VP Mpango bemoans grueling interest rates

THE onlyVice-President, Dr Philip Mpango, has tasked financial institutions in the country to revisit conditions for issuance of loans including the requirement by borrowers to tender immovable assets to access loans, noting that the terms have been a hindrance to access credit facilities by majority of Tanzanians.

Dr Mpango also urged the institutions to develop innovative means of reaching out to the youth to enable them to access loans, which will improve their lives and national economy as a whole.

The VP made the call in Mwanza yesterday during the official launch of the 2nd National Financial Sector Services Week being held at Rock City Mall in the lakeside city.

Dr Mpango pointed out that the average of 16 per cent interest rate being charged by financial institutions on loans is still by far a burden to people wishing to access loans.

He, thus, urged commercial banks through their umbrella organisation, the Tanzania Bankers Association (TBA) to assess the root cause of the challenge and consider lowering the interest rates on loans.

The VP as well urged the financial institutions to reduce the costs they charge for international money transfers to enable foreigners and Tanzanians in the diaspora to conduct their transactions with ease.

“High costs associated with international money transfers among financial institutions have pushed many Tanzanians in the diaspora and foreigners to resort to informal means when remitting funds to and from abroad.

“What is more, what banks and agents charge on credit cards used by tourists is also a burden to the backpackers to the extent that they cannot purchase locally produced goods, and thus deny revenues to the government and other service providers,” he observed.

In his speech during the occasion, the VP also reached out to financial institutions through TBA to expand their services in rural areas in a bid to nurture a saving culture among rural folks.

“Expansion of such services in remote areas will also encourage people in those areas to access credit facilities and shun using informal means of keeping their savings,” he advised.

Dr Mpango also directed the Bank of Tanzania (BoT) to conduct public awareness and issue guidelines on opportunities and risks associated with digital currencies such as cryptocurrencies and bitcoins, among others.

“The public awareness and guidelines will shed more light on the new technology which is being embraced by youths and pensioners who are eager to invest in digital currencies to make quick profits,” he urged.

The VP also instructed BOT and the Tanzania Communications Regulatory Authority (TCRA) to ensure service providers in the communication sector adhere to laws and regulations of the land by protecting interests of users of their services through financial inclusion.

“The interest rates charged by some communication service providers on short-term loans and airtime are exorbitant and thus the users should be duly informed before accessing such credit facilities,” he instructed.

At the same occasion, Deputy Minister for Finance and Planning, Mr Hamad Chande, said through reforms undertaken in the financial sector a total of 3.99tri/- has been loaned out to the private sector, representing a growth of 19.4 per cent.

According to Mr Chande, the loaned amount contributed to growth of Gross Domestic Product (GDP) by 4.9 per cent during the financial year 2020/2021.

During the period under review, mobile phone money transactions increased to 33.14 million accounts, the Deputy Minister explained.

Mr Chande noted on the other hand that the financial sector in the country faces a myriad of challenges including pyramid schemes, use of informal services and unregulated online transactions, among others.

Earlier, Deputy Permanent Secretary in the Ministry of Finance and Planning (Economic Management and Policies), Mr Lawrence Mafuru, said marking of financial services week is part of implementation of the financial sector development plan spanning between 2020/2021 and 2029/2030.

Among others, Mr Mafuru said the plan aims at enhancing financial inclusion, availability of long-term financing and protecting users of financial services as well as curbing money laundering.