TPSF highlights motives for industrialization drive in Tanzania

For Tanzania to achieve its industrialisation drive, it needs to capitalise on the alternative means of financing, instead of relying on commercial banks for the growth of the sector come 2025. The Executive Director of Tanzania Private Sector Foundation (TPSF), Mr Godfrey Simbeye, disclosed this at a forum on the Role of Financial Institutions in Promoting Industrialisation in Tanzania organised by Mwalimu Nyerere Memorial Academy (MNMA) in Dar es Salaam, yesterday. “If we depend on commercial banks to finance industrialisation in the country, it will take us quite some time to achieve the anticipated goal... like other countries, Tanzania should device a plan to have in place an industrial development bank to cater for the purpose,” said Mr Simbeye. According to Mr Simbeye, statistics show that out of 16.3trl/- dished out as credit by commercial banks to private sector, it’s only 9.8 per cent that goes to the manufacturing industry, with trade and personal loans topping the list. He pointed further that of the 49,245 industries existing in the country - 1,322 are large establishments and the majority 47, 921 comprise of micro, small and medium enterprises. These figures demonstrate a problem in the area of financing. He, however, cited among challenges that hinder growth of industrial economy to include protection of products produced within the country. “As a focused country intending to promote its industrial economy, the agenda should be placed as a national building project with its own financing system like that of the Standard Gauge Railway (SGR) Project. And in order to generate more financing in the sector, we should formulate policies aiming to protect goods produced within the country,” he noted. The Chairman of the Tanzania Banking Association, Dr Charles Kimei, was also of the view that the government needs to focus on sector priority to achieve its goals. Dr Kimei revealed some of the drivers for financing industrialisation include profitability, physical incentives, such as collaterals, legal and regulatory frameworks, among others. “We can all agree that there is no person who will put money where there is no money, so it’s only natural that there is a certain guarantee scheme,” he observed. He said that the only reliable solution is the establishment of an industrial development bank, considering that money being lent by commercial banks is generated from short term sources, such as saving accounts and the like. He further pointed out that with the above reasons; it becomes difficult for commercial banks to give loans on long term basis. On her part, the Deputy Minister of Industries, Trade and Investment, Eng Stella Manyanya, noted the government’s commitment to promote industrialisation in the country. She observed that among challenges facing people include capital and proper business knowledge. She called on financial institutions to provide knowledge before issuing out loans