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LAST UPDATE: 24/9/2008 - 5:58PM EAT

Thursday, November 6, 2008


[Photo courtesy of: Muhidin Issa Michuzi]


Hon. Mustafa Mkullo, Minister for Finance and Economic Affairs;
Madame Antoinette Sayeh, Director for Africa Department, IMF;
Mr. Gray Mgonja, Permanent Secretary, Ministry of Finance;
Professor Benno Ndulu, Governor of the Bank of Tanzania;
Deputy Governors of the Bank of Tanzania;
Leaders and Representatives of Financial Institutions in Tanzania;
Distinguished Invited Guests;

(I recognize Mzee Mtei, Bob Makani and Mr. Mbaya;
Ladies and Gentlemen.

It is, indeed a pleasure for me to be afforded the opportunity to address such an important conference which brings together the practitioners of the financial institutions that are so key, to the realization of the growth and development of Tanzania.

Since independence, the hope for each Tanzanian has been better life. Building and nurturing a nation whose people are free of ignorance, disease and poverty have been the hallmark aspirations, guide and preoccupation of the successive administrations in our dear country.

Today, the
vision that underlies our socio-economic agenda and programs still carries these great dreams of each Tanzanian since dawn of independence.
History has over time taught us that success in achieving these goals sustainably lies ultimately in the private sector’s maximum involvement in economic activity.

It is in recognition of this important fact, that the reforms that we have undertaken over the past two decades have brought the private sector to the centre of the economic development agenda in our country.
As you all know, human intellect and entrepreneurship are among the greatest assets any nation can have.

But the best ideas, as truly as they are human, will hardly get off the ground effectively, without being properly nurtured and empowered. Financing is critical in this regard. It does not matter whether the idea is big or small.
A widow, who is struggling to feed her children, may identify a good market for pancakes that she knows she can easily take advantage of. A good market or a good idea without finance, will not enable this woman realize her ambition to change her life.
A graduate of agricultural science may identify a fertile peace of land suitable for a crop that has good local and global demand. He knows what to do to get maximum output from the land, but without finance his knowledge will be worthless. Likewise, an investor with an excellent idea about a good project is helpless without finance.

Tanzanians are a very resourceful people. They are full of good ideas which can transform this nation into the dreamland of our people. But, without proper financing though, those man y ideas will not be realized. It is just as good as having no ideas at all.

I am saying this, Mr. Governor and distinguished representatives of the financial institutions, just to remind ourselves of the importance of having a financial intermediation system that efficiently collects the funds from those who have money to spare, and channel them to those in need of funds for investment. Morden civilization has been made possible and sustained by credit flows—a fact that is even more clear now that, the world is going through a financial crisis.

Our entrepreneurs—small and large—need reliable, accessible and sustainable sources of financing. Providing funds at reasonable cost, remains a major challenge in our country, more so for people in the rural areas and small enterprises.

That is why, Governor and distinguished delegates, I consider this meeting to be an opportune moment for me to address officials who are best placed to give us answers as to how this gap can be filled and indeed, bring those answers to reality.

First Generation Financial Reforms in Tanzania
Before identifying the challenges ahead let me reflect on the ground that we have covered in addressing the financial sector problems in our country. We are, today, in the middle of financial sector reforms whose first phase started in the early 1990s.

Two important pieces of legislations were passed in the first half of the 1990s, namely:
The Banking and Financial Institutions Act 1991 which opened up the financial sector to private capital both local and foreign, and;
The Bank of Tanzania Act 1995 that shed the non-traditional functions off the responsibilities of the Bank of Tanzania and gave the Bank the independence it needs in pursuit of financial and price stability, which the Act made the primary objective of the Bank.

I am happy to have been associated with the conception and passage of the BOT Act. At that time I was the Minister for Finance.

Both acts have now been revised in 2006 to match with the changing times and needs of modern financial sectors.

