BoT: Inclusive growth hinges on payment systems

DAR ES SALAAM: BANK of Tanzania has said inclusive economic growth increasingly depends on robust payment systems, which are streamlining financial access, boosting efficiency and strengthening the resilience of the country’s economy.

The BoT Deputy Governor (Economic and Financial Policies), Dr Yamungu Kayandabila, told Stanford University students visiting the central bank in Dar es Salaam that payment systems drive inclusive economic growth and finance by enabling payments, fuelling supply chains and underpinning financial sector stability.

“The Bank of Tanzania has continued to take various policy measures and invest in infrastructure to strengthen and improve payment systems, while also promoting innovation, particularly in digital financial services and financial inclusion,” Dr Kayandabila said over the weekend in a statement.

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The Deputy Governor said the modernisation of payment systems in the country began in the mid-1990s as part of broader financial sector reforms aimed at improving efficiency, security and stability of the financial system.

He further noted that these reforms facilitated the entry of private domestic and international banks, the privatisation of some stateowned banks and the removal of certain restrictions on financial services and products.

In 1996, the central bank launched the National Payment Systems Reform Project, which aimed to transform the old system that relied heavily on cash and paper-based processes into an electronic system aligned with international standards.

He recalled that before these reforms, cash transactions dominated, while cheque processing could take up to 14 days in upcountry regions and 7-day in Dar es Salaam, causing delays in economic activities.

The Director of National Payment Systems, Ms Lucy Shaidi, highlighting key milestones achieved up to last year, said there has been rapid growth in instant payments, mobile financial services and interoperable payment systems.

“These developments are driving the country towards a more inclusive, efficient and increasingly digital financial system,” she said.

Among the major achievements of the BoT in payment systems is the establishment of the Tanzania Instant Payment System (TIPS), which allows users of financial services to send and receive money instantly, regardless of the financial institution they use.

TIPS has improved efficiency, reduced transaction costs and strengthened financial inclusion by simplifying financial transactions for individuals and businesses across Tanzania.