20 August 2020

8th African Financial Inclusion Policy Initiative (AfPI) Annual Leaders’ Roundtable – Keynote Address by Governor – Prof. Florens D.M.A Luoga, Bank of Tanzania

Honourable, Dr. Louncény Nabé, Outgoing Chairperson and Governor of the Central Bank of Guinea;

Dr. Alfred Hannig, Executive Director of the Alliance for Financial Inclusion;

Honourable Governors and Deputy Governors of Central Banks Present;

Ladies and Gentleman;

Good morning, Good afternoon, Good evening; wherever you are joining us now!

It is my pleasure and honour to welcome you all to this 8th Annual Leaders Roundtable of Africa Financial Inclusion Policy Initiatives, which is co-hosted by the Bank of Tanzania and Alliance for Financial Inclusion, our partner in the quest to address the barriers that exclude the populace from accessing and using formal financial services.

Ladies and Gentleman, you may recall that, this important Leaders Roundtable event was initially scheduled to be hosted physically (face-to-face) in Tanzania’s pristine and tourist hub, Arusha, in June 2020, but unfortunately, due to challenges posed by the outbreak of COVID-19 pandemic that caused travel restrictions across the world, we inevitably opted for this virtual meeting.  Therefore, I would like to extend my profound appreciation to you all for accepting the invitation to attend this event.  It is my hope that we will be able to meet in person once circumstances allow for safe travel and organization of face-to-face events. It is my hope and prayer that the first physical meeting after this challenge of COVID-19 will, potentially be held as planned in Arusha!

Allow me to thank Dr. Alfred Hannig, AFI Executive Director and AFI staff for co-hosting this virtual Leaders Roundtable, which has been preceded by three other virtual events this week.  First, the technical staff (Expert Group) from the region meeting, which was held on 17th August 2020; second, the Training on approaches to enhance financing to MSMEs in Africa, held on 18th August 2020; and third, the Private and Public Sector Dialogue on strengthening last mile delivery channels for digital financial services uptake, which was held on 19th August 2020. I appreciate your efforts and time for coordinating all these virtual events. I was reliably informed that they were interactive and vibrant in bringing out the policy solutions that will enhance the AFI network’s efforts to address challenges for expanding financial inclusion in the continent.  I would also like to thank the Bank of Tanzania staff who have worked relentlessly to make this virtual meeting possible.

With a special note, I would like to commend and appreciate the leadership of the outgoing Chairperson, Dr. Nabe, Governor of the Central Bank of Guinea, who has been pivotal in steering the initiative to bring out practical guidance for policy reforms that are relevant for the continent and for enhancing the peer platform for leaders’ open dialogue.

The year 2020 has been a challenge all over the world since the outbreak of COVID-19 pandemic, which has caused disruption in global demand and supply chains.  The pandemic has also affected various economic activities, particularly for MSMEs and disproportionately financially excluded population including women, youth and forcefully displaced persons.

In Tanzania, we have implemented a range of policy response measures to cushion the economy from the adverse effects of the pandemic.  Notably, the Bank of Tanzania has implemented the following policy measures: lowering the statutory minimum reserve requirement from 7.0 percent to 6.0 percent; reducing the discount rate from 7.0 percent to 5.0 percent; reducing haircuts on government securities from 10.0 percent to 5.0 percent for Treasury bills and from 40 percent to 20 percent for Treasury bonds; and increasing the daily transaction limits to customers who use mobile money from TZS 3,000,000 to TZS 5,000,000 and their daily balance from TZS 5,000,000 to TZS 10,000,000; and providing regulatory flexibility to banks and other financial institutions that will carry out loan rescheduling to borrowers who faced difficulties in loan repayment.  The measures aim at safeguarding the financial sector stability and facilitating intermediation process.  They also aim at encouraging customers to use digital payment platforms for transactions and ensuring that MSMEs and the vulnerable population are able to maintain their businesses. The implementation of the financial inclusion policy related responses was pivotal to ensure that social stability is maintained and households are able to have their livelihood. Hence, we emphasized the use of digital financial services for efficient access to financial services at these times where in some countries movement restrictions and social distancing are still in place. It is my hope that, we shall also get experiences from your countries on how you addressed the impact of COVID-19, with policy responses that have had a positive impact on financial inclusion.

