Banks challenged to lower lending rates

Dr Kigoda

The Ministry of Industry and Trade has challenged commercial banks to find ways of lowering borrowing costs especially for Small and Medium Enterprises (SMEs) to accelerate economic growth.

The ministry said that, at the moment the SMEs, despite their immense contribution on industrial output and trading, the sector is facing numerous challenges especially on how to raise relative affordable capital.

“There are a number of issues about loans interest rates, but the banks still can at least start discussions of how to lower lending rates to SMEs,” Dr Kigoda said when opening Stanbic Bank’s Kariakoo Sokoni Branch.

The minister said the bottom line should be on how to promote this sector, which is the engine on economic growth, to access affordable capital plus managing their finances. 

Dr Kigoda said he was aware of the other variables that are pushing up interest rates, such as inflation and Treasury Bills rates but promised that the government is working round the clock to control the same.

“We should help farmers increase productivity to sustain ourselves and have enough for export, as this will help lower the inflationary pressure,” Dr Kigoda said. 

Speaking previous, Barclays Bank Tanzania CEO, Mr Kihara Maina said that despite credit being an integral component to drive an economy, banks which offer the service to the public feel comfortable when putting client deposits at risk when lending.

“To be able to do that, it is important to ensure lending practices are as safe as possible. We need therefore infrastructure around safeguarding credit to be in place,” Mr Maina said. He commended Stanbic for opening a full fledged branch that would cater for SMEs at the heart of business trading in Kariakoo.

On his part, Stanbic’s Head of Marketing and Corporate Affairs, Mr Abdallah Singano said the branch would help reduce congestion at Narung’ombe branch, as the number of customers for their SMEs Quick Account has increased very fast.

“So far over 30bn/- has been issued in a span of about one year since the introduction of SMEs account, benefiting over 1,920 clients,” Mr Singano said, adding:

“All these loans have been issued to our clients in Kariakoo area alone. This necessitated opening another branch to cater for the increasing customers demand.” 

Stanbic’s SMEs Quick Account client, Mr Charles Mlawa said that easy accessibility of the loan has boosted his business in less than one year, owning three shops, up from one.

Mr Mlawa, a Director of Tropical Electrical Goods Shop which has employed 30 staff from three about 15 years ago, said: “If it were not for the bank’s Innovative Account, I could not be able to expand.” 

According to the Ministry of Industry and Trade data, Kariakoo area is one of major East African trading hubs, serving roughly 60,000 clients a day.

Source: The Daily News,http://www.dailynews.co.tz, reported by Abduel Elinaza in Dar es Salaam 

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