Editorial

EDITORIAL

Affordable credit is key to Tanzania’s growth

Finance Minister, Amb Khamis Mussa Omar, was right when he recently raised concerns in Arusha over the high lending rates and banking service charges that continue to burden Tanzanians.

Addressing CRDB Bank’s shareholders’ seminar, the minister noted that “there is a public outcry regarding interest rates and banking service charges” and urged CRDB Bank and other financial institutions to take concrete steps to reduce the cost burden on customers.

Tanzania’s economy cannot grow strongly if its most energetic population and middle-class citizens are locked out of financing. Our young men and women are educated, ambitious and full of ideas yet many remain unemployed, trapped in informal work or can not grow their small enterprises because they cannot raise capital to start or expand businesses. Banks speak of financial inclusion but inclusion means little when borrowing remains too expensive for the very people who need support most.

High lending rates discourage enterprise. They make investment risky, slow down innovation and prevent small businesses from becoming employers. A young person with a viable business idea should not be defeated before starting simply because the cost of credit is beyond reach. When banks charge heavily on loans and services they do not only burden customers; they weaken the country’s productive base.

The government, regulators and commercial banks must work together to reduce borrowing costs. Special upstarter-focused loan products should be affordable, quick to process and supported by flexible repayment terms. Financial education is important but it must be matched with real access to money. Raising awareness about investments and opportunities while denying citizens affordable capital is not enough.

We must also be mindful that our youth and ordinary citizens need to be prepared to compete economically in the opportunities created through Tanzania’s participation in the EAC, SADC and the African Continental Free Trade Area. Without deliberate empowerment, affordable finance and practical support, we risk remaining mere observers while others benefit from markets to which we belong.

Banks must also stop seeing unemployed youths or ordinary citizens only as risky borrowers. With proper mentorship, business support and fair lending conditions many can become successful entrepreneurs and loyal long-term clients. Supporting them is not charity. It is a sound economic strategy.

Banks and other microfinancial institutions have the capacity to lead this change. Strong profits and growing assets should translate into stronger support for the communities that sustain the banking sector.

Tanzania urgently needs jobs, enterprise and wider economic ownership. That will not happen if credit remains available only to those already financially secure. Lending rates must come down. Service charges must be reviewed. Access must become faster, simpler and cheaper.

Our youth and ordinary citizens cannot wait. The economy cannot wait either.

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