Bank of Tanzania (BoT)
According to the Bank of Tanzania’s (BoT) latest report for March
2014, released and availed to the media in Dar es Salaam yesterday, the
economy remained strong in 2013 at the growth rate of 7 percent. The
growth is above the regional averages in sub Saharan Africa and the East
Africa regions.
The growth has been achieved despite challenges posed by regional and global environments.
The projection of 7.5 percent growth in 2015 is attributed to the
government’s efforts in improving infrastructure, sustain practical
fiscal and monetary policies and the increase in aggregate demand.
However, the report was quick to note that the government should
take urgent action to strengthen its financial regulation, maintain
investment in infrastructures and deepen capital markets in a bid to
promote the country’s competitiveness in exports.
According to the report, relative appreciation of the Tanzanian
shilling against trading partners’ currencies may weaken the country’s
exports competitiveness.
“These call for among others, strengthening macro-prudential
oversight, continued implementation of prudent monetary and fiscal
policy, sustained investment in infrastructure, and broadening and
deepening of capital markets,” it says.
It explains that the Shilling appreciated against a basket of
currencies of major trading partners during the period under review.
The 54-page report maintains that the trend of real effective
exchange rate of the Shilling from 2006 to 2013 shows that the currency
appreciation, which was recorded in 2011 through the mid-2012, exhibited
the same trend beginning May 2013.
This could negatively impact Tanzania’s export competitiveness if
sustained for long; hence subject the economy to exchange rate risk due
to a widening current account deficit.
The Shilling remained fairly stable against major currencies save
for the Japanese yen. With regard to major trading partners the Shilling
appreciated against the Indian rupee and South African rand which had
depreciated against the US dollar on account of capital outflows due to
anticipated policy shift in advanced economies.
Even then the report which was signed by the bank’s Governor and
Chairman of the Tanzania Financial Stability Forum Prof Benno Ndulu
detailed a stable increase of mobile phones applications as instrumental
for financial services provision and delivery in the country.
It says the development accelerated access to financial services in the economy.
“Banking and other institutions use the mobile phone networks to
deliver financial services. In addition, the banks maintain trust
accounts to secure e-money issued by Mobile Network Operators (MNOs),”
it reads.
As of March this year the net balances held by MNOs in the Trust Accounts amounted to 297.9bn/-.
It said technological advancement and institutional innovations
have continued to deepen inter-connectedness among financial sectors at
national, regional and global levels.
At the national level, the wholesale payment systems (transactions)
declined while retail payments and clearing house transactions
increased substantially.
“The developments in retail payments are explained by the on-going
expansion in mobile phone penetration on the back of expanding mobile
phone payment platforms. Such rapid growth requires strong regulatory
oversight.
To this end, the bank is awaiting enactment of the new National
Payment Systems statute directed at enhancing regulatory oversight,” it
says.
Despite these positive developments, it reports, the deepening of
financial systems inter-connectedness heightens risks transmission
mechanisms across financial sectors and countries, hence calling for
inter-agency cooperation in the financial systems oversight and crisis
management.
In additional BoT warns that expected stronger global trade and
high commodity prices will positively impact on Tanzania’s exports.
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