THE Bank of Tanzania (BoT) maintained its key lending rate at 6 per cent for the quarter ending December citing easing inflationary pressures and a positive economic outlook.
The Central bank governor, Emmanuel Tutuba, said in a statement that improving domestic and global conditions supported the decision to hold the rate steady by the monetary policy committee which met on Wednesday.
In the two quarters to September, the central bank held the benchmark rate at 6 per cent from 5.5 per cent that was announced in January when the bank introduced the rate.
The central bank targets to maintain inflation below 5 per cent, but consumer inflation has stayed comfortably below that figure, despite growing pressure on the shilling.
Inflation increased to 3.1 per cent year-on-year in August from 3.0 per cent the previous month, data from the National Bureau of Statistics show.
An economist and investment banker, Dr Hildebrand Shayo said the rate was likely to be maintained given the continued improvement in the global economy with inflation rate declining.
However, Dr Shayo raised concerns about the significant disparity between the Bank of Tanzania’s (BOT) key lending rate and the double-digit lending rates offered by commercial banks to customers.
He questioned the reasons behind this mismatch, suggesting that risk premiums alone cannot account for the high borrowing costs faced by consumers and businesses.
“Who will explain this significant discrepancy between the central bank rate and the commercial banks’ lending rates, which remain in double digits? What can account for the reality of expensive loans, aside from risk premiums?” he inquired.
Bank lending rates in Tanzania decreased slightly to 12.78 per cent in July from 12.82 per cent in June. Despite this minor decline, the spread between the central bank’s rate and commercial bank rates remains substantial.
The Head of Research and Financial Analytics at Alpha Capital, Imani Muhingo, said maintenance of the CBR at 6 per cent was expected, especially as inflation is still at the bottom of the target range, while US’s rate cut and seasonal foreign inflows are expected to relieve foreign exchange pressures.
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Despite presumed liquidity pressure in the banking sector, cutting rates would be moving in too quick given the time lag of US’s policy, he said.
Financial analysts were divided on their prediction on the new central bank rate, with opinions varying on the whether to increase, maintain, or slightly decrease the key rate.
Some predicted the central bank would maintain the rate at 6.0 per cent for the third consecutive time, citing stable inflation and favourable macroeconomic conditions.
Others suggested there would be a modest reduction to stimulate investment and support private sector credit growth given the recent US Fed rate cut.
Meanwhile, Mr Tutuba told reporters that foreign currency availability improved from July to September 2024 alongside the tourism season and sales of agricultural products and exports, as well as rising gold prices in the global market.
He stated that as a result of this trend, the depreciation rate of the shilling decreased to 10.1 per cent for the year ending September 2024, down from 12.5 per cent for the year ending June 2024.
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Tutuba mentioned that foreign reserves increased to 5,413.6 million US dollars by the end of September 2024, up from 5,345.5 million US dollars in June 2024, sufficient to cover over four months of imports, aligning with the country’s goals.
He projected that foreign currency availability is expected to continue improving, driven by rising gold prices in the global market, tourism activities and sales of natural products like cashews, tobacco, coffee and cotton, as well as exports of staple foods like maize and rice to neighboring countries.
This improvement will also be supported by a decrease in fertiliser imports and declining energy product prices, which are expected to reduce the demand for foreign currency and enforce legal requirements regarding quoting and making payments in Tanzanian shillings.
Source: allafrica.com
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Tanzania: Samia Hands Over NBC’s 354m/ – Crop Insurance Compensation to Farmers Affected By Hailstorms
President Samia Suluhu Hassan, has handed over a cheque of 354m/- from the National Bank of Commerce (NBC) as compensation to tobacco farmers, who were affected by hailstorms during the previous farming season in various regions across the country.
Handing over the cheque in Dodoma, the compensation is part of the crop insurance service provided by NBC in collaboration with the National Insurance Corporation (NIC).
Furthermore, President Samia has also handed over health insurance coverage to members of the Lindi Mwambao Cooperative Union based in Lindi Region, through the Farmers’ Health Insurance service provided by the bank in partnership with Assurance Insurance Company.
While visiting the bank’s pavilion at the Nanenane Agricultural Exhibition and being received and briefed by the bank’s Managing Director, Mr. Theobald Sabi, she said: “This crop insurance is one of the crucial solutions in ensuring farmers have a reliable income, without fear of challenges such as natural disasters, including hailstorms.
“I call upon all farmers in the country to make the best use of this important opportunity by accessing these kinds of insurance services. I also highly commend NBC and all the stakeholders participating in this programme.”
Elaborating further on the crop insurance service, the Minister of Agriculture, Hussein Bashe, stated that it will help to recover the loss farmers incurred, especially in various calamities beyond their control.
Citing them as floods, fires, and hailstorms, which have significantly affected the well-being of farmers and caused some to be reluctant to invest in the crucial sector, Mr Bashe added: “However, our President, this step by NBC is just the beginning, as this is the second year since they started offering this service, and the results are already visible.
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“As the government, we promise to continue supporting the wider implementation of this service, with the goal of ensuring that this crop insurance service reaches more farmers.”
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On his part, Mr Sabi said that the farmers who benefited from the compensations are from 23 primary cooperative unions in the regions of Shinyanga, Geita, Tabora, Mbeya, Katavi, and Kigoma.
He added: “In addition to these insurance services, as a bank, through this exhibition, we have continued with our programme of providing financial education and various banking opportunities to farmers, alongside offering them various loans, including loans for agricultural equipment, particularly tractors, to eligible farmers.:
At the NBC booth, President Samia also had the opportunity to be briefed on the various services offered by the bank to the farmers namely crop insurance and health insurance services.
There, the President had the chance to speak with some of the beneficiaries of the services, including the Vice-Chairman of the Lindi Mwambao Primary Cooperative Union, Mr. Hassan Mnumbe, whose union has been provided with a health insurance card from the bank.
Source: allafrica.com
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European Union Bans Air Tanzania Over Safety Concerns
Kampala — The European Commission added Air Tanzania to the EU Air Safety List, banning the airline from operating within European Union airspace. This decision follows the denial of Air Tanzania’s Third Country Operator (TCO) authorization by the European Union Aviation Safety Agency (EASA), citing significant safety deficiencies.
The EU Air Safety List includes airlines that fail to meet international safety standards. Commissioner Tzitzikostas emphasized the importance of passenger safety, stating: “The decision to include Air Tanzania in the EU Air Safety List underscores our unwavering commitment to ensuring the highest safety standards. We strongly urge Air Tanzania to take swift action to address these safety issues. The Commission has offered its assistance to Tanzanian authorities to enhance safety performance and achieve compliance with international aviation standards.”
Air Tanzania joins several African airlines banned from EU airspace, including carriers from Angola, the Democratic Republic of Congo, Sudan, and Kenya. Notable names include Congo Airways, Sudan Airways, and Kenyan carriers Silverstone Air Services and Skyward Express. The ban reflects the EU’s strict approach to aviation safety worldwide.
Source: allafrica.com
