THE Minister for Finance and Economic Affairs, Dr William Mgimwa, has underscored the need for banks and financial institutions in the country to serve the people in rural areas.
Officiating at the opening of the Bank of Africa (BoA) branch in Kahama District, Shinyanga Region at the weekend, the minister rightly stressed the importance of financial inclusion. Official records show that hardly 10 per cent of Tanzanians have access to formal banking services, despite the fact that there are more than 50 commercial banks and scores of non-bank financial entities.
Due to lack of financial services including access to credit facilities millions of hardworking people in rural areas and urban centres continue to languish in abject poverty. This is because most of the commercial banks and serious financial institutions are crowded in Dar es Salaam and major municipalities such as Mwanza, Arusha, Mbeya, Moshi and Tanga.
In such a situation, the country's major bread-winners, who include paddy growers in the valleys of Kilombero, Ulanga, Udzungwa and Mbarali are left out in formal financial intermediation. It is, therefore, highly encouraging to note current branch opening spree away from Dar es Salaam and major urban centres by several commercial banks including Exim, Bank of Africa, National Microfinance Bank, Tanzania Women Bank, Mkombozi Commercial Bank and Akiba Commercial Bank.
Some banks which were earlier designated to operate in Dar es Salaam alone such as the DCB Commercial Bank (former Dar es Salaam Community Bank) are also planning to go rural.
This is in line with the government's ongoing financial sector reforms which, among other things, are aimed at implementation of the financial sector reforms, which is aimed at promotion of competition, financial inclusion and enhancement of financial stability in the economy.
Over the last one year, the central bank started to review regulations relating to the microfinance companies and financial co-operatives to facilitate increased access to credit, especially those in the so-called low-income bracket. The Bank of Tanzania (BoT) has also reportedly concluded drafting of Agency Banking Regulations and the Tanzania Postal Bank (TPB) has already carried out pilot surveys on the programme.
Under the scheme banks will be able to extend their outreach through non-banking retail outlets such as supermarkets, petrol stations and other agencies. It is hoped that the current initiatives towards financial inclusion in the country are going to be maintained as a matter of national policy. Banks and financial institutions should not be tools of a few urban elites.