Dar es Salaam. Yesterday, the government revealed how it plans to put more money back into circulation, with the Finance and Planning minister, Dr Mwigulu Nchemba saying a total of Sh5 trillion will be injected into the economy to stimulate economic activities.
Gracing an event to change the name of the TPB Bank to Tanzania Commercial Bank (TCB), Dr Nchemba said Sh1 trillion of that sum will directly go into circulation through payments of arrears to suppliers and services providers.
“We have plans to make sure we provide enough money to government service providers - and, if everything remains unchanged, we are determined to provide no less than Sh1 trillion to help those companies that were struggling following the government’s failure to pay them on time,” he said.
The remaining Sh4 trillion, he said, will be spent on financing development projects at the grassroots level, including water drilling, improving rural and urban roads, as well as renovating and building health-care and education facilities where local contractors will be engaged.
This will be a shift from the existing scenario whereby the bulk of development expenditure goes to foreign companies that are currently executing mega infrastructure projects across the country.
According to him, the new levies for mobile money transfers that were recently passed by the just-ended Parliament would prove a challenge in the early days. But, following the government’s decision, the cash flow would increase - and the money would reach the people as soon as possible.
Dr Nchemba also said that the banks should prepare to serve more customers whose numbers will soon increase as the government stimulates cash flows. Money will be available not only in Tanzanian pockets but also in the bank.
He said the steps being taken are only being looked at from one side. “Someone looks at their own situation, and feels that the government has come up with more levies - for example on oil, mobile phone transactions - and does not look at other measures which the government is taking to cushion the blow,” he said.
When the money goes into circulation, he said, it will enable Tanzanians to perform assorted activities that contribute to the economy.
In another development, the Finance minister said it was sad that most Tanzanians shy away from using formal financial institutions, especially banks.
“They use an informal sector that charges them 100 percent interest on loans in a short time - ultimately causing them to lose their collateral. This is not a good thing,” he said.
According to him, statistics showed that Tanzania had 47 banks as of last December, which had issued loans totalling about Sh19 trillion to individuals, companies and other institutions.
“The government will be strict on people who borrow from the banks, and fail to pay back the loans as agreed. This causes our banks to fail while, at the same time, other people are not able to access loans,” he said.
On the same note, he revealed that it had come to the government’s notice that there were greedy bank personnel who were out to get hold of the security provided by their creditors, look for loopholes in them that made it difficult for the clients to repay their loans. “This is not acceptable,” he stressed.
He called on the banks to expand to neighbouring countries, including DRC and Zimbabwe, thus making it easier for those countries which use our port services to make payments easier.
Meanwhile, CEO Sabasaba Mushingi said it was a historic event for the launch of the new name Tanzania Commercial Bank (TCB) following the joining of four banks.
He said it’s imperative for the financial sector to be stable with adequate capital and liquidity.
According to him, the new name has been made possible through the government’s supervision, as well as putting in place a conducive environment for the financial sector.
“TPB Bank - henceforth known as TCB - was started in 1925 as a postal bank. It was later joined by TIB Corporate, Tanzania Women Bank and Twiga Bank which has led to the formation of TCB,” he said.
“I am honoured to have been given the task to take this bank forward and provide sterling services to the public,” he said. In another development, Finance Commissioner Charles Mwamaja - speaking on behalf of Permanent Secretary Emmanuel Totuba - said the sixth-phase government of President Samia Suluhu Hassan has made good changes in the financial sector.
“The financial sector has continued to improve despite the c Covid-19 pandemic. Banks have enough liquidity and capital vital for running the sector,” he said - adding that the government has continued to join together sectors that do the same work including banks. Hence the launch of TCB.
For his part, Dr Edmond Mndolwa, TCB Board Chairman, said President Hassan’s effort at improving the financial sector through digital platforms has enabled the public to withdraw or save money digitally. This has made revenues grow enough to support strategic major projects.