Several additional laws were enacted which gave the financial sector its current market based character. The Foreign Exchange Act 1992, that among others provided for the administration and management of dealings in gold, and foreign currency and the Bureau de Change Regulations of 1992 that, provided for establishment of bureaus de change are cases in point. The other is Capital and Securities Market Authority Act 1994 that formed the Capital and Securities Market Authority and laid the ground for establishm ent of the Dar es Salaam Stock Exchange in 1996.

Today, distinguished participants, a decade and half since the financial sector reforms began, notable strides have been made in provision of financial services in our country. Allow me to mention some of them here. These include:
The number of financial institutions has increased and their efficiency in provision of services has improved.

From only three public owned banks in early 1990s, the number of banks has increased to 35; We have seen success in refocusing monetary policy to price stability as evidenced by the decline of inflation from rates ranging between 20 and 30 percent before 1995, to single digit rates since 1999. This is an indication that our economy has become remarkably resilient to shocks. For instance while the recent food and oil price shock has caused inflation to soar in many nations around us inflation in Tanzania has increased by much less;

Tanzanians have a wider range of instruments to put their savings in now. They are no longer limited to only cash and shilling bank deposits, but they can also put their savings in government securities, shares and foreign currency;
Exchange rate and interest rates are now market determined and I trust the markets are, as expected, making better allocation of the financial resources, on the basis of where the highest return is. This has contributed to the steady increase in the strength of our economy that we have witnessed in the recent past; and Credit to the private sector has expanded substantially as the government become less and less dependant on bank borrowing to finance its activities.

Ladies and Gentlemen;
These, are by any standard, not trivial achievements. They are significant and you deserve praise from all of us. You are the ones who are at the centre of it all. As we celebrate these achievements, I want us not to forget how far we have come and how far we still have to go.

Challenges to Financial Sector
Let me now say something about some of the key challenges that financial sector faces in the work of supporting growth of the Tanzanian economy and improvement of the livelihood of the this great nation of ours.

Ladies and Gentlemen;
Access to bank services in Tanzania is still very low even by sub-Saharan Africa standards. In 2004, only about 5 percent of our people had bank accounts compared to the sub Saharan Africa average of 26.8 percent.

The 2001 Household Budget Survey showed that the average distance to a bank in 15 out of the 21 regions of Tanzania Mainland exceeded 25 kilometres.
In some reforms new outreach challenges have surfaced. For instance, the question about how to broaden access to finance when private banks have rolled back their branch network to ensure profitability? Can we use modern technology to address this challenge?

As we all know the majority of Tanzanians live in rural areas and depend on agriculture for their livelihood. But, agriculture is faced with numerous constraints which can be overcome by availability of inputs and other resources. It is, therefore, important that we enable rural Tanzanians to have access to credit to enable them overcome the constraints. I have recently talked about opening a window in Tanzania Investment Bank to channel credit to agriculture as a first step towards the realisation of the age old dream of establishment of an agricultural bank.

