Addressing a conference of leading financiers in Dar es Salaam Prime Minister Mizengo Pinda stated that strong supervisory enforcement of financial regulations had enabled Tanzania to weather the storm during the recent world economic crisis without too much impact compared to other countries. Limited links with the global financial markets had also helped to keep the country’s financial sector strong and sound, as the world went through its most severe financial crisis in recent times. All major financial indicators of the local banking sector had remained strong he said. The banking system had remained adequately capitalised against any potential financial risk and the ratio of non-performing loans to total loans had remained within prudential limits. “Furthermore, the banking system has managed to keep enough liquidity to operate smoothly and cover its liabilities without recourse to the central bank.”
“Our banking system has maintained reasonable profitability”, he pointed out. He also announced that the Bank of Tanzania recently took steps to review the minimum capital requirements for commercial banks, raising it from Sh5 billion to Sh15 billion. This would consolidate the strength of the banking industry and enhance its ability to self-bailout in case of a crisis. On the proposed East African Monetary Union (EAMU), the PM said that recent reforms in Tanzania’s financial sector had placed the country in a better position for financial integration. Since these had been undertaken in various phases dating back to the early 1990s, the number of banks that operate in the country had increased to 42, up from only three public-owned banks in 1992. Insurance companies had increased from two in 1990s to 26 at present. The total assets of banks had risen significantly from an average of 6% of GDP in the early 1990s, to above 40% of GDP currently.
Warning to foreign traders
The government has issued a warning to foreign traders doing small business in Tanzania without following procedures. One of the requirements for a foreigner to do business in the country is that he should have a minimal capital of $300,000. Some foreigners are said to be entering the country for work on the mines or on major projects but later moving into petty trading in Kariakoo market in Dar es Salaam. The Guardian has reported that there has been an increase of shopkeepers of Chinese origin at several business centres in the city which were adversely affecting local businesses. However former Industry, Trade and Marketing Minister Dr Mary Nagu she said this was due to globalisation. “It is not only Tanzanians who conduct their businesses in the area, but also Congolese, Zambians, and Malawians” she said.
Big Korean investment
100,000 hectares of land in Tanzania’s Rufiji valley are to be developed by South Korean corporation KRC as part of Tanzania’s Kilimo Kwanza programme. In an interview with the BBC, Lee Ki-Churl, of the state-run Korean Rural Community Corporation, said the move would see Tanzanian farmers benefit from an education centre as well as from South Korean expertise on the ground. Plans envisaged half the land given over to local farmers with the rest being used to set up a food processing complex for exports to Korea. The initiative was said to be partly the product of Prime Minister Mizengo Pinda’s visit to South Korea to help develop economic ties between the two nations.
UK gives £103.5 billion
While some donors have decided to cut down on their donations towards General Budget Support, Britain is giving Shs 230 billion in the financial year 2010/11. This was said by the UK Parliamentary Under-secretary of State for International Development, Stephen O’Brien, during a visit to Tanzania. Earlier on, the British minister had a meeting with Finance Minister Mustafa Mkullo during which they had a profound discussion on the utilisation of the funding. “This will help in the priority areas as stipulated in the Mkukuta development strategy,” said the statement. Tanzania ranks third among the recipients of British aid – Mwananchi.