Sep 21, 2021

Mawazo Writing Africa

Writing about the main

Loan access eased after Tanzania ID review

The Bank of Tanzania (BoT) is making it easier for banks to lend in a new policy by removing the requirement for a national ID card to register bank agents, while lenders would only need 18 months of business experience.

According to data of the BoT governor Prof. Florens Luoga, this policy is intended to contribute to an increase in the funds that can be lent to banks by mobilizing deposits. BoT also intends to lower lending rates to the private sector.

Prof. Luoga said the bank had issued Tsh 1 trillion ($ 432 million) in special loans to banks and other financial institutions for onward transmission to the private sector.

“The Bank of Tanzania will become banks and other financial institutions Grant special loans of three percent per year to pre-finance or refinance new loans to the private sector, “he said a maximum of 10 percent per year. This measure is intended to increase the liquidity of banks and lower lending rates.

“This gives banks the opportunity to lend the private sector more credit than before,” said Prof. Luoga.

The BoT also announced a reduction in the statutory minimum reserve requirement (SMR), adding that banks that lend to agriculture are entitled to a reduction in the amount of SMR that is equal to the amount of credit granted. According to Prof. Luoga, the banks must prove that they are granting loans to agricultural companies at an interest rate of no more than 10 percent per year.

The BoT bank said before the Covid-19 outbreak that macroeconomic conditions were changing stable in Tanzania.

The executive director of the Tanzania Private Sector Foundation, Francis Nanai, said companies are financially constrained due to a slowdown in economic activity.