Opening the BoT 42bn/- zonal branch in Mwanza City, the president said it is prudent to prepare for virtual currencies than being caught unprepared with the technology that is becoming the new normal in global financial markets.
Experts say that cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Many crypto currencies are decentralized networks based on blockchain technology, described as a distributed ledger enforced by a disparate network of computers.
President Samia similarly tasked the central bank to ensure that interest rates charged by financial institutions drop to 10 per cent and further below, noting that currently the financial institutions are charging interest ranging from 12 per cent to 29 percent interest charges, which hinders credit growth.
Interest charged is so high and the time to clear the loans is too short, she said, asserting that low interest rates have a role to contribute for those in the informal sector to rise to the formal sector.
"Since you have a credit reference system, there is no reason for the financial system to continue charging such high rates,” she said, urging BoT to set strategies that can ensure financial institutions in the country provide systematic long-term loans.
The central bank must ensure that the Tanzania Instant Payment System, now in the final stages of installation, starts being used to encourage and increase financial inclusions, she said, pointing out that the system will reduce costs that the government incurs to print new notes.
Commenting on the capital account system, President Samia said Tanzania is not an island as the world has now become a village, so it will one day come to the country, challenging the monetary authority to get prepared before the public enters online business as it is still unregulated here.
Technology in the financial sector is moving fast, and BoT must work faster to cope with advances in global changes, she stated, on the background of estimates that financial inclusion had reached 65 percent of the population and that BoT needs to ensure people get more access to financial resources on demand. .
Minerals minister Doto Biteko, representing the Finance and Planning minister Dr Mwigulu Nchemba who was on parliamentary duty, said that the country’s economy grew by 6.5 percent on average during the past five years, from 2016/2021.
Revenues collected had increased from 850m/- per month to 1.4trn/- expected by next month, he said, urging the central bank to come up with the best way of issuing loans to banks that makes loans affordable.
BoT Governor Prof Florens Luoga said the monetary authoriity was finalizing the Tanzania Instant Payment system to fast- track payments and more cheaply. The change will reduce costs incurred to print new notes, he reiterated, noting that the central bank now has four branches, in Mwanza, Arusha, Mbeya and Mtwara, with sub branches in Dar es Salaam and Zanzibar.
The Mwanza branch serves altogether seven regions, namely Mwanza, Geita, Simuyu, Kagera, Kigoma, Shinyanga and Mara.
The branch building cost 42bn/- where 27bn/- was used for basement construction and 18bn/- used in the installation of machines, heh stated, elaborating that the construction of a new branch in Mwanza follows an increase in economic activities contributed by the mining sector, fishery and agriculture, among others
Completion of infrastructure like the Standard Gauge Railway (SGR) will further stimulate the lake side city’s economy, he stated, specifying that business operations in the Lake zone were now contributing around 25 percent to the Gross Domestic Product (GDP).
He said 90 percent of gold production is based in the zone as well as over 90 percent of cotton, to which BoT was finalising the payment and settlement system to reduce cash transactions. Most local traders prefer cash transaction and thus the notes printing costs, he added.