Bank of Tanzania (BoT) Governor Prof Benno Ndulu has said reduction in credit risk will enable banks and other financial institutions lend more to the private sector and reduce reliance on the safety of public sector credit market.
Speaking at the 18th Financial Institutions conference concluded in Arusha at the weekend, Prof Ndulu said, “Coupled with better credit information of prospective borrowers, cost of credit can be reduced and credit be made affordable.”
“Financial institutions have capacity to extend credit to both private and public sectors in order to facilitate transport and logistics infrastructure, among others, which is critical for enabling the country serve as a gateway to the six neighbouring landlocked countries,” he added.
More importantly financial institutions need to work towards securing longer term savings to support lengthening maturity of loans to investors and help to reduce the burden of debt servicing associated with maturity mismatch between short term deposits and investment credit. Banks can also organise finance through syndicated loans for large scale financing of investments.