Bank of Tanzania: Rural Financial Markets Characterised by Decreasing Availabili...

Nov 2014
Tanzania, November, 24 2014 - The state of rural financial markets in Tanzania is characterised by low and decreasing availability of financing for both agricultural and non-agricultural activities.

This was said by the Bank of Tanzania (BoT) Deputy Governor, Juma Reli, when inaugurating rural and microfinance conference, which was opened at the BoT conference hall in Dar es Salaam towards the weekend.

“Accelerating rural and agricultural financial inclusion in Tanzania: Where are we,” he said

He told the participants in the conference, organised by Tanzania Association of Microfinance Institutions (TAMFI) in collaboration with Marketing Infrastructure, Value Addition and Rural Finance Support Programme (MIVARF), that Tanzania’s rural areas are characterised by a paucity of viable financial institutions.

 “Our rural areas are characterised by a paucity of viable financial institutions and by lack of variety, breadth and range of financial services available .… There is also very limited access to long-term financing needed for agriculture, land and other rural enterprises,” he noted.

He told about a hundred and so participants who included members of TAMFI and Community Banks Association of Tanzania (COBAT), among others that because of the weak rural financial markets, traps have been created which reproduce poverty over time, depress the rate of rural growth and distort its income distribution consequences.

Calling for a clear set in policy and servicing rural financial markets to get rid of, high incidence of poverty in rural areas and growing income inequality between urban and rural markets he advised the participants to look at the role of financial markets in relation to rural financial inclusion, the players, users, literacy, infrastructure, innovations in rural areas, the available opportunities and challenges for rural penetration.

He told them to look at the challenges of the warehouse receipt system to cooperatives and farmers and those ofn value chain financing and opportunities in agricultural food processing.
Besideshe advised that to look at the effects of frequent government interventions in selling agricultural produce (export ban and food imports, and tax free on crude imported cooking oil).

“We also need to ask ourselves as to how we expand financial markets to be vibrant and thereafter bring financial services to the rural areas,” he said.
With a high proportion of the Tanzanian population still living in the rural areas, he said, it is imperative to develop an institutional framework to reach the hitherto un-served population with financial services.

He stressed that the reason for concern about widespread financial “exclusion” is straightforward, and that is access to a well-functioning financial system can economically and socially empower individuals, to better integrate into the economy, actively contribute to their development and protect themselves against economic shocks.

In his welcoming speech, TAMFI chairperson Chairman Edmund Mkwawa said it was paramount to look at the challenges facing the rural economy in as far as provision of inclusive financial services is concerned, and come up with solutions to be shared with the relevant arms of the government.

“We need to get answers on how we can save our rural dwellers from poverty,” he said, adding that the conference would come up with collective suggested solutions.

Source : IPP Media

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