By Alawi Masare
Dodoma
— 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.
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