BoT: Financial sector stable, resilient
DAR ES SALAAM: THE Bank of Tanzania (BoT) has stated that the country’s financial sector remains stable and resilient, marked by moderate risk levels and supported by strong macroeconomic stability.
The Monetary Policy Statement (MPS) Mid-Year Review 2024/25 reports that the banking sector, which constitutes the largest part of the financial sector, remains liquid, profitable and wellcapitalised.
“The assets of banks grew alongside deposits, driven by the expansion of agent banking services, increased adoption of financial products and the digitalisation of banking services,” the MPS report noted.
Liquidity in banks remained robust, with the ratio of liquid assets to demand liabilities surpassing the regulatory requirement of 20 per cent.
The quality of assets continued to improve, as evidenced by a reduction in non-performing loans (NPLs) to 3.3 per cent in December, down from 4.1 per cent in June last year.
The MPS noted that the NPL ratio is well below the tolerable level of 5 per cent and is expected to decline further as banks implement measures to enhance asset quality.
In partnership with stakeholders, the Central Bank will continue to implement reforms to deepen the financial sector.
These reforms include amendments to the Banking and Financial Institutions Act to ensure compliance with capital adequacy requirements, paving the way for the transition to Basel II/ III risk-based supervision standards.
Additional measures involve issuing new regulations for capital adequacy, liquidity management and prompt corrective action, along with collecting real-time data to improve supervision.
The MPS report also emphasised efforts to improve access to and usage of financial products and services. The payment systems operated effectively, with modernisation initiatives enhancing efficiency.
“Measures to promote a cash-lite economy were also implemented, including a public notice prohibiting merchants from imposing charges on card transactions at Point of Sale (PoS) terminals, complementing pricing guidelines for digital transactions conducted through the Tanzania interbank settlement system and electronic fund transfers, issued in April last year,” stated the MPS report.
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BoT also continued enabling interoperability of domestic and cross-border payment systems by onboarding participants and integrating the Government E-Payment System (GePG) into the Tanzania Instant Payment Systems (TIPS).
This integration a l l o w s for the payment of government bills via all digital platforms.
“ To ensure the safety and integrity of the financial system and limit illicit financial transactions, BoT conducted both offsite surveillance and onsite examinations of payment systems, particularly those provided by the private sector,” the MPS report said.
Regarding performance, the MPS highlighted an increase in digital payment usage, alongside a decline in cheque usage.
Transactions through electronic funds transfer grew by 6.4 per cent in volume and 18.8 per cent in value during the first half of 2024/25, compared to the same period in 2023/24.
This growth is attributed to government efforts to make digital payments more affordable, improvements in operational efficiency and consumer protection initiatives.
The volume and value of cheques denominated in Tanzanian Shillings decreased by 17.81 per cent and 9.73 per cent, respectively.
Similarly, cheques denominated in USD fell by 24.78 per cent in volume and 16.42 per cent in value. Mobile money platforms continued to play a key role in expanding financial access to the unbanked population.
The volume and value of mobile payment transactions increased, driven by higher adoption of merchant payments, as well as the facilitation of both domestic and cross-border transfers, along with transactions between wallets and banks.
