physical presence is no longer a determinant in the adoption of financial services: “With improved technologies and connectivity, banks are increasingly providing services via cellular networks and the internet, which then provides an opportunity for inclusion beyond the traditional brick-and-mortar models.”
And Stanbic and Ecobank are of similar views and seek further cooperation with FinTech.
Kevin Wingfield, CEO of Stanbic Bank Tanzania, one of the largest lenders in the country, says: “Mobile technology and finance are intertwined. There is no doubt that the future of finance is digital. Technology lowers the cost of delivering financial services and this allows for much greater access to financial services and financial inclusion. Collaboration and partnerships will be critical between traditional financial services and the emerging Fintech world in order to ensure we all stay relevant to our customers. Technology is also revolutionizing more complex banking products and services which enhances the customer experience but also gives rise to new and emerging risks that need to be managed.”
True to his word, in December 2020 Stanbic introduced a self-registration process dubbed BOFYA-to allow customers to open accounts on the bank’s website by following quick and easy steps.
Charles Asiedu, MD of Ecobank Tanzania, part of the largest pan-African banking group, adds: “We will help accelerate financial services accessibility to all Tanzanians leveraging our electronic channels and partnerships with telcos. Ecobank is seeking more partnerships with fintechs, especially through its annual Ecobank Fintech Challenge to notch up its digital strategy and invest more in order to level up its technology.”
And financial inclusion is to benefit an additional boost as BoT is developing a Tanzania Instant Payment System (TIPS). This will be a single platform that will connect different payment systems: electronic money, card, mobile and internet banking.
TIPS will be accessible for payments to and from individuals and businesses and will permit payments to mobile phone numbers as well as to bank accounts and it will serve to replace the more costly Tanzania Interbank Settlement System and the East Africa Cross-border Payment Systems.
This will facilitate interoperability of digital financial services amongst payment service providers, reduce the use of cash transactions, enhance effective governance, and promote financial inclusion.
Credit Reference Bureaus
Credit reference bureaus play a critical role in increasing lending activity and access to capital, and in turn accompanying economic growth by assisting lender to make faster and more accurate credit decision.
Tanzania passed the credit bureaus regulation in December 2012 and in 2013 BoT licensed two credit bureaus. These institutions are responsible for collecting, analyzing and providing credit information to different lending stakeholders, thereby facilitating credit underwriting process.
In its Annual Report 2019/20, BoT explains that stakeholders were sensitized on the importance of submitting data to the credit reference bureaus and use credit reports during the lending process. With this, the credit reference system improved in terms of data submission and quality and the number of non-regulated institutions that shared credit information through credit reference reached 99. The number of credit inquiries also increased by 3.4% to 1,847,379 in 2019/20 compared to 2018/2019.
And in 2019, BoT in collaboration with the International Finance Corporation (IFC), launched a public awareness programme for Tanzanians aiming to increase the understanding, awareness of credit reporting in accessing credit.
Forex and Bureaus de Change
In Tanzania, foreign money exchange services were traditionally offered by commercial banks and bureaus de change.
In 2018, BoT conducted a compliance review of the bureaus de change in the country as they were found to be source of money laundering, tax evasion and poor know your customer (KYC) compliance.
The Review resulted in the closure of all bureaus and a new Foreign Exchange (Bureau De Change) Regulations that came into force on 7 June 2019 and revoked the 2015 Foreign Exchange (Bureau De Change) Regulations.
According to BoT’s Governor Prof. Florens Luoga, the crackdown on foreign exchange bureaus also helped to ease the pressure on the Tanzanian shilling and to stabilize it against major global currencies. “Since the operation was completed, the shilling maintained stability against the US dollar and other major currencies and prices for essential commodities stabilized.”
As at the end of June 2020, there were three bureaus de change with 38 branches operating in Tanzania.
Furthermore, BoT issued a circular in August 2020 to all foreign exchange authorised dealers operating in Tanzania, providing directives on foreign exchange operations to foster macroeconomic stability and safeguard the stability of the financial system in Tanzania. As per the circular, banks are prohibited from buying foreign currency from exporters with whom they have no account relationship. As such, sale of foreign currency by exporters shall be made through banks which the exporters maintain their accounts.
Also, all foreign exchange dealers are reminded to observe Know Your Customer (KYC) procedures in undertaking foreign exchange transactions, and trading of foreign exchange with international foreign currency brokers who are not licensed in Tanzania is prohibited.
The changes in the forex regulations and the closure of bureaus de change redirected foreign exchange services to the banking sector which saw the profits from foreign exchange dealings up by 70% in Q1 2019. However, earnings from forex fell heavily in Q1 2020 due to the impact of the Covid-19 pandemic on international trade.
