Tanzania has the fewest bank customers: study

Despite having the biggest number of players in the banking industry, Tanzania has the lowest number of bank customers among the East African Community (EAC) member states.

According to a 2012 Ernst & Young banking review, Tanzania has 47 banks compared to Kenya’s 43, Uganda’s 25 and Rwanda’s 11.

However, 22.6 per cent of Kenya’s population is banked compared to Tanzania’s 12 per cent, Uganda’s 21 per cent and Rwanda’s 23 per cent.

Only two million had deposited their money with a bank in Tanzania by the end of last year. The report did not cover Burundi.

The review shows that banks in Tanzania have little innovation, thus failing to attract more customers. It states that most of the prominent banks still largely rely on investing in government securities rather than having other financial services.

Its other major highlight says that the sector in Tanzania has not yet adopted the banking agency system compared to Kenya, which has enabled East Africa’s largest economy to tap the lowest earners in the informal sector.

Banking agency is where banks let their services be dealt with by a third party rather than opening their own branches.

It, however, ranks Tanzania the best when it comes to efficiency but lower in profitability compared to other East African countries. It showed that total assets of banks in Tanzania increased by 17 per cent in 2012 from 16 per cent the previous year.

The sector’s investment in government securities also rose to 21.3 per cent from 18 per cent. The banks’ appetite for government securities make most of them unwilling to lend.
Source: The Citizen, reported by Julius Bwahama in Dar es Salaam
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