Analysis of Tanzania’s Banking Sector 2022

Tanzania's Banking Sector
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In a recent comprehensive report reviewing the calendar year 2022, Tanzania’s banking sector has been spotlighted for its resilience, adaptability, and significant growth. The report, titled “Tanzania Banking Sector Report – A Review of the Calendar Year 2022,” provides an in-depth analysis of the sector’s performance amidst various challenges, including global supply chain disruptions caused by geopolitical tensions in Eastern Europe.

The 2022 report reveals a banking sector that has not only weathered the storm of global adversities but has emerged with a stronger footing, ready to propel the nation toward economic stability and growth. The growth in total assets, customer deposits, and lending activities is a testament to the sector’s robustness and the growing confidence investors and consumers have in Tanzania’s financial institutions.

This article aim to unravel the key highlights from the report, explore the microeconomic dynamics at play, and look ahead at the opportunities and challenges that lie on the horizon for Tanzania’s banking sector.

Key Highlights on Tanzania’s Banking Sector

  1. Asset Growth: The total assets within Tanzania’s banking sector witnessed a significant growth of 17.3%, reaching a remarkable TZS 46 trillion. This growth is a positive indicator of the sector’s resilience and the increasing confidence among investors and stakeholders in the nation’s financial stability.
  2. Customer Deposits: Customer deposits saw a notable increase of 11.4%, amounting to TZS 30.6 trillion. This rise is a testament to the growing trust and financial inclusion that the banking sector has fostered among individuals and businesses. It also reflects the sector’s crucial role in facilitating savings and fostering economic stability.
  3. Lending Activities: The total value of loans, advances, and overdrafts surged 24.9% to TZS 26 trillion. This surge showcases the sector’s efforts to provide access to credit, support investment opportunities, and fuel economic growth, which are essential for the country’s overall development.
  4. Market Concentration: The report highlights that the 13 largest banks account for a significant portion of the market, holding 85.1% of all assets, 87.6% of all deposits, and 87.6% of all loans. This concentration reflects the dominant position of large banks in Tanzania’s banking landscape.
  5. Employment in the Sector: The banking sector remains a significant employer, with 16,731 individuals employed across various banking institutions. This employment level indicates a significant level of income generation and the sector’s contribution to job market stability.
  6. Non-Performing Loans (NPL) Average: The report provides a breakdown of the average Non-Performing Loans (NPL) ratio, with large banks at 3.8% and small and regional banks at 11.7%, compared to an industry average of 4.8%. This data suggests better risk management practices within larger banks.

These key highlights provide a snapshot of the robust performance and the positive impact of Tanzania’s banking sector on the economy in 2022. The growth in assets, customer deposits, and lending activities, coupled with the sector’s ability to maintain a stable employment level and manage risks effectively, underscores the banking sector’s pivotal role in Tanzania’s economic narrative.

Market Concentration: What It Means for the Average Tanzanian

The narrative of market concentration within Tanzania’s banking sector, dominated by 13 large banks, unfolds a scenario with mixed implications for the average Tanzanian. Here’s a closer look at how this market structure impacts the common citizen:

  1. Competitive Landscape:
    • Pricing: The lack of competition could lead to higher banking costs for the average Tanzanian. Whether it’s in the form of higher interest rates on loans or higher fees for banking services, the cost of banking could potentially be a burden for many.
    • Service Quality: With fewer banks vying for customers’ attention, the incentive to offer superior customer service or innovative banking solutions might diminish. This could result in a less satisfying banking experience for the average Tanzanian.
    • Innovation: A competitive market often drives innovation, leading to better products and services. The average Tanzanian might miss out on innovative banking solutions that could make financial management easier, safer, and more accessible.
  2. Economies of Scale:
    • Lower Costs: The dominance of large banks could lead to operational efficiencies that translate to lower costs. If these cost savings are passed on to consumers, the average Tanzanian could benefit from lower banking fees and better interest rates.
    • Accessibility: Large banks, with their extensive resources, are often better positioned to offer a wide network of branches and ATMs, making banking services more accessible to individuals across different regions of Tanzania.
    • Financial Literacy: With more resources at their disposal, large banks may also invest in financial literacy campaigns. Educating the average Tanzanian on financial management, savings, and investment could have long-term positive implications on individual financial health and the broader economy.
  3. Consumer Choice:
    • The market concentration might limit the choices available to consumers. With fewer banks to choose from, the average Tanzanian might find themselves with limited options to suit their specific banking needs.
  4. Small and Medium-Sized Banks:
    • The overshadowing presence of large banks might make it challenging for smaller and medium-sized banks to thrive. However, these smaller institutions often cater to niche markets or local communities, providing personalized services that resonate with the needs of the average Tanzanian.

