Private Sector and Central Bank in talks to improve country’s monetary policy and enhance private sector in Tanzania.

TPSF Board of Directors in a group photo with Governor of the Central Bank Prof. Luoga (Front-Centre)

Dar es Salaam Tanzania: TPSF Board of Directors led by TPSF Chairman Mr. Salum Shamte recently met with the Bank of Tanzania Governor Prof. Florence Luoga and his deputies Dr. Yohana Kibese, Dr. Yamungu Kayandabila and Mr. Julian Banzi.

The new vibrant board sought to introduce itself to the governor whilst highlighting it’s priorities and recommendations to the governor, to enhance private sector participation in the economy.

Mr. Shamte acknowledged the many efforts championed by the Central Bank on using monetary policy to improve the challenges in the economy which include lowering private sector lending. TPSF recognizes measures taken including lowered discount rate to boost lending and reduction of Statutory Minimum reserve. It was also noted that other indicators have significantly improved including inflation and financial inclusion.

A call was made to raise awareness and increase visibility of existing windows that BOT has in order to maximize their utilization. Other issues as raised by Chairman included;

  • Payment of arrears to local suppliers, contractors and refunds. According to World Bank 2016 outstanding payment of arrears was estimated at 6.5% of GDP. TPSF regards this as too high. Outstanding arrears are especially high in the importation of industrial sugar, VAT refunds, local suppliers of goods and services.
  • Deepening of Capital and Domestic Resources Mobilization. Public sector should consider alternative channels instead of crowding out the private sector through normal borrowing facilities offered by commercial banks. TPSF also recommend s flexibility in minimum share placement at DSE with 10% as minimum and 25% target to be met by year 5.

At the meeting BoT Governor continued to call upon commercial banks to lower lending rates in response to the lowered discount rates by the central bank, to boost lending to the private sector. ” We have seen growth of credit to the private sector reach 3.4% from measures taken by BoT to reverse the situation from the 2017 credit crunch, where credit lending stood at negative 1.7%. “We would like to work closely with TPSF to identify which sectors are having difficulties accessing credit, and work jointly to resolve the situation as soon as possible”, Prof. Luoga said.

A Joint committee is expected to be formed between TPSF and BoT, the committee will work to prioritize key policy issues for government intervention, as such TPSF will continue to engage the Central Bank more regularly on Fiscal and Monetary issues affecting businesses and investment in country.