Dodoma. The government says it will take measures to ensure banks and financial institutions lower interest rates on loans to enable more Tanzanians to borrow.
The deputy minister for Finance and Planning, Dr Ashatu Kijaji, made the remark yesterday when officially launching the Azania Bank Ltd branch.
The deputy minister also called on the banks and financial institutions to take action against Non-Performing Loans (NPLs) and reduce costs of doing business to make loans cheaper.
“It is the right time for banks and financial institutions’ boards to start taking disciplinary measures for employees who charge high lending rates,” she noted.
According to her, the government, through the Bank of Tanzania (BoT), has imposed policy measures, including reduction of discount rate to nine per cent from 16 per cent, to trigger the reduction of costs of borrowing.
The experiences have shown that most of the banks have concentrated their portfolios on government debt instruments, sidelining the productive sectors of the economy.
Currently, some of the commercial banks charge up to 40 per cent on loans.
The Tanzania’s credit market contracted since 2017 to early this year when it started to bounce back after the BoT started using accommodative monetary policy, to stimulate lending.
As a result, the credit market has started to recover, but the concentration of loans has remained on personal and trade loans, which accounts for nearly half of banking total credits.