Forex is big business for Ecobank, and Charles Asiedu is confident that forex will become increasingly important when the African Continental Free Trade Area comes into force and exponentially increases intra-African trade given the volume of different currencies across our continent.
“Intra-African trade will also be driven sharply upwards by one of the learnings from Covid-19, which is seeing larger corporates–particularly–seeking to diversify their supply chains, rather than risk having just one main supplier, which can dry up overnight as has happened to some due to the disruptions caused by the pandemic,” Asiedu explains.
For this, Ecobank has introduced its cross-border remittance solution dubbed Rapidtransfer, a game changer for remittances being sent by the diaspora and others for remittances to Tanzania. “The World Bank reported that the average transaction cost for USD 200 remittance to sub-Saharan Africa was 8.9% in Q1 2020. Rapidtransfer does this for 3% or less and also provides transparency, certainty, and convenience,” Asiedu states.
Tanzania Banking Sector Consolidation
Lately, the sector has been experiencing increasing consolidation. After a peak of 59 licensed banking institutions operating in Tanzania in 2017, the number has descended to 53 in 2018, 51 in 2019, 49 in 2020, and 47 in 2021.
In 2018, BoT revoked the banking license of five banks on the basis of their undercapitalization: Covenant Bank, Efatha Bank, Njombe Community Bank, Kagera Farmers’ Cooperative Bank, and Meru Community Bank. BoT also took over the administration of Bank M Tanzania due to the bank’s critical liquidity problems and its inability to meet its maturing obligations.
During the same year, Twiga Bancorp merged with TPB Bank retaining the name TPB Bank. But a new bank entered the crowded Tanzania banking market: China Dasheng Bank (CDBL) which was issued a banking business license in November 2018.
In 2019, the number of banks further decreased with the acquisition of UBL Bank Tanzania by Exim Bank Tanzania, and BoT’s transfer of assets and liabilities of Bank M Tanzania to Azania Bank.
During 2020, the sector experienced further consolidation. In July, BoT licensed Mwanga Hakika Microfinance Bank (MHB) following the merger between Mwanga Community Bank (MCBL), Hakika Microfinance Bank (HK MFB), and EFC Microfinance Bank. And in November, BancABC Tanzania was acquired by KCB Bank. During the same month, BoT placed China Commercial Bank Limited (CCB) under statutory administration, and in March 2021, it transferred all its assets and liabilities to NMB Bank.
Finally, in March 2021 the National Bank of Malawi plc (NBM) completed the acquisition of a 51% controlling stake in Akiba Commercial Bank. The acquisition is part of the banks’ strategic regional expansion.
It is plausible to expect that the impact of the Covid-19 pandemic will put additional pressure on the sector and further reduce the number of banks successfully operating in Tanzania.
Wingfield of Stanbic Bank commented on that: “I think given the current Covid-19 crises, [consolidation] is going to be accentuated, as those organizations that act swiftly and adapt to ensure they remain relevant to their customers will grow and those that are slower or unable to adapt will disappear or be taken over. As a member of the Standard Bank Group, we are part of the largest bank on the African continent that has a presence in 21 countries on the continent, a strong balance sheet. We have built a strong brand in Tanzania and are well-positioned to deliver our local and Group capabilities to meet our customer needs and fulfill our Group vision of Africa is our home.”
Tanzania Banking Sector Outlook: Covid-19 and Economic Growth
In May 2020, soon after the appearance of the Covid pandemic in Tanzania, BoT introduced various policies to cushion the economy from the adverse effect of Covid-19, safeguarding the financial sector stability and facilitating the financial intermediation process.
The policy measures approved included: lowering the Statutory Minimum Reserves (SMR) requirements from 7% to 6% to provide additional liquidity to banks, reducing the discount rate from 7% to 5% to permit banks to borrow from the BoT at a lower cost; reducing haircuts on government securities from 10% to 5% for Treasury bills, and from 40% to 20% for Treasury bonds, to increase the ability of banks to borrow from the BoT with less collateral; increasing mobile money operators daily transaction limits to costumers, from TZS 3 million to TZS 5 million and daily balance from TZS 5 million to TZS 10 million, to encourage digital transactions thus reduce congestion in banking premises; and promoting loan restructuring by providing regulatory flexibility to banks.
From July to December 2020, BoT continued to implement accommodative monetary policy, amidst low inflationary environment, to cushion the economy from the adverse impact of Covid-19 and facilitate provision of private sector credit.
This was implemented using a wide range of instruments of injecting liquidity in the economy, which included reverse repo, purchase of foreign exchange from the interbank foreign exchange market, and inward foreign exchange swaps with banks. In addition, BoT granted standing credit facilities to banks to smoothen short-term liquidity fluctuations.
