Finance

Tanzania Finance and Enterprise Development (TFED) project (1993 – 1997) assisted the government of Tanzania to lay down a framework for reforms and ultimately liberalized the financial sector. Before 1995, public/state banks dominated the market. Interest rates were very high, investments were made with no basis for economic/financial viability, cost of borrowing was very high and lending to the private sector was limited to short term loan products.

Reforms of the financial sector exposed the public banks and the government to free market forces. Treasury Bills interest rates leveled to market rates, inefficient banks were closed or restructured while others were sold and acquired by efficient ventures and to top it all new local banks and foreign multinational banks entered the market. The list of banks operating in Tanzania is as shown below:

i. Foreign banks

1. Citibank (USA)
2. Barclays Bank (UK)
3. Standard Chartered Bank (SA) (3) Amalgamated Bank of South Africa – bought National Bank of Commerce
4. Stanbic Bank (South Africa)
5. Kenya Commercial Bank
6. Malaysia Bank
7. Habib Bank (Pakistan)
8. East African Development Bank
9. United Bank of Africa (
10. Euro Africa Bank

ii. National Banks:

1. CRDB Bank
2. Akiba Commercial Bank
3. Tanzania Investment Bank
4. AZANIA Bankcorp
5. National Micro Finance Bank
6. CF Bank
7. EXIM (T) Bank
8. National Bureau de Change
9. Tanzania Postal Bank
10. Kilimanjaro Cooperative Bank and
11. Small Community Banks in Dar es Salaam,Mwanga, Njombe and Mufindi

iii.Other Financial Institutions:

1. Tanzania Development and Finance Limited
2. Capital Finance Ltd.
3. Fedha Fund Ltd
4. Savings and Finance Ltd

iv. Non Financial Institutions that offers some financial services:

1. Social Action Trust Fund (SATF) – Seed fund of $ 10 million given by USAID to lend to large enterprises in private sector
2. Risk Management and Profit Sharing Fund (RMPS) – Seed Fund of $ 2 million given by USAID to lend to Small and Medium Enterprises
3. Mtaji Fund – Seed fund of $600,000 given by SNV – Netherlands
4. Small Enterprise Loans Fund (SELF) – Seed Fund of $8 million loaned to government from ADF for lending to Micro Finance Institutions and about 12 NGOs that are donor funded. There are also Credit Reference Bureaus to offer information related to credit in the Banks and financial institutions.

The opportunities available for the sector are mainly linkage to sound investors as well as providing services to the growing number of community banks that require technology for efficient delivery of services. The biggest constraint for growth of commercial banks is savings mobilization as most banks are not yet able to serve MSMEs in the rural market. At present the commercial banks' network is limited to urban and peri-urban areas only. The lack of a development bank has been the biggest setback to financial institutions' contribution to the growth of economy as some sectors, e.g., agriculture, manufacturing, real estate, etc., requires long term loans that are not provided by commercial banks. There is a need to improve the legal and judicial environment and regulatory framework to enhance local participation in the finance sectors. Such framework will be most applicable in obviating challenges in the sector which amongst others include the sector is still quite small; there is Low access of financial services to majority of Tanzanian MSMEs; Low financial education and literacy due to large subsistence in the economy; poor infrastructure in terms of roads and building; relatively inefficient and access to finance remains very low by majority of Tanzanians who are mainly low income earners in the rural areas. The banking system has a very limited level of 8% penetration rate in the rural areas of Mainland Tanzania, primarily attributed to the tendency for banks to be located in areas with high population densities and high economic activities.