Dec. 19, 2016


Prof. Benno Ndulu

Tanzania

Prof. Benno Ndulu

Governor, Bank of Tanzania (BoT)

BIO

Prof. Benno Ndulu was appointed Governor of the Central Bank of Tanzania in January 2008. He started his career at the University of Dar es Salaam in the early 1980s before joining the World Bank as Lead Economist. He is best known for his involvement in setting up and developing one of the most effective research and training networks in Africa, the African Economic Research Consortium. He received an honorary doctorate from the International Institute of Social Studies (ISS) in The Hague in 1997. Following his PhD degree in economics from Northwestern University in Evanston, Illinois, he taught economics and published widely on growth, adjustment, governance, and trade.

What strategies have you implemented to ensure the stability of the Tanzanian shilling?

BoT intervenes from time to time for the purpose of smoothing short-term fluctuations. Depreciation in the value of the shilling can be a result of a several factors, such as strengthening of the US dollar, decline in export earnings, delays in budget support, and increase in speculative tendencies, especially when there is persistent depreciation. Looking ahead, more has to be done in terms of diversifying the economy and increasing productivity, improving business environment, and addressing infrastructure bottlenecks to attract investments to be able to realize our economic potential and develop greater resilience to economic shocks.

What is your assessment of the role of technology plays to boost financial inclusion in Tanzania?

In 2006, only 11.2% of adult Tanzanians had access to and used formal financial services. There was roughly 965,000sqkm with poor connectivity, which is larger than the combined area of Kenya, Uganda, Rwanda, and Burundi, with room to spare. Digital technology has provided people the ability to access these areas and has provided a platform for cost effective delivery of financial services. In 2008, Vodacom Tanzania introduced the M-Pesa product, followed by similar solutions from Millicom and Airtel in 2009, then Zantel in 2010. The four electronic money products have enabled various services to be introduced over time. Starting with money transfers from person to person, it has evolved to include utility payments, loan disbursement and repayments, money transfers from/to bank accounts or ATMs, wage repayments, and so on. From 112,000 subscribers in 2008, the number of users of the products has grown to reach 59 million registered accounts at end of May 2016. The regulatory framework required mobile financial service providers to implement systems that are open and interoperable. Since February 18, 2016, all four mobile money service providers have became interoperable. In this regard, Tanzania's strategy to achieve universal financial inclusion will continue to be digitally driven.

What are the objectives of the National Financial Inclusion Framework (NFIF) 2016-2020?

The NFIF is the key roadmap to address the barriers of access and usage of financial services to the under banked and unbanked population. The NFIF is a public and private sector initiative and therefore has a significant role to play in enhancing the cooperative approach of addressing the challenges of financial inclusion. During its formation, it has leveraged other national issues such as the issuance of National Identification and conduction of a National Risk Assessment, formalization of businesses, and facilitated coordination between financial sector and non-financial sector stakeholders. As a result, it is estimated that by 2017 at least 70% of the adult population will access and use financial services, leaving 30% with partial or without access, an improvement from the 57.7% of the adult population in 2013. Going forward, the emphasis will be on finding other strategies rather than digital for the last frontiers to bring those people onboard.

What are the goals and expectation for the BoT in 2017?

In 2016/17, the economic development priorities of the government focused on sustainable development as outlined in the Second Five Year Development Plan. The main emphasis is on strategically mobilizing and organizing national resources for human and industrial development needed to transform Tanzania into a middle-income economy. BoT will continue to focus on maintaining price stability through maintaining the appropriate level of liquidity in the economy by achieving the following monetary policy targets: annual growth of average reserve money not exceeding 13%, annual growth of M3 not exceeding 14.8%, annual growth of private sector credit of about 20.5%, and maintaining gross official reserves at levels adequate to cover at least four months of projected imports of goods and services, excluding FDI-related imports. BoT will continue to pursue a tight monetary policy to ensure that liquidity is consistent with the demands of various economic activities to keep inflation at a single digit-level.