TANZANIAN BANKS PLEDGE CUTS IN INTEREST RATES

President Samia Suluhu Hassan speaks during the 20th Conference of Financial Institutions (COFI) meeting on recovery of the economy from the Covid-19 pandemic and beyond in Dodoma yesterday.

Dodoma, 25 November 2021 - Tanzanians should expect a reduction in lending rates if the ongoing strategies between commercial banks and the Bank of Tanzania (BoT) are anything to go by.Giving his remarks during the 20th Conference of Financial Institutions (COFI), the Tanzania Bankers Association (TBA) chairman, Mr Abdulmajid Nsekela, said lending interest rates would soon start going down, saying a number of issues were being deliberated between lenders and the BoT.

“President Samia Suluhu Hassan has continuously called upon banks to improve lending and reduce interest rates. The BoT has come up with a number of interventions for policy reforms that will see banks reducing interest rates soon,” he said during the conference that was themed: ‘Tanzania Economy: Recovery from Covid-19 Pandemic and Beyond’.
Debate on reduction of lending rates had been heightened during the past few months after BoT introduced in July some policy measures that were meant to lay a solid framework to increase liquidity and reduce the cost of lending to the private sector.
Among the measures, the BoT said it would introduce were a Sh1 trillion special loan fund for banks and other financial institutions to access money for lending to the private sector.

Speaking yesterday, Mr Nsekela, who doubles as managing director of the CRDB Bank Plc, said the banks have been doing simulation (coming up with statements on reducing various lending rates) - and will soon individually start to announce reduction of their interest rates.

He hailed BoT for taking measures to cushion the sector against the challenges caused by the viral Covid-19 pandemic.

He noted that the banking sub-sector has also put in efforts to improve its technology in order to reach more Tanzanians through digital products - adding that similar efforts had been made to ensure lending is extended to small-scale farmers.

He, however, noted that the sector was still grappling with high levels of Non-Performing Loans (NPLs), currently standing at Sh1.2 trillion.

The BoT Governor, Prof Florens Luoga, said that, to ensure sustainable economic growth, the banking sub-sector’s regulator has implemented a number of policies that aim to reduce loan interest rates, increase liquidity in banks and increase loans in the agriculture sector. The BoT was also sensitising on the use of digital payments, including a reduction of statutory minimum reserves.

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