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Lower loan interest rates to empower youths to fight poverty

TANZANIA: TANZANIA boasts a youthful population (read workforce), with 77 per cent under 35 (2022 Population and Housing Census) that is a powerful engine for economic growth and innovation. However, this potential is often stifled by financial barriers, particularly the high interest rates on loans that restrict access to capital for young entrepreneurs and students alike.

With this note, it is imperative that banks reconsider their loan interest policies to foster a more inclusive economic environment, empowering the youth in the fight against poverty.

This is because in the current landscape, high interest rates are a significant hurdle for young individuals seeking to start businesses. For instance, with prevailing rates often rotating or exceeding 15 per cent— sometimes much higher—many are left with little choice on seeking banks’ support, because of unfavourable terms. This cycle of financial exclusion perpetuates poverty, limiting opportunities for young people to develop their skills, gain employment, or launch their own ventures.

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Lowering loan interest rates would enable more young people to access affordable credit, which is crucial for starting small businesses and this is reinforced by the fact that by fostering entrepreneurship, banks can contribute to jobs’ creations, ultimately reducing unemployment rates and stimulating economic growth.

Equally, banks should also realise that a stronger youth demographic engaged in productive activities can lead to greater economic stability. When young people thrive, they contribute to their communities and local economies, reducing dependency on government assistance and social programmes.

Put in another way; by lowering interest rates, banks can attract a wider customer base, including those who have been historically underserved. Financial inclusion is key to fostering a resilient economy and can lead to increased savings and investment, benefiting the banking sector in the long run.

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Lowering loan interest rates is not just a philanthropic endeavour; it is a strategic business move for banks. By investing in the future of Tanzania’s youth, banks can create a more dynamic and prosperous economy that ultimately enhances their own profitability. A thriving population leads to increased consumer spending, reduced default rates on loans and a more vibrant market for banking services.

By and large, the fight against poverty in Tanzania is intricately linked to the empowerment of its youth. By lowering loan interest rates, banks have a unique opportunity to play a pivotal role in transforming lives and building a more equitable society. It is time for financial institutions to recognise that investing in the youth is not merely a moral obligation, but a strategic imperative. Together, we can cultivate a future where every young person has the opportunity to dream, create and succeed. In doing so, we lay the groundwork for a prosperous Tanzania, free from the shackles of poverty.