Liberalisation of the Banking Industry in Tanzania: Issues and Prospect.

In Tanzania, as in many other developing countries, banks play a predominant role in the financial sector of the country as far as mobilisation and allocation of financial resources is concerned. The question that deserves attention however, is whether and to what extent foreign banks have been playing a positive role in the promotion of the country's economy. Looking at this concern the paper notes that after the enactment of the Banking and Financial Institutions Act, 1991 the Banking industry has undergone a dramatic change allowing the establishment of private banks in the country. On the one hand the liberalisation of this sector has made it possible for over 800 Tanzanians to get employed in sixteen projects which were approved up to 1998 by the government authorities to carry on financial business, mainly in the banking sector. On the other hand the Bank of Tanzania reveals that the sector has contributed to the country's GDP by an average of 4.0 percent between 1990 and 1996. This paper discusses the role that has been played by the banking system especially after the arrival of private investors in the sector. Various issues and prospects in the industry are examined. African Journal of Finance and Management Vol.7(2) 1999: 98-11