In essence, the tale of market concentration in Tanzania’s banking sector is a double-edged sword for the average Tanzanian. While the economies of scale could bring about benefits in cost savings and accessibility, the stifled competition could hinder innovation, service quality, and consumer choice. As the sector evolves, the balancing act between these dynamics will continue to shape the financial landscape and the experiences of individuals navigating through it.

Loan Availability and Quality

The surge in lending activities within Tanzania’s banking sector in 2022 unveils a scenario of increased credit access and a spotlight on loan quality. Here’s how these dynamics resonate with the average Tanzanian:

  1. Credit Access:
    • Fueling Dreams: The significant increase in loans, advances, and overdrafts to TZS 26 trillion is a beacon of hope for many. Whether it’s a small business owner looking to expand operations or a family aspiring to own a home, the availability of credit is often the bridge between dreams and reality.
    • Economic Participation: With more credit access, individuals and businesses can actively participate in economic activities, contributing to the nation’s growth. The ripple effect of this credit availability can lead to job creation, increased consumer spending, and improved standards of living.
    • Financial Inclusion: The growth in lending activities also reflects a stride towards financial inclusion. By extending credit to a broader segment of the population, the banking sector is playing a pivotal role in integrating more Tanzanians into the formal financial system.
  2. Non-Performing Loans (NPL):
    • Risk Management: The variance in NPL ratios among large, small, and regional banks unveils a narrative of risk management. For the average Tanzanian, this could translate to varying levels of loan approval criteria, interest rates, and loan terms depending on the bank they approach.
    • Loan Quality: A lower NPL ratio in large banks suggests better loan quality and possibly more stringent risk assessment before loan disbursement. This could mean that while it might be more challenging to secure a loan from large banks, the terms might be more favorable due to lower risk.
    • Financial Health: On the flip side, a higher NPL ratio in small and regional banks might indicate a higher risk profile, which could lead to higher interest rates. This scenario could potentially strain the financial health of borrowers, especially if they are not well-versed in managing credit.
  3. Financial Literacy:
    • Educated Borrowing: The scenario of varying NPL ratios also underscores the importance of financial literacy. Educating the average Tanzanian on responsible borrowing, understanding loan terms, and managing credit can go a long way in ensuring that the access to credit serves as a stepping stone rather than a stumbling block.
  4. Policy Implications:
    • Regulatory Oversight: The dynamics of loan availability and quality also hint at the need for robust regulatory oversight to ensure fair lending practices, protect consumer rights, and foster a healthy credit environment that supports sustainable economic growth.

In a nutshell, the dynamics of loan availability and quality in Tanzania’s banking sector in 2022 have profound implications for the average Tanzanian. While increased credit access is a positive stride towards economic growth and financial inclusion, the variance in loan quality and risk management practices across different banks highlights the importance of financial literacy and robust regulatory oversight in nurturing a healthy credit culture.

Banking Sector Employment in Tanzania

The employment landscape within Tanzania’s banking sector is a narrative of opportunities, skill development, and economic stability. Here’s a closer examination of how these employment dynamics resonate with the average Tanzanian:

  1. Employment Opportunities:
    • Income Generation: The employment of 16,731 individuals across various banking institutions translates to thousands of families with a stable source of income. This income generation is crucial for improving living standards, enhancing financial security, and fostering economic stability at a household level.
    • Consumer Spending: With stable employment and income, individuals are more likely to engage in consumer spending, which in turn stimulates economic activity. The ripple effect of this spending contributes to the broader economic growth and development of Tanzania.
    • Poverty Alleviation: Employment within the banking sector can also play a role in poverty alleviation. By providing stable job opportunities, the sector helps in reducing unemployment rates and lifting individuals and families out of poverty.
  2. Skill Development:
    • Professional Growth: The banking sector provides a platform for individuals to develop their skills, advance their careers, and achieve professional growth. Whether it’s through on-the-job training, exposure to modern banking technologies, or interactions with a diverse clientele, employees can hone their skills and expertise.
    • Human Capital Development: The skill development within the banking sector contributes to the overall human capital development in Tanzania. By nurturing a skilled workforce, the sector is investing in the country’s human capital, which is a critical asset for Tanzania’s long-term economic growth.
    • Knowledge Transfer: The expertise and skills acquired by individuals within the banking sector can be transferred to other sectors of the economy. This knowledge transfer is vital for fostering innovation, improving service delivery, and enhancing productivity across various sectors.
  3. Career Diversity:
    • Wide Range of Roles: The banking sector offers a wide range of roles and career paths, from customer service and sales to risk management and financial analysis. This diversity of roles provides opportunities for individuals with varying interests and skill sets to find a fulfilling career within the sector.
  4. Educational Opportunities:
    • Continuous Learning: Many banking institutions provide educational opportunities, training programs, and professional development courses for their employees. This culture of continuous learning is beneficial for individuals aspiring to expand their knowledge and advance their careers.
  5. Community Impact:
    • Community Engagement: Banks often engage in community outreach programs, financial literacy campaigns, and corporate social responsibility initiatives. Employees within the banking sector can participate in these initiatives, contributing to positive social impact and community development.

