23 May 2016

Tanzania: Govt Wants Financial Institutions to Help in Industrialisation Drive

Photo: The Citizen
Tanzanian government introduced industrialisation agenda (file photo).

Arusha — The government wants financial institutions to increase financing of the manufacturing sector as a way of supporting President John Magufuli's industrialisation agenda.

Bank of Tanzania figures show that the manufacturing sector mostly comes in the third position with regarding to areas that receive the most credit from financial institutions.

Trade comes first while personal activities come second as the manufacturing sector occupies the third position.

The government says with industrialisation high on the national development agenda - as outlined in the second Five Year Development Plan (FYDP II) - commercial banks must also direct their efforts towards giving out increased loans to the manufacturing sector.

"Commercial banks need to support the implementation of the FYDP II which centres on nurturing industrialisation for economic transformation and human development... .this must be your top priority," he told participants at the CRDB's annual general meeting here at the weekend.

Dr Mpango delivered the speech on behalf of the vice president who was a chief guest at celebrating CRDB's 20 years of growth and transforming lives since privatization in 1996 in Arusha.

He called upon CRDB and other banks to come up with strategic plans on how they can help the industrialization agenda as a way of helping Tanzania to realize the goal of becoming a middle income country by 2025.

The support, he said, must also be directed towards other sectors that are directly linked to industrialization, including supporting infrastructure--mainly electricity--to fuel the sector growth.

"With such an able management, I find no reason why CRDB should not play an increasingly important role in this," he said.

Analysts believe a smart partnership between the government and commercial banks is vital if the country is to meet its development goals.

"Commercial banks should play part but the government should also play its role increasingly through facilitating and increasing funding for such sectoral banks as TIB Development," said the Dhow Financials chief executive officer Prof Mohamed Warsame.

He said commercial banks were providing short term loans as they were lending based on customers' deposits.

"Loans directed to industry investment some are lasting for even ten years, for a commercial bank this is a heavy burden to carry," Prof Warsame said.

Manufacturing companies, he said, should also see the existence of stock markets as a way of raising their much-needed capital for implementation of the government's industrialisation agenda.

The manufacturing sector accounted for 15 per cent of the total loans that CRDB issued to its various customers in 2015, according to managing director, Dr Charles Kimei.

For his part, the CRDB Bank chairman, Mr Martin Mmari said the bank was well positioned to issue increased lending to its various customers, thanks to an enhanced capital position.

Last year, CRDB Bank raised Sh150.4 billion through right issue.

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