Tanzania's banking sector remains stable, says TBA

The Tanzania Bankers Association (TBA) has identified six factors that make the banking sector continue to exhibit robust financial stability.

These factors, including increasing investor confidence in the business environment, have translated into the growth of businesses and the profitability of the banking sector.

The positive performance experienced by the banking industry in the first half of 2023 has translated into a significant socio-economic impact and contribution to the country.

TBA said that member banks have maintained healthy capitalization levels and adhere to stringent risk management practices, contributing to the overall strength of the financial system.

Asset quality improved, with the ratio of non-performing loans reaching 5.85 percent, down from 8.42 percent in January 2022, and even decreasing to 5.5 percent in April this year.

TBA also said the positive performance is largely due to the pro-business policies of the government.

Banks' innovative solutions in serving customers and developing client-focused products for consumers have also contributed to increased demand for banking services.

Speaking on Friday, October 6, 2023, the association's chief executive officer, Ms Tusekelege Joune, said the sector's stability is a testament to the resilience and professionalism of member institutions, adding that the core capital adequacy ratio was 19.6 percent above the minimum regulatory requirements of 10 percent.

She also said that the economic recovery from Covid-19 has continued to influence more investment, fewer non-performing loans, and increased demand for financial services.

Another issue that contributed to the sector's stability is banks' innovative solutions to serving customers and developing client-focused products for consumers.

"We will continue to introduce different products that are specific to serving different customer groups, such as youths and women who run diverse SMEs. Banks have continued to provide financial education with the focus of converting currently unbanked customers into potential customers. Banks have continued to invest in digital innovations to easily extend services to customers in rural areas and other remote areas," she added.

In another development, to ensure the bank sector continues to serve Tanzanians, TBA is partnering with the International Trade Centre to develop an MSME gateway that will virtually connect financial services providers, financial business development services providers, and MSMEs.