Bridging the 24 Percent Gap: The Bank of Tanzania’s Vision for Inclusive Finance

The Bank of Tanzania (BoT) is committed to bridging the 24 percent financial inclusion gap. Governor Emmanuel Tutuba outlined a strategy emphasizing digital innovation, agent banking, financial literacy, and interoperability of payment systems. Despite significant adoption of mobile money and agent banking, financial literacy remains a challenge. The BoT aims to achieve 85 percent formal financial inclusion by 2028, requiring collective efforts across the sector.

The Bank of Tanzania (BoT) is committed to addressing the 24 percent financial inclusion gap that currently leaves a substantial portion of the adult population outside the formal financial system. BoT Governor, Mr. Emmanuel Tutuba, presented this plan during the third Tanzania Bankers Association Conference on Financial Inclusion in Dar es Salaam, emphasizing the need for a multifaceted approach that utilizes digital innovation, alternative banking solutions, elevated financial literacy, and enhanced interoperability in payment systems.

Digital financial services have transformed the Tanzanian financial landscape, evidenced by over 40 million registered mobile money accounts. This digital shift allows for increased accessibility to financial services, particularly for underprivileged communities. “We have seen a transformative impact from mobile money, agent banking, and fintech solutions, all of which enhance accessibility to financial services,” stated Mr. Tutuba.

Agent banking is crucial in bridging geographical barriers, with over 60,000 outlets facilitating access in rural areas. Mr. Tutuba noted, “Agent banking brings services closer to people, particularly in remote areas where traditional banks may be few and far between.” Despite these advancements, financial literacy remains a challenge, necessitating national campaigns to educate citizens about the benefits of formal financial services.

To enhance the efficiency of financial transactions, the introduction of the Tanzania Instant Payments System (TIPS) has been pivotal. This system allows seamless fund transfers among various financial entities, enhancing user convenience and increasing the adoption of formal channels. “This system enhances convenience and broadens the adoption of formal financial channels,” affirmed Mr. Tutuba, emphasizing the importance of interoperability to facilitate transactions.

Regulatory support is essential for fostering an environment conducive to innovation within the financial sector. The BoT aims to adopt new technologies while aligning with the 2024 Digital Economy Strategic Framework, designed to integrate digital technologies across sectors. Mr. Tutuba expressed that improved connectivity offers banks the opportunity to expand their services digitally.

The BoT reported a rise in formal financial service adoption, growing from 65 percent in 2017 to 76 percent in 2023. Despite this progress, only 22.2 percent of adults utilize traditional banking, indicating both a challenge and an opportunity in the market. Achieving the government’s target of 85 percent formal financial inclusion by 2028 requires collaborative efforts across the sector.

The TBA Chair, Mr. Theobald Sabi, emphasized the importance of ensuring citizen inclusion in the financial system for sustainable national development. He noted, “This is the third meeting with the primary objective of citizen inclusion in the formal financial sector, as well as the goal of protecting citizens from the challenges they face in obtaining informal services such as credit.”

Experts concur that a combination of digital innovation and improved financial literacy will drive increased formal financial inclusion. Aisha Mkwawa, a financial technology expert, pointed out that it is essential to create tailored financial products that cater to the needs of underserved populations. “It’s about creating tailored financial products that meet the unique needs of different groups, including women, youth, and smallholder farmers,” she explained.

In conclusion, the Bank of Tanzania is focused on bridging the financial inclusion gap through a multi-faceted strategy that includes leveraging digital innovation and enhancing financial literacy. The increase in mobile money services and agent banking has proven pivotal in expanding access. However, challenges remain, particularly in ensuring that all segments of the population are financially literate and able to benefit from formal financial services. The collaborative efforts of various stakeholders will be vital in achieving the government’s financial inclusion goals by 2028.

Original Source: www.thecitizen.co.tz