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| Dr Masawe delivering a speech |
The Bank of Tanzania (BoT) has said narrow financial structure in the
economy is one of the major reasons for a huge amount of money being transacted
in the informal sector, hindering smooth implementation of the monetary policy.
The Central Bank Director of Economic Research and Policy, Dr
Joseph Masawe, said in an interview
over the weekend that the cash budget economy also contributes greatly to
massive money transactions in the
informal sector.
"The huge amount of money transacted informally is an obstacle to
the Bank's efforts to implement monetary policy, an important instrument in
curbing inflation," he said.
Statistics show that 75 per cent of money in the market circulates in
an informal system thus calling for concerted efforts in promoting use of
formal financial system to rectify the situation.
Dr Massawe, however said, increased use of mobile financial services
has been a good tool for formalising money transactions without involving individuals directly who use the system. The
recent BoT figures show that more than 800bn/- was being transacted through
mobile financial services.
Likewise, he said there is need to promote formal financial services
like use of cheque and credit cards to reduce the informal money transactions
in the economy. Apart from promoting use of financial services, also increased
use of savings could facilitate in rectifying the situation.
Also he called for the need to
deepen financial services in rural areas. Commercial banks have denied that
mobile phone financial services are a threat but they are actually
complementing banking business.
The combined customers of all 45 banks in the country are less than
one-third of all subscribers of mobile phone companies -- Vodacom, Zantel,
Airtel and Tigo --which offer financial services. Through mobile phones, the
country can easily formalise the financial system.
Likewise, most people prefer mobile financial services over commercial
banks because of efficiency, reliability and convenience. They challenged commercial banks to improve their services especially
the Automated Teller Machines (ATMS).
Source: The Daily News,www.dailynews.co.tz, reported by Sebastian Mrindoko
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