“Tanzania has made significant progress in expanding financial inclusion through the use of mobile services. Today, 40 percent of adults in Tanzania have an account – up from 17 percent in 2011 according to the Global Findex,” said Prof. Benno Ndulu.
In two separate events, Tanzania has received a helping hand from World Bank Group (WBG) after its collaboration with Bank of Tanzania aimed at expanding financial inclusion in the country. In another occasion, African Development Bank (AfDB) will support Tanzania’s economic transformation to inclusive and green growth with an indicative concessional resource assistance package.
The 2016-2020 Country Strategy Paper (CPS) for Tanzania is estimated to be over $1.1 and will guide AfDB’s operations in the country in the next five years. The CSP was approved by Bank’s Board of Directors on Wednesday, February 24, 2016, in Abidjan, Côte d’Ivoire.
In a high-level stakeholder panel held on February 18, 2016 which was hosted by Bank of Tanzania and the World Bank Group, the meeting discussed the findings of two recent keynote World Bank studies on financial inclusion, namely the Independent Evaluation Group’s (IEG) report on the WBG’s support for financial inclusion initiatives and the Global Findex 2014 report.
The Global Findex is the world’s most comprehensive database on financial inclusion. It provides in-depth data on how individuals save, borrow, make payments, and manage risks.
The second report, prepared by the IEG – the body in charge of evaluating the activities of the WBG and their outcomes – examines, at a global level, the relevance and effectiveness of seven years (FY07–13) of WBG support for financial inclusion and its impact on the poor.
Speaking at the event, Prof. Benno Ndulu, the Governor, Bank of Tanzania reiterated the central bank’s commitment to further expanding financial inclusion in the country.
“Tanzania has made significant progress in expanding financial inclusion through the use of mobile services. Today, 40 percent of adults in Tanzania have an account – up from 17 percent in 2011 according to the Global Findex,” said Prof. Ndulu.
He also reiterated that “in spite of the fact that interoperability has commenced amongst mobile network operators, we still have to ensure that it becomes broad to be applicable to banks and other service providers, so as to enable the infrastructure to be optimally used for financial services to enhance convenience, competition and plotting out new tools and products for consumers.”
Bella Bird, World Bank Country Director for Tanzania urged industry stakeholders to scale up their services to further expand financial access, particularly among low-income segments of the population, as well as for micro, small and medium enterprises.
“Despite the progress that has been made, we must do more to ensure every adult in Tanzania has access to affordable financial services,” said Bird. “One way to rapidly expand financial inclusion is to digitize payments for social transfers. There are large opportunities in digitizing payments especially for the sale of agricultural products but also when it comes to wage or government transfer payments.”
Ms Bird also stressed the importance of raising financial literacy and enhancing consumer protection through, for example, building capacity among Savings and Credit Cooperative Organizations (SACCOS) and strengthening regulatory oversight.
Marvin Taylor-Dormond, Director, Financial, Private Sector & Sustainable Development at the World Bank’s Independent Evaluation Group said that “achieving the goal of universal financial access will require governments, development partners, the private sector and other stakeholders to bring costs down by, for example, using technology more innovatively.”
Since 2011, Tanzania has experienced robust GDP growth in excess of 6% and while AfDB’s Board commended the development, they said future assistance would address the most pressing constraints to economic transformation and improving public sector governance to ensure value for money in public spending
To address these future challenges, the Country Strategy Paper (CSP) is built on two complementary support pillars – infrastructure development for inclusive and green growth; and strengthening governance and accountability for improved competitiveness.
Transport and energy will play a key role to promote domestic and regional transport connectivity, and improve access to reliable, affordable and sustainable electricity. This is the first pillar of the CSP. The second pillar, on the other hand, prioritizes strengthening of financial management and improving the enabling environment for private sector investment and finance for sustainable job creation.
“Investment interventions from the Bank’s private sector window will be complementary and aimed at improving enterprise access to finance, in particular, businesses engaged in smallholder agriculture, agri-business and related value chains. Non-lending operations will be targeted at providing capacity building, technical assistance and advisory services to improve domestic resources mobilization (DRM) and the negotiation of commercial transactions in the oil and gas sector,” according to the CSP papers presented to the Board.
In order to effectively consolidate the Bank’s contribution to Tanzania’s development, the CSP 2016-2020 introduces innovative infrastructure investments that aim at transforming operational regions into sustainable development corridors. It also mainstreams the Bank’s 2013-2022 Ten Year Strategy priorities such as inclusive and green growth, gender equality and empowerment. It aligns the strategy with the High 5 Priorities. Application of innovative financing instruments, such as local currency bonds and guarantees that can be used to de-risk lending to sectors like agriculture to augment African Development fund (ADF) and AfDB resources windows, also forms part of the package.
The CSP provides for a cumulative 2016-2020 indicative concessional resource envelope of $1.1 billion. Additional resources will be mobilized from the AfDB window, Africa Growing Together Fund, trust funds, renewable energy financing and co-financing with other partners.
Board members underscored the need for Tanzanian authorities to ensure that the country’s high GDP growth delivers robust economic transformation, poverty reduction, and improved livelihoods.
Image Credit: africa-engineering
Are you impressed, have any concerns, or think we can improve this article? Comment below or email us.