17 December 2013

Tanzania: Banks Fix Interest Rates 'Freely'

Dodoma — THE country's banking sector is liberalised hence interest rate on loans are decided by the market. This means the Ministry of Finance has no immediate plans to intervene against hiked interest rates.

Deputy Minister for Finance, Saada Mkuya Salum told Parliament on Monday that the cost of borrowing money in the local market is high because of risks involved in lending, price of money and absence of credit reference bureau.

"But now Bank of Tanzania (BoT) has already licensed some private credit reference bureaus which will help banks make reference of prospective borrowers," Ms Salum said while responding to questions from Wawi legislator (CUF) Hamad Rashid Mohamed, who wanted to know how long should loan processing take.

Salum said loan processing and interest rate charged on loans differ from one bank to another and individuals depending on their negotiations and credit history.

"For example, to get a commercial loan at CRDB its policy says it takes 21 days, Bank M takes seven days, NBC takes 30 days, NMB is 14 days while Bank of Africa takes 30 days," Ms Salum noted.

Meantime, the government has no plans to review the 2004 Public Procurement Act as amended in 2010 because it is yet to be implemented. Responding to Special Seats legislator (Chadema), Conchesta Rwamlaza wanted to know when the government will stop using quotation of public procurement as it is costly due to inflated prices.

In a question asked on her behalf by Iringa Urban legislator (Chadema), Peter Msigwa, Ms Rwamlaza argued that the procurement law should be taken back to Parliament because it allows dishonest civil servants inflate product prices through quotations.

"Is this continued procurement system by the government take into consideration the Controller and Auditor General's (CAG) advice?" Rwamlaza asked in a supplementary question. She said use of quotations is legally acceptable and is meant to provide a competitive environment for bidders.

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