Tanzania is implementing the National Financial Inclusion Framework (2018-2022) which focuses on usage of financial services as the next phase of Tanzania’s financial inclusion journey.  The Framework emphasizes on aspects of women and micro, small and medium enterprises (MSMEs). Looking at where we came from, that is 2006; I am pleased that today the level of financial inclusion attained so far is impressive.  Currently, according to FinScope 2017, we have about 86.0 percent of Tanzanians with access to financial services from 11.2 percent recorded in 2006 and 65.0 percent who are using financial services from 9.0 percent in 2006.

However, statistics reveal to us that women use less formal financial services compared to men, that is 71.0 percent of men use formal financial services compared to 61.0 percent of women. The level of exclusion is also high amongst women at 31.6 percent compared with 22.7 percent for men.  In addressing this challenge, we have formed the Women Financial Affairs Committee to identify various challenges of financial inclusion for women and policy areas to address the identified challenges.  It will also coordinate all initiatives and programs targeting women in order to bridge the 10 percent gap with men and reduce 90 percent of the gap by 2022. Some of the initiatives include; design of products and services which target women, develop policies, legal and regulatory strategies that address women’s issues.

All over the world, MSMEs are known to play a major role in social economy development. They contribute significantly to employment creation, income generation and stimulation of growth in both urban and rural areas. Currently, Tanzania is reviewing SMEs development policy 2003, in order to come up with a new policy, which will provide conducive environment to MSMEs to ensure they access finance easily.  Other interventions which are being implemented in order to ensure that MSMEs have access to finance include developing financial infrastructure; collateral registry; alternative financing instruments; and monetary and fiscal interventions.

Moreover, in ensuring sustainability of the MSMEs and the disadvantaged group, the Government has been taking measures to improve the business environment by implementing the Blueprint for Regulatory Reforms’, which aim at removing a number of regulatory challenges, which negatively impacted the growth of the private sector, and hence weakening the foundation of the present Government’s industrialization drive.

The theme of this year Leaders’ Roundtable is “Enhancing Enablers for Accelerating Financial Inclusion in Africa”.  Therefore, understanding these enablers is critical since they are likely to shape the provision and access of financing services to the people.  They can also change the landscape for financial inclusion.  Technology is one of the clear enablers since none of what we have seen emerging in the last 10 years would have been possible without it.  Financial innovations and digital technology have therefore provided solutions for overcoming a number of barriers for advancing and accelerating financial inclusion by making it easier for individuals to access credit, make purchases and pay bills, as well as send or receive remittances.  Many thanks should therefore go to the innovators associated with digital technology (internet banking, SIM-banking, mobile money and point of sales) as well as experts and policy makers who make enabling environment such as developing and reviewing policies, laws and regulatory frameworks to support innovations in financial sector for broad financial inclusion. In Tanzania, most of the successful initiatives have also been facilitated by development in digital technology. One of the initiatives is the development and implementation of Financial Services Registry (FSR), which registers and maps all existing financial access points throughout the country by using a special designed tool to serve as a National System for tracking growth and distribution of financial access points. Moreover, we have managed to develop interoperability in mobile money (peer to peer) hence making mobile money accessible and affordable especially to the rural people and those with low income.

We are also developing Tanzania Instant Payment System (TIPS) as a single instant payment platform that will connect different payment systems providers in a cost effective and secured manner. The system is expected to increase financial inclusion through interoperability of digital financial service providers. It will also provide a single national switch that will facilitate the Bank of Tanzania to conduct oversight supervision of payment systems, improve financial inclusion through usage of electronic payment platform and promote cash-lite economy. In supporting this, we have a National Payment system (NPS) Act, 2015 and its set of regulations which have been reviewed to accommodate new innovations in financial services ecosystem. Furthermore, we have enacted Microfinance Act, 2018 and its Regulations 2019 and Financial Consumer Protection Regulations, 2019 to encourage innovations that will promote financial inclusion.

Let me end my remarks by taking this opportunity on behalf of all stakeholders in the financial sector, to express our sincere appreciation for the support, which AFI have been extending to us in developing financial inclusion policy and regulatory frameworks.  It is our expectations that our dialogue today will be fruitful in approving key deliverables and a work plan, which will be followed during my leadership tenure; also the shared views on key policy issues will accelerate access to and usage of broader range of financial services in Africa.

Finally, I would like once again, to welcome you all, to this 8th Annual AfPI Leaders’ Roundtable Meeting.

Asante Sana!

Thank You!

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