This is a challenge that needs to be operationalized. An even bigger challenge for you is how to make sure that at the retail end, the credit will reach as many Tanzanians as possible. I am told in some countries banks set aside a certain percentage of their resources for agriculture credit. Can we emulate such examples?
Mr. Governor, Delegates, Ladies and Gentlemen;
Banks and financial institutions can also be helpful in supporting value addition to agricultural commodities. We now have examples of outgrower schemes which integrate production by small holders, large scale producers and processing plants. This is happening in sugar cane and sugar production, tea and even fruit production and canning in Morogoro. This approach has helped small farmers to get extension services and access to credit to mechanize cultivation and get other inputs. I challenge all financial institutions in the country to help promote and expand credit to the agricultural sector. This way Tanzanian farmers would be enabled to increase productivity hence raise their incomes and improve their livelihood.
There are new products that are just emerging now which could also be helpful both to small enterprise and rural communities. One of these is lease financing where with a small deposit and the asset as collateral, more Tanzanians can have access to small machinery and other equipment to improve productivity. In this regard, small tractors, bakery equipment, small transport equipment etc. will be easily available to small holders and enterprises. It is my hope that this instrument will not be used to finance purchase of luxury cars but to raise the opportunities for income generation for a much wider range of Tanzanians.
Affordable credit is an important facilitator for investment and growth. Credit in Tanzania is still too costly and therefore not within the reach of the majority of Tanzanians. Partly this situation arises from extremely high risk premium that banks place on potential borrowers and partly because of insufficient competition in the sector. The government over the past ten years has reduced substantially its share of total domestic credit and therefore, is much less of a problem in terms of crowding out the private sector. Unfortunately, most of the credit released tends to sit in the banks as excess liquidity instead of being lent out. As a result the cost of credit made to the private sector has to be borne by the small part that is lent. I am happy to note that the interest rate spread has been declining but the cost of finance still remains too high.
I have also learned that the Bank of Tanzania and financial institutions are working on credit reference bureau which will open up a possibility of using “moral” collateral where someone’s track record for servicing debt will serve as collateral. I hope this also will be given rapid push to be realized.
Ladies and Gentlemen;
Financial stability is an important goal to be achieved by operations in this sector. I am pleased that supervision of banks and deposit taking non-bank institutions has been strong and that the insurance industry has a strong regulator too. I am, however, still worried about the lack of strong regulator of pension funds which have tended to face major collapses—for instance in Latin America. A pension fund is a fiscal contingent liability because ultimately, the government has to shoulder the obligation to pensioners in the event of failure. It also poses big risk for financial instability because of pension funds’ wide integration to the whole financial system. The Social Security Act has been passed and the draft investment guidelines for pension funds have been prepared. I hope that concerned institutions will now move quickly to establish and operationalize the regulatory framework.

Concerning access to long-term finance we have been facing challenges in mortgage, infrastructure and venture capital areas. Household access to mortgage financing remains highly limited. A young employee’s desire to acquire a home is frustrated by the fact that it would take too long (and in most cases impossible) to save enough money to purchase or build one. Our financial system is yet to develop an accessible and reliable mechanism to meet the demand for mortgage financing. I take notice that some of you have begun to venture into this area—commendable effort—but it is still too little.

A Mortgage Finance bill has already tabled in the Parliament. After this bill is passed in law by the signature of the President it will help to expand mortgage finance, and that the expansion will help to provide funds for acquisition of low cost housing and not just for mansions and skyscrapers. As we venture into this we should be mindful of the current financial crisis which originated from subprime mortgage lending. We must make sure that the regulatory framework for this avenue of financing is effective and robust.

Ladies and Gentlemen;
We have been working on sovereign rating in preparation for issuance of sovereign bond to raise funds for infrastructure projects. The current financial crisis, that began in mortgage finance in US has not only raised the lending risk and the attendant increase in interest rates, but also has reduced the probability of success through credit rating as the crisis has shaken the credibility of the rating agencies themselves. This underlines the importance of looking inside for long term sources of infrastructure financing. In this regard, the challenge for the financial system is to provide mechanism for facilitation of such financing from within the country.

It is my hope that the set-up of TIB as the national development financial institution will strengthen the provision of long-term financing for growth enhancing projects in agriculture, manufacturing, tourism and other sectors, as well as provision of venture capital. This is an area that we can encourage the private financial institutions to venture into, albeit by opening some windows for long-term financing.

Before finishing, let me say something again about the current financial crisis. As developed nations struggle to rescue their financial systems, huge government resources have already been committed and will continue to be committed to that endeavour. This may cause stress on aid funds, but we still have trust on the promises that the international community has continued to make on its dedication to make provisions for the attainment of Millennium Development Goals.

One of the outcomes of the crisis has been the loss of trust among financial institutions and the accompanying credit dry up, which is now causing worries about impending recession in developed economies. I am comforted Governor by your assurance that our financial sector remains safe and that systematic steps are being taken to minimize our exposure to risk by transferring our official reserves to safer hands. I urge you, in the financial community, to work together to keep our financial system from being pulled into the turmoil.

