A CONSUMER society is calling on banks to charge declining interest on loans and not fixed interest, arguing that the former method is more "fair" to clients.
The Tanzania Consumer Advocacy Society says that the move will be one way of making interest rates calculations more transparent.The call comes ahead of the Nuebrand Financial and Investment Services Week 2012, a free, open-air financial literacy education and entrepreneurship training aimed at the general public and (SME's) entrepreneurs.
It targets the entire financial sector players including banks, insurance firms, social security institutions and mobile money operators as well as the support institutions including regulators, stock market, investment promoters and many others, will also offer free financial services.
The society's, national finance and administrative coordinator, Mr Ally Goronya told 'Daily News on Saturday' in Dar es Salaam that the education is a follow up of their research carried out that more women than men take loans. On banks charging declining interest, he said the society proposed to Bank of Tanzania that as a regulator, it should oblige banks to put certain interest rates against certain brackets of loans.
He said a US Company, Microfinance Transparency had come up with a system dubbed "calculating a fair value of interest rate" where a database would be adapted by banks and other financial institutions to calculate clients loans by using both fixed and declining interest rates.
Under this arrangement, he said banks would put all information on their websites. However, banks fear that the arrangement would interfere with competition as banks don't all have the same interest rates.During the four days campaign at the Mnazi Mmoja Grounds, he said the public and financial consumers will be educated on areas such as budgeting, savings, debt management, consumer rights and responsibilities and the range of formal financial services available in the market.
He said SMEs entrepreneurs would be offered business skills development training including business plan formulating skills, understanding of entrepreneurship and negotiation skills.to understand the financial concepts.He said that financial literacy is an effective policy tool for inculcating financial management practices and enhancing financial access.
The event organised jointly by NUEBRAND Events Limited, the Centre for Microfinance Enterprise Development (CEMiDE), Tanzania Private Sector Foundation (TPSF), Tanzania Consumer Advocacy Society (TCAS) and Tanzania Microfinance Association (TAMFI), will be held in October.