Tanzania has also enjoyed emergency financial support from both the International Monetary Fund (IMF) and African Development Bank (AfDB) to better cope with the pandemic. And the country is one of the few to experience positive economic growth in 2020 and 2021.
And some major commercial banks in Tanzania have actually reported an increase in net profits in 2020, while introducing measures to cope with the impact of Covid-19.
For example, Stanbic Bank Tanzania introduced debt reliefs for its clients by providing them with a 3-6-months payment holiday. Additionally, the bank continues to provide financial advisory to its clients to ensure that they have an effective business continuity strategy.
Wingfield shares his view on the issue and his bank’s strategy to cope with it: “The current environment is challenging and no one knows exactly how long this pandemic will last and how it will impact our environment into the future. We will continue to focus on those sectors that are a priority for growth and development in Tanzania. At present the likes of tourism, transport, oil and gas, local and cross border traders are all finding the environment challenging. However, there are some sectors that are thriving like medical and consumer, which present opportunities. As a leading and responsible corporate citizen in the market we also have an obligation to do what we can to support the efforts of Government and other organizations to fight the pandemic and support the economy through this time.”
Asiedu of Ecobank shares a similar commitment to deal with the Covid-19: “At the moment our primary focus is on making sure that we can meet the needs of our customers despite the pandemic, but expanding our trade finance operations will become an increasing focus once Covid-19 is consigned to the rear-view mirror. Meanwhile, we are continuing to extend our marketing and distribution reach through partnerships with telcos and others, in addition to expanding our Xpress Point agency network to better serve the varied needs and demands in local communities throughout Tanzania. In line with our purpose, we keep making banking more inclusive, convenient, and accessible for our customers in Tanzania.”
In its latest Monetary Policy Statement of February 2021, BoT indicates that the Tanzanian economy performed satisfactorily amid the negative impact of Covid-19 on some sectors of the economy.
Growth averaged 4.7% in the first three quarters of 2020, compared to 7.3% in the corresponding period of 2019 and 6.9% in 2018, mostly driven by construction, agriculture, transport, and mining and quarrying.
The activities benefited from the Government decision of not imposing a nationwide lockdown of the economy because of the Covid -19, as well as fiscal and monetary policies implemented to cushion the economy from the adverse impact of the pandemic.
Meanwhile, the banking sector performance was generally satisfactory. It remained stable, resilient, adequately capitalized and profitable, with satisfactory level of liquidity. The quality of assets of banks improved, as the ratio of non-performing loans to gross loans declined to 9.3% in December 2020 from 10.8% in June 2020.
Looking ahead, Bot’s current monetary policies are focussed on easing liquidity conditions to support the growth of the economy during the Covid-19 pandemic. The growth of the economy is projected at 5.5% and 6.0% in 2020 and 2021, respectively. The growth projection in 2021 is slightly higher than the World Bank projection of 5.5%. And inflation rates should remain relatively low, between 3.0% and 5.0% in 2021.
With this is mind, the Tanzanian banking sector is expected to remain safe and sound in line with ongoing policy, prudential and regulatory measures undertaken by BoT towards improving business environment and efficiency in financial services delivery. Additionally, BoT continues to monitor the quality of banks’ assets with a view of reducing non-performing loans to the desired level of 5%.
And the largest banks are expected to continue to support Tanzania’s economic growth and financial inclusion.
Asiedu says that Ecobank “Aims at fulfilling our objective of being a bank to help Tanzania grow through integration with the rest of African economies. We will leverage our global partnerships to participate in large infrastructure project financing. We are aware of how important the agricultural sector is to Tanzania’s economy. We will therefore continue to be a key player in the agricultural value chain. Thus, we will continue to implement a range of Group-wide measures to deliver beneficial socio-economic impact and these include strengthening micro, small and medium-sized businesses. In addition, we are boosting our lending to women-led businesses.”
And Wingfield confirms that Stanbic “Looks forward to playing an even greater role in supporting the growth and economic success of the country. We have access to proven expertise in Tanzania and from the Group to support all the key sectors that are and will drive growth in Tanzania. At present the likes of tourism, transport, oil and gas, local and cross border traders are all finding the environment challenging. However, there are some sectors that are thriving like medical and consumer, which present opportunities. As a leading and responsible corporate citizen in the market we also have an obligation to do what we can to support the efforts of Government and other organizations to fight the pandemic and support the economy through this time.”
Sources: Bank of Tanzania (BoT), Financial Sector Deeping Trust (FSDT), Global System for Mobile Communications Association (GSMA), Centre for Affordable Housing Finance Africa (CAHF).