Ladies and gentlemen,
Let me finish by reiterating that: absence of reliable and accessible source of finance for poverty reducing activities remains a big challenge to our nation. It is a challenge that falls directly on you, and our people are looking at you, and their government for the answers. The theme of this conference “Second Generation of Financial Sector Reforms”, gives me hope that all matters vital to filling this gap, will be carefully considered and workable solutions will emerge from this conference.

As you discuss and deliberate on various issues in this conference, let us make sure that we come up with answers on how we can meet the various challenges mentioned earlier. We all have our roles to play in resolving these challenges. I call upon all the key financial sector players to go from here with good implementable ideas and put them into practice.

Having said this, now I have the pleasure to declare this conferences e opened. I wish you fruitful deliberations and outcomes.
I Thank you for your kind attention!

7th IFM annual conference coming

Dear Colleagues,
I am writting to notify you once again that the IFM Annual Conference will be taking place on 24th and 25th November at the Kilimanjaro Hotel Kempinski in Dar es Salaam.
The conference is ussually very educative, and provides a great opportunity of networking; this will be its 7th year running Background The Institute of Finance Management (IFM) organizes an annual International conference on matters relating to Financial Markets, Good Governance and Economic Development. This year's will be the SEVENTH in the series.
The conference primarily aims at bringing academics, practitioners, Government agencies, researchers, policy-makers, industry professionals and other stakeholders working or having an interest in any sub-field of finance and economics with a special reference to Financial Markets, Good Governance and Economic Development.
This year's conference will be held on Monday 24th and Tuesday 25th November 2008 at the Kilimanjaro Kempinski Hotel, Dar es Salaam.
The main theme of the conference is 'Financial Markets, Good Governance and Economic Development: Challenges and Prospects.'
Targeted Audience include Government agencies, academicians, practitioners, consultants, industrialists, policy makers, regulatory agencies, the general public, and other interested parties.
Invited speakers are drawn from a portfolio of reputable and experienced international authorities in the area from within and outside the African Continent.
The Conference is the ideal forum for the dissemination of the latest advances in Economic Development, Financial Markets and Good Governance. Ideally, the gathering is expected to facilitate an invaluable discussion among participants after each presentation.
Participants will have ample opportunity to discuss and share their experiences in the field.
Equal emphasis shall be placed on academic rigor and practical usefulness. We have great pleasure to invite scholars, practitioners, consultants, industrialists, policy makers, regulatory agencies, other interested parties and the general public to attend this International conference.

IFM is a non-profit Government Institution of higher learning and to ensure a smooth running of the conference participants will be charged a fee of TShs. 300,000/= per person to cover tea, coffee and snacks, three course hot and cold buffet lunch, soft drinks, pens and writing papers, copies of the papers to be presented, a conference bag and a cocktail party at the end of the conference.
Since conference space will be limited, we will advise you to confirm your participation and pay the appropriate fees at the Institute [Block A, 3rd Floor, Room 320] as soon as possible.
IFM looks forward to welcoming you and your colleagues to what promises to be an excellent International conference!
The registration of participants will be done on the day of the conference, and copies of the papers will be available on the same day.
If you have any questions regarding the conference you may contact:
Dr A.H. Makame
Conference Organizing Committee,
The Institute of Finance Management,
Shaaban Robert Street,
P.O.Box 3918,
Dar es Salaam,
el (office): +255222129181
Fax: +255222122045
+255777995556 or

