Tanzania: Credit bureaus trigger reduction in non-performing loans

Jul 14, 2016

Financial institutions are increasingly using the Credit Reference Databank.

The Tanzanian banking sector has experienced a reduction in non-performing loans (NPLs) thanks to the increasing use of credit bureaus.

Most banks maintained NPL levels below five per cent, the Bank of Tanzania said in its latest Monetary Policy Statement, seen by Tanzania Daily News.

The number of borrowers submitted by banking institutions to the Credit Reference Databank increased by 36.9 per cent year on year to reach 1,050,649 at the end of April. In addition, the number of loans went up 31.5 per cent to 1,952,974 over the same period.

The BoT praised the significant increase in the use of credit information since the establishment of credit reference bureaus in 2013.

"The increased use of credit information system is expected to have a positive impact on the number of non-performing loans in the banking sector and interest rates charged by banks in the long-run."

Tanzania has now taken the top spot for financial inclusion in sub-Saharan Africa, according to the Global Microscopic Surveys carried out by the Intelligence Unit of UK newspaper The Economist.

It shows financial inclusion has deepened in the country as a broad spectrum of institutions - including banks and non-governmental organisations - have all made successful attempts to reach out to the unbanked through non-traditional channels.

Around 76 per cent of the population had access to financial services in 2013, up from 44 per cent in 2009, according to the Finscope survey of 2013.

The Central Bank is aiming to have 80 per cent of the population using financial services and at least 70 per cent of the population living within five kilometres of a financial access point by 2017.ADNFCR-2976-ID-801821759-ADNFCR