Dar es Salaam. Tanzania’s financial markets have made steady gains in stability, transparency and market depth, according to the recently launched Absa Africa Financial Markets Index (AFMI) 2025, but experts say more reforms are needed to fully realise the sector’s potential.
Making an analysis of the Index in Dar es Salaam this week, the Director of Global Markets at Absa Bank Tanzania, Ms Irene Rwegalulira highlighted the report as a key tool for assessing progress and guiding policy interventions.
“The AFMI helps governments, regulators and financial institutions understand what is working well, what needs improvement, and where reforms can have the biggest impact,” she said.
The AFMI 2025 commends Tanzania for its sustained macroeconomic stability.
The country has maintained predictable monetary policy, low and stable inflation, and clear communication from policymakers. These factors build investor confidence and support a stable environment for businesses and households.
The report also notes improvements in market infrastructure and regulatory oversight.
Efforts to strengthen governance, align frameworks with international standards and enhance transparency across key financial segments are starting to yield results.
These achievements, Rwegalulira said, reflect a “sustained commitment by policymakers and regulators to build a credible and resilient financial ecosystem.”
Growing market activity
According to the report, Tanzania’s financial markets are becoming more diverse.
While bank financing continues to dominate, the increasing use of bonds, structured products and risk management tools points to a gradual shift towards a more balanced financial system.
“Deeper markets enhance liquidity, improve price discovery and reduce concentration risk,” the report notes. “Over time, they also lower the cost of capital for both government and the private sector, freeing resources for productive investment and economic growth.”
Areas for further improvement
Despite progress, the AFMI identifies key areas requiring attention. Low local institutional participation remains a challenge, as pension funds and other long-term investors are still underrepresented. Boosting their participation could provide a steady source of local capital.
Clear rules and effective enforcement—particularly around financial contracts and insolvency—are critical for investor confidence, highlighting the need to strengthen legal and institutional frameworks.
In addition, while technology has expanded access to financial services, ordinary citizens and small businesses need greater understanding and meaningful participation in markets, indicating the need to improve financial literacy and access.
Policy direction and future prospects
Rwegalulira said government and central bank policies are aligned with the Index’s recommendations, emphasising capital market deepening, modernisation of legal frameworks, enhanced pension fund participation and support for product innovation.
“If pursued consistently, these measures can fundamentally reshape Tanzania’s financial markets—enhancing liquidity, improving resilience to shocks, and positioning the country as a competitive investment destination within the region,” she said.
A shared responsibility
Experts stress that building deep and resilient financial markets requires collaboration across government, regulators, financial institutions, market infrastructure providers and the private sector. The AFMI serves as a shared reference point to align ambition with evidence.
“The discussions during the report launch made one thing clear: Tanzania has built a solid foundation. The next step is to accelerate reforms so that our financial markets grow stronger and support the country’s long-term aspirations,” Rwegalulira said.
With continued dedication and collaboration, she concluded, Tanzania can move from steady progress to transformative change, unlocking broader economic growth and private sector development.
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