Leave domestic banks to private borrowers, govt urged

Dar es Salaam. Stakeholders have advised the government to reduce borrowing from local commercial banks to enable the private sector access financing for industrial development.

Speaking yesterday in the city at a forum on industrial financing, stakeholders also added that financial education should be seriously imparted to Tanzanians to drive them into keeping their money in banks.

The chairman of the Tanzania Bankers Association (TBA), Dr Charles Kimei, noted that the government should find ways of accessing financing from foreign financial markets and leave the domestic markets to build a strong industrial base.

Also, new banks specialising in industrial financing should be established to compliment efforts made by commercial banks, he added. “Lending for industrial development is long term, which is not always suitable for commercial banks. Only about 40 per cent of our depositions are long-term. We need more banks that can focus on long-term financing,” Dr Kimei, who is also the managing director of the CRDB bank, noted.

Dr Kimei cautioned against long-term borrowing from pension funds because their function is not to provide banking services.

“Pension funds do not have much expertise in banking services and might not, as well, be well-equipped to calculate risks,” he noted.

But if more of the money that is kept by the people in unsafe conditions in their homes could be channelled to the banking system, banks could have more money to lend for industrial development, Dr Kimei added.

“There are huge opportunities for deposits to increase if people were well-educated on the advantages of using banks,” Dr Kimei added.

The Executive Director of the Tanzania Private Sector Foundation (TPSF), Godfrey Simbeye, also insisted on creating lending institutions specialising in industrial development to relieve commercial banks.

“Last year, about Sh16.3 million, equivalent to 9.8 per cent, of all lending went to the private sector.

As building industries is a national priority, it is better for the government to chip in,” Mr Simbeye noted.

The deputy minister for Industries and Trade Stella Manyanya, who officiated the event, encouraged local banks to increase lending to the private sector for industrial development, despite their challenges.

“We will attain a sufficient level of industrial development only if banks play their part in financial industrialisation,” Ms Manyanya.

Meanwhile, Dr Kimei and Mr Simbeye expressed their concerns over the disclosure of bank account details of individuals as it is against privacy policies.

“There is this growing habit by government institutions to seek financial records of bank customers; if this is abused, it can lead to massive pullout of clients from the banking sector due to lack of confidence,” Dr Kimei said.

Right procedures, including seeking court orders, should be sought before seeking bank account details. Mr Simbeye said habitual disclosure of customers’ details can have a negative impact on investment.

“Customers have the right to privacy, the right for their details to be protected,” Mr Simbeye explained.