Dar es Salaam. The newly introduced caps on fees for bank-to-bank transfers through the Tanzania Instant Payments System (TIPS) will strengthen liquidity in the banking industry and promote the transition towards a cashless economy, according to analysts.
The Bank of Tanzania (BoT) recently announced new fee limits for bank-to-bank transactions conducted through retail platforms and channels such as TIPS and the Tanzania Automated Clearing House (TACH). The news rates will come into effect tomorrow.
According to a circular signed by BoT deputy governor (financial stability and deepening) Sauda Msemo, transfer fees will not exceed Sh2,000 for transactions of up to Sh20 million.
Transfers ranging from Sh500,001 to Sh5 million will be subjected to charges ranging from zero to Sh1,500, with transfers ranging from Sh50,001 to Sh500,000 incurring charges of between zero and Sh1,000. Transfers of Sh1 to Sh50,000 will attract charges of from zero to Sh500.
“The Bank of Tanzania has observed that high charges are imposed on customers for transferring funds from one bank to another through retail platforms and channels, which increases the burden on consumers of these services,” the BoT statement said.
TIPS, operated by the BoT, facilitates real-time payments among various digital financial service providers (DFSPs), including banks and non-banking entities such as mobile money operators.
TACH, on the other hand, is a centralised automated system operated by the BoT for clearing cheques and electronic funds transfers (EFTs).
TIPS enables one to instantly make transfers and payments between bank accounts and mobile wallets around the clock.
The system is an upgrade of the Tanzania Interbank Settlement System (TISS), which charges a fee of up to Sh10,000 for each transfer regardless of the amount involved.
“The system allows for cheaper bank-to-bank transfers. It’s cost-effective and enhances customer convenience and trust by providing immediate confirmation and notification of payments. With TISS, customers had to wait for a number of minutes or even hours before transactions were completed,” banker and analyst Kelvin Mkwawa told The Citizen.
He noted that through TIPS, the central bank will be able to address liquidity management issues by maintaining a single connection as the system will support the BoT’s objective of retaining liquidity within the banking system through convenient and easy money transfers.
“With cost-effective and straightforward transactions being made possible, there will be no need to resort to alternative channels. Consequently, liquidity will be maintained within the banking system,” Mr Mkwawa said.
A seasoned economist, Prof Abel Kinyondo, said by reducing transfer costs, the central bank will encourage many more people to conduct banking transactions.
“Making banking transactions more affordable will also promote a cashless economy. Customers will be encouraged to use bank-to-bank transfers instead of carrying large sums of cash from one bank to another and risking being robbed and even harmed. The new system will also make it easier for the relevant authorities to trace suspicious transactions,” he said.
Prof Kinyondo added that promoting bank-to-bank transfers is beneficial for the country in terms of revenue collection, with the Tanzania Revenue Authority (TRA) being able to estimate tax more accurately.
According to the BoT, while mobile phones have continued to play a key role in bridging the infrastructural gap by providing a platform for the unbanked population to access financial services, TIPS provided a platform for facilitating instant and secure retail payments and transfers between digital financial service providers.
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Air Tanzania Banned From EU Airspace Due to Safety Concerns
Several airports have since locked Air Tanzania, dealing a severe blow to the Tanzanian national carrier that must now work overtime to regain its certification or go the wet lease way
The European Commission has announced the inclusion of Air Tanzania on the EU Air Safety List, effectively banning the airline from operating in European airspace.
The decision, made public on December 16, 2024, is based on safety concerns identified by the European Union Aviation Safety Agency (EASA), which also led to the denial of Air Tanzania’s application for a Third Country Operator (TCO) authorisation.
The Commission did not go into the specifics of the safety infringement but industry experts suggest it is possible that the airline could have flown its Airbus A220 well past its scheduled major checks, thus violating the airworthiness directives.
“The decision to include Air Tanzania in the EU Air Safety List underscores our unwavering commitment to ensuring the highest safety standards for passengers in Europe and worldwide,” said Apostolos Tzitzikostas, EU Commissioner for Sustainable Transport and Tourism.
“We strongly urge Air Tanzania to take swift and decisive action to address these safety issues. I have offered the Commission’s assistance to the Tanzanian authorities in enhancing Air Tanzania’s safety performance and achieving full compliance with international aviation standards.”
Air Tanzania has a mixed fleet of modern aircraft types including Boeing 787s, 737 Max jets, and Airbus A220s.
It has been flying the B787 Dreamliner to European destinations like Frankfurt in Germany and Athens in Greece and was looking to add London to its growing list with the A220.
But the ban not only scuppers the London dream but also has seen immediate ripple effect, with several airports – including regional like Kigali and continental – locking out Air Tanzania.
Tanzania operates KLM alongside the national carrier.
The European Commission said Air Tanzania may be permitted to exercise traffic rights by using wet-leased aircraft of an air carrier which is not subject to an operating ban, provided that the relevant safety standards are complied with.
A wet lease is where an airline pays to use an aircraft with a crew, fuel, and insurance all provided by the leasing company at a fee.
Two more to the list
The EU Air Safety List, maintained to ensure passenger safety, is updated periodically based on recommendations from the EU Air Safety Committee.
The latest revision, which followed a meeting of aviation safety experts in Brussels from November 19 to 21, 2024, now includes 129 airlines.
Of these, 100 are certified in 15 states where aviation oversight is deemed insufficient, and 29 are individual airlines with significant safety deficiencies.
Alongside Air Tanzania, other banned carriers include Air Zimbabwe (Zimbabwe), Avior Airlines (Venezuela), and Iran Aseman Airlines (Iran).
Commenting on the broader implications of the list, Tzitzikostas stated, “Our priority remains the safety of every traveler who relies on air transport. We urge all affected airlines to take these bans seriously and work collaboratively with international bodies to resolve the identified issues.”
In a positive development, Pakistan International Airlines (PIA) has been cleared to resume operations in the EU following a four-year suspension. The ban, which began in 2020, was lifted after substantial improvements in safety performance and oversight by PIA and the Pakistan Civil Aviation Authority (PCAA).
“Since the TCO Authorisation was suspended, PIA and PCAA have made remarkable progress in enhancing safety standards,” noted Tzitzikostas. “This demonstrates that safety issues can be resolved through determination and cooperation.”
Another Pakistani airline, Airblue Limited, has also received EASA’s TCO authorisation.
Decisions to include or exclude airlines from the EU Air Safety List are based on rigorous evaluations of international safety standards, particularly those established by the International Civil Aviation Organization (ICAO).
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The process involves thorough review and consultation among EU Member State aviation safety experts, with oversight from the European Commission and support from EASA.
“Where an airline currently on the list believes it complies with the required safety standards, it can request a reassessment,” explained Tzitzikostas. “Our goal is not to penalize but to ensure safety compliance globally.”
Airlines listed on the EU Air Safety List face significant challenges to their international operations, as the bans highlight shortcomings in safety oversight by their home regulatory authorities.
For Air Tanzania, this inclusion signals an urgent need for reform within Tanzania’s aviation sector to address these deficiencies and align with global standards.
The path forward will require immediate and sustained efforts to rectify safety concerns and regain access to one of the world’s most critical aviation markets.
Source: allafrica.com
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