Wednesday, November 5, 2008

Watuhumiwa wa EPA kizimbani leo

watuhumiwa wa EPA kizimbani leo
JEETU Patel (pichani katikati) anayetajwa kuwa kinara wa ufisadi katika wizi wa Sh bilioni 133 kwenye Akaunti ya Madeni ya Nje (EPA) katika Benki Kuu ya Tanzania (BoT) pamoja na wenzake tisa, jana walifikishwa mahakamani kujibu tuhuma za kuiibia benki hiyo.
Wengine waliofikishwa katika Mahakama ya Hakimu Mkazi Kisutu, Dar es Salaam ni Devendra Vinodbhai Patel na Amit Nandy, Ketan Chohan, Johnson Lukaza, Bahati Mahenge, Davies Kamungu, Godfrey Mosha na Manase Mwakale anayeshitakiwa na mkewe, Eddah Mwakale, ambaye ndiye mwanamke pekee katika kesi hiyo ya kifisadi.
Jeetu, ambaye jina lake halisi ni Jayantkumar Chandubahi Patel, katika moja ya kesi anazokabiliwa nazo, anashitakiwa kwa pamoja na Devendra Vinodbhai Patel na Amit Nandy.
Kwenye shitaka hilo, washitakiwa wanatuhumiwa kula njama, kughushi, kuwasilisha nyaraka za uongo, kuiba na kujipatia Sh bilioni 2.6 kwa kutumia kampuni yao ya Bencon ya Dar es Salaam. Wanadaiwa waliiba fedha hizo baada ya kudanganya kuwa Kampuni ya Matsushita Electric Trading Company iliwapa jukumu la kulipwa fedha hizo kupitia kampuni yao ya Bencon International Ltd.
Washitakiwa hao pia kwa pamoja wanashitakiwa kula njama, kughushi, kuiba na kujipatia tena Sh bilioni 7.9 kwa kutumia kampuni hiyo ya Bencon International Ltd. Katika wizi huo, washitakiwa hao wanadaiwa kudanganya kuwa walipewa jukumu la kulipwa fedha hizo na Kampuni ya Maruben Corporation ya Japan wakati wanajua kuwa si kweli.
Hakimu Euphamia Mingi alisema dhamana kwa washitakiwa ziko wazi, ila kila mshitakiwa anatakiwa kuweka mahakamani nusu ya fedha anazodaiwa kuiba, wadhamini wawili na mmoja kati yao awe ndugu wa karibu na wote watasaini hati ya dhamana.

