Dar es Salaam. The government has warned that it will continue to take strict actions against financial institutions operating unlawfully, particularly those offering predatory loans that exploit citizens and oppress them.
This warning was issued on Tuesday in Dar es Salaam by the Minister for Finance, Dr Mwigulu Nchemba, during the launch of the first Financial Sector Stakeholders Forum for the year 2024.
Dr Nchemba highlighted that certain financial institutions have been harming citizens by offering loans with exorbitant interest rates and scheming to lend to individuals who are clearly unable to repay these loans.
He emphasized that the government will not tolerate such practices and will take severe measures against these institutions.
The Minister urged stakeholders in the financial sector, particularly banks, to continue educating the public on the importance of using officially registered financial services.
He stressed that citizens need to understand the difference between formal and informal institutions, and that banks are much safer for them than exploitative, unregistered lenders.
“Citizens must understand the difference between formal institutions and informal ones. We must show them that they are not safe when borrowing from unregistered institutions and encourage them that banks are a safer option,” Dr. Nchemba stated.
He also highlighted the need for the public to be educated about the advantages of saving money in banks, as it is part of a modern economic system.
Dr Nchemba further noted that in some areas, people are still afraid to deposit their money in banks, which is an issue that needs to be addressed through collaboration between financial sector stakeholders and the Tanzania Revenue Authority (TRA).
He urged the public to understand that banks are safe places for their savings.
Additionally, the Minister condemned the actions of some dishonest bank employees who collaborate with external parties to seize collateral from loan defaulters, depriving individuals of their property illegally.
He called for banks to ensure thorough checks before auctioning collateral, as these actions impoverish individuals who have already paid a significant portion of their loans.
Dr Nchemba also instructed bank leaders to take strong actions against employees who collaborate with clients to manipulate loans, emphasizing that loans should be used for productive activities that can generate income to repay the loan. He gave the example of how development projects contribute to repaying national debt, adding that Tanzania is one of the few countries in Africa with strong debt resilience.
Meanwhile, the Minister for Education, Science, and Technology, Prof Adolf Mkenda, announced that starting next year, the government will introduce a new curriculum where financial literacy and entrepreneurship will be mandatory subjects.
The goal is to equip students with the skills to become self-employed upon graduation.
In addition, the Permanent Secretary of the Ministry of Finance, Dr Natu Mwamba, stated that the Ministry of Finance, in collaboration with stakeholders in the financial sector, organized the Financial Sector Stakeholders Forum to exchange ideas and experiences, share information, build capacity, and collaborate on successes and challenges in the sector.
He explained that the forum’s main objectives include strengthening the financial sector in the country and promoting the use of technology and innovation.
Dr Mwamba also added that another goal of the forum is to discuss various actions taken to improve the financial sector and find the best ways to enhance cooperation among stakeholders.
The forum also aims to inform the public about the policy and legal improvements made to strengthen the financial sector in the country.
