FINANCIAL INCLUSION LEAPS AS TBA UNVEILS SUSTAINABLE FINANCE PRINCIPLES

In recent years, the global financial landscape has witnessed a paradigm shift towards sustainability and responsible investing. As economies evolve, so do the expectations of financial institutions to prioritize environmental, social, and governance (ESG) factors in their decision-making processes. For a while, Tanzania did not have a specific sustainable finance framework that would guide players in the financial sector on their operations and business practices.

However, there have been different legal provisions incorporated in other sector-specific laws related to the environment, labour, employment, and social welfare among others.

This necessitated the development of Sustainable Finance Principles (SFPs) that were recently launched. The development and the adoption of Sustainable Finance Principles not only align with global trends but also catalyze inclusive economic growth and environmental stewardship.

The launch of the SFPs was held as part of the opening ceremony of the 2nd Tanzania Bankers Association (TBA) Conference on Financial Inclusion that was held on 9th February 2023 at Serena Hotel. The Guest of Honor at this event was the Governor of the Bank of Tanzania, Mr. Emmanuel M. Tutuba. The launch marked a significant milestone for the financial sector and Tanzania at large. The SFPs are expected to influence new thought leadership and best practices.

These Sustainable Finance principles underscore the imperative for Tanzanian banks and Financial Institutions to prioritize sustainability in their day-to-day operations. This will promote inclusive economic growth that incorporates the adoption of ESG principles in the private sector particularly in the banking industry. The SFPs were developed through collaboration between the Tanzania Bankers Association (TBA), the International Union for Conservation of Nature (IUCN), the World-Wide Fund for Nature (WWF), and the CEO roundtable (CEOrt).

TBA Leadership and Management Team with the WWF Team.

In line with this initiative taken by non-governmental stakeholders, the Government has been pursuing several efforts including the implementation of the Alternative Project Financing Strategy (APF Strategy) through the Ministry of Finance, which aims at exploring alternative long-term financing mechanisms ensuring sustainability.

The Ministry of Finance in collaboration with other stakeholders implements a national financial literacy education to promote financial inclusion. Other efforts include the implementation of National Financial Inclusion Framework III (2023-2028), Dar Es Salaam Stock Exchange Plc Rules, 2022, the development of a national switch for reducing transaction costs in digital financial services, and Climate-Related Financial Risks Management Guidelines issued by Bank of Tanzania in 2023.

Tanzania Bankers Association itself is not behind in ensuring sustainability, particularly in the banking industry. This is manifested through interventions such as the collaboration with other stakeholders to develop the SFPs and the development of a Sustainable Finance Booklet to guide financial practitioners.

In the same vein, TBA recently joined the Sustainable Banking and Finance Network (SBFN), a network of institutions dedicated to fostering sustainable practices within the banking and financial sector.

As noted above these initiatives conducted by both the government and other non-governmental players will lead to diverse benefits. It is expected that this effort will contribute to the national move to promote a greener and more inclusive economy.

Moreover, The SFPs developed will inspire the uptake of sustainable finance policies and practices, raise financial sector awareness of environmental and social risks, increase transparency and consistency, and promote confidence in the financial sector. The adoption of the SFPs will also lead to increased collaboration between different stakeholders for sustainable development.

Speaking during the launch on the advantages of the Principles the Chairman of TBA, Mr Theobald Sabi noted that implementation of the principles would boost efforts that are currently made to ensure a sustainable economy.

“Once these principles become effective and well implemented, we expect banks to develop robust risk management frameworks that account for environmental and social factors, thereby minimizing risks and maximizing long-term value. Moreover, promote financial inclusion by ensuring that access to financial products and services is extended to marginalized communities, fostering economic empowerment and resilience” he said.

In conclusion, the formulation and launch of Sustainable Principles for Tanzania's financial sector mark a significant step towards building a more sustainable and resilient economy.

As financial institutions embrace these principles, they not only mitigate risks and enhance transparency but also contribute to the well-being of communities and ecosystems.

To get the principles please visit: www.tanzaniabankers.org or click the link below;

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