Washitakiwa hao pia wanatakiwa kuwasilisha hati zao za kusafiria mahakamani, wanatakiwa wasisafiri nje ya mkoa hadi kwa ruhusa ya mahakama. Sharti jingine ni kila Ijumaa ya mwisho wa mwezi wataripoti kwa mwendesha mashitaka na pale wanapokuwa na matatizo, wadhamini wao watalazimika kwenda kutoa taarifa mahakamani.
Jeetu pia anashitakiwa katika kesi nyingine na Ketan Chohan na Amit Nandy ambao wanadaiwa kuiba Sh bilioni 3.3 kwa kutumia Kampuni ya Navy Cut Tobacco Tanzania Limited. Walidanganya kuwa wameruhusiwa na Kampuni ya Matsushita Electric Trading Company ya Japan walipwe fedha hizo. Kesi hiyo inasikilizwa na Hakimu Mkazi Neema Chusi na uamuzi wa dhamana yao utatolewa leo.
Kinara huyo wa ufisadi, pia anashitakiwa kwa wizi wa Sh bilioni 3.9 ambazo aliiba kwa kutumia kampuni ya Bina Rosorts Ltd kwa kudanganya kuwa walipewa mamlaka ya kulipwa fedha hizo na Kampuni ya C. Itoh & Company Ltd ya Japan. Katika shitaka hilo anashitakiwa kwa pamoja na wenzake Devenra Vinodbhai Patel na Nandy na kesi hiyo iko mbele ya Hakimu Mkazi Richard Kabate. Katika shitaka jingine, Jeetu anashitakiwa kwa wizi wa Sh bilioni 4.9 kwa kushirikiana na Devenra na Nandy.
Wote wanatuhumiwa kufanya wizi huo kwa kutumia Kampuni ya Maltan Mining Company Ltd wakidanganya kuwa wameruhusiwa na Kampuni ya Marubeni Corporation ya Japan walipwe fedha hizo na BoT.
Mtuhumiwa mwingine aliyefikishwa mahakamani jana ni Johnson Lukaza ambaye naye anatuhumiwa kula njama, kughushi, kuwasilisha hati ya uongo, kuiba na kujipatia Sh bilioni 6.3. Mtuhumiwa huyo na mwenzake aliyetajwa kwa jina la Mwesiga Lukaza ambaye hakuwapo mahakamani, wanadaiwa kufanya wizi huo Desemba 2005.
Dhamana kwa mshitakiwa iko wazi ila mshitakiwa anatakiwa kuweka mahakamani nusu ya fedha anazodaiwa kuiba na wadhamini wawili na mmoja kati yao awe ndugu wa karibu, wote watasaini hati ya dhamana. Mshitakiwa pia anatakiwa kuwasilisha hati yake ya kusafiria mahakamani, anatakiwa asisafiri nje ya mkoa hadi kwa ruhusa ya mahakama.
Sharti jingine ni kila Ijumaa ya mwisho wa mwezi ataripoti kwa mwendesha mashitaka na pale anapokuwa na matatizo wadhamini wao atalazimika kwenda kutoa taarifa mahakamani. Wengine waliopanda kizimbani ni Bahati Mahenge, Davies Kamungu, Godfrey Mosha na Manase Mwakale anayeshitakiwa na mkewe, Eddah ambaye ni mwanamke pekee katika kesi hiyo ya kifisadi.
Washitakiwa wanatuhumiwa kuiba Sh milioni 855.4 ambazo waliiba kwa kutumia Kampuni ya Changanyikeni Residential Complex Ltd baada ya kuwasilisha nyaraka za kughushi BoT wakionyesha kuwa kampuni hiyo, mkurugenzi wake Samson Mapunda ndiye aliyetoa idhini ya kulipwa fedha hizo.
Watu hao pia walishitakiwa kwa wizi wa Sh bilioni 1.2, mali ya BoT baada ya kutumia kampuni ya Changanyikeni Residential Complex Ltd wakidai wamepewa mamlaka ya kulipwa fedha hizo na kampuni ya Marubeni Corporation ya Japan. Uamuzi wa dhamana yao utatolewa kesho na Hakimu Victoria Nongwa.
Akihutubia Taifa Ijumaa iliyopita, Rais Jakaya Kikwete alisema Sh bilioni 69.3 ambazo ni sawa na asilimia 76.7 ya Sh bilioni 90.3 zilizochotwa kutoka EPA, zilikuwa zimerejeshwa kufikia Oktoba 31. Hata hivyo, aliagiza kuwa wote ambao kufikia siku hiyo, watakuwa hawajatekeleza agizo la kurejesha fedha hizo, hatua za kisheria zichukuliwe.
Alitoa maelekezo kamili kwa ambao hawakutimiza malipo, majalada yao yakabidhiwe kwa Mkurugenzi wa Mashitaka mara moja, kwa hatua zipasazo za kisheria. Kampuni 23 zinadaiwa kuchota fedha, Sh bilioni 133 katika Akaunti ya Madeni ya Nje ya BoT, na iligundulika baada ya ukaguzi wa hesabu uliofanywa na Kampuni ya kigeni ya Ernst & Young katika mwaka 2005/2006 ambayo ilipewa kazi iliyoachwa na Deloitte & Touche ya Afrika Kusini.
kachelo koba kimanga 'assossa' (shoto) akimuelekeza jeethu patel pa kwenda wakati watuhumiwa wa EPA walipotinga mahakama ya kisutu sasa hivi kujibu tuhuma hizo
baadhi ya watuhumiwa wakiwa wamechuchumaa kusubiri kuingizwa mahakamani
baadhi ya watuhumiwa wa EPA wakisubiri kupanda kizimbani mchana huu katika mahakama ya hakimu mkazi wa kisutu, dar

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