Dar es Salaam — The Minister for Industry and Trade, Mr Geoffrey Mwambe, yesterday asked financial institutions to lower interest rates on loans to stimulate the growth of the private sector.
Mr Mwambe, who the guest of honour during the 20th Annual General Meeting of the Tanzania Private Sector Foundation (TPSF), said financial institutions in Tanzania had no justifiable reason for imposing prohibitive interest rates on loans they issue to the private sector because the banks themselves are enjoying a reduced lending rate from the Bank of Tanzania.
Mr Mwambe said the government failed to grasp the logic for high interest on loans issued to private sector borrowers. High interest on loans, he said, was crippling project initiatives by members of the private sector.
"The government has reduced the interest rate to seven percent. We expect you, too, to reduce interest rates to enable the private sector to undertake projects successfully. High interest is slowing down the pace of initiating projects by the private sector," he added.
He equated loans to lubricants in an engine, saying the financial sector should give private sector borrowers reasonable interest on loans to make the private sector a truly engine of the Tanzanian economy. He also called on banks to use the credit reference system to lend borrowers with good repayment records at friendly interest rates.
Mr Mwambe told the meeting that if the private sector will seriously exploit opportunities in the agriculture sector, Tanzania will easily and quickly have its own indigenous billionaires and move steadily towards a strong self-reliant middle-income economy.
He called on the private sector to look for foreign markets for strategic crops for national economic development, including cashew nuts, which were not aggressively marketed by Tanzania's private sector.
TPSF Annual General Meeting yesterday unanimously elected Ms Angelina Ngalula the foundation's chairperson.
After her election, Ms Ngalula told the meeting that she would remain faithful to and defend the values of TPSF, and that will work closely with the government to ensure that the private sector plays a positive role in economic growth and national development.
She said unethical members of the TPSF would lose membership.
"Those among us who will go against universal ethics in doing business must know very well that we shall reject them and allow the government to take appropriate action against them. The aim is to protect the image of the TPSF."
Ms Ngalula also said the TPSF will help young people in the informal sector of the economy to grow and prosper.
The TPSF board also met with Prime Minister Kassim Majaliwa, who stressed the need for cooperation between the two sides in efforts to propel the economy forward.
"The government will provide all the necessary support to TPSF and cooperate with it in addressing challenges that arise. The government is very confident with this institution," said Mr Majaliwa.