Tanzania: This is why many financial institutions fail to finance industrial projects

NMB head of wholesale business Mr Filbert Mponzi. Photo by Antony Siame

What you need to know:

Dependence on short-term deposits, lack of skills for assessing long-term financing and risk appetite by industries are the main challenges for failure of local banks to finance industrialisation which is estimated to have a demand of Sh48 trillion.

Dar es Salaam. NMB Bank PLC has identified three reasons that make it difficult for banks to finance industrial projects, which are estimated to have a demand of over Sh48 trillion.

The NMB head of wholesale business Mr Filbert Mponzi said at the Mwananchi Thought Leadership Forum on Thursday October 4 that the largest share of money used by the local lenders to issue loans come from short-term deposits, while industrial projects require long-term financing.

Other reasons include lack of skills for assessing long-term financing and the high risk appetite for the industrial projects.

"For NMB, we have been working with development financial institutions (DFIs) to solve those challenges of skills and long term financing. In the last three years for instance, NMB has managed to mobilise Sh300 billion," he said.

"We are also working with the government institutions to address the challenges," he added.