Navigating the Future: Opportunities and Challenges for Tanzania’s Banking Sector

As we reflect on the performance and dynamics of Tanzania’s banking sector in 2022, it’s imperative to cast a gaze towards the horizon, exploring the opportunities and challenges that lie ahead. The sector’s journey is intertwined with the broader economic narrative of Tanzania, and navigating the future requires a nuanced understanding of the evolving landscape.


  1. Digital Transformation: The global shift towards digital banking presents a golden opportunity for Tanzania’s banking sector. By embracing digital technologies, banks can enhance service delivery, reach a wider customer base, and improve operational efficiencies.
  2. Financial Inclusion: With a significant portion of Tanzania’s population still unbanked, there’s a vast opportunity to expand financial services to underserved communities. Innovative banking solutions, mobile banking, and financial literacy campaigns can play a crucial role in promoting financial inclusion.
  3. SME Financing: Small and Medium-sized Enterprises (SMEs) are the backbone of Tanzania’s economy. By providing tailored financial products and services to SMEs, banks can support the growth of this vital sector, contributing to job creation and economic diversification.
  4. Green Financing: As the global focus shifts towards sustainable development, there’s an opportunity for Tanzanian banks to venture into green financing. By supporting environmentally-friendly projects and adhering to sustainable banking practices, the sector can contribute to Tanzania’s sustainable development goals.
  5. Regional Integration: The East African Community (EAC) provides a platform for regional integration and cross-border banking services. Tanzanian banks can explore opportunities for expansion and collaboration within the EAC, tapping into a larger market and fostering regional economic growth.


  1. Regulatory Compliance: Adhering to evolving regulatory frameworks can be a challenge for banks. Ensuring compliance while maintaining profitability requires a delicate balance and a proactive approach to regulatory engagement.
  2. Cybersecurity Threats: As the banking sector embraces digital transformation, cybersecurity threats loom large. Investing in robust cybersecurity infrastructure and fostering a culture of cybersecurity awareness are imperative to safeguarding the sector’s integrity.
  3. Market Concentration: The market concentration among a few large banks could stifle competition and innovation. Fostering a conducive environment for the growth of smaller and regional banks is crucial for promoting a competitive and vibrant banking landscape.
  4. Human Capital Development: Attracting and retaining skilled talent is a challenge that could impact the sector’s ability to innovate and compete. Investing in human capital development, continuous training, and creating conducive work environments are essential for nurturing a skilled and motivated workforce.
  5. Global Economic Uncertainties:The banking sector is not immune to global economic uncertainties. Geopolitical tensions, global financial market volatility, and the ongoing COVID-19 pandemic pose challenges that require a resilient and adaptive banking sector.

Forecasting Tanzania’s Banking Sector Performance in 2023

Based on the insights gleaned from the 2022 Tanzania Banking Sector Report by EY, and considering the prevailing global and local economic conditions, here’s a forecast on how the banking sector in Tanzania might perform in 2023:

  1. Continued Digital Transformation: The trajectory of digital transformation is expected to continue ascending as banks further integrate digital technologies to enhance service delivery, operational efficiency, and customer experience. The adoption of mobile banking, online platforms, and digital payment systems is likely to gain more traction, aligning with the global trend towards digital financial services.
  2. Financial Inclusion: Efforts towards financial inclusion are anticipated to intensify, with banks extending their outreach to unbanked and underbanked populations. Innovative banking solutions, coupled with financial literacy campaigns, could play a pivotal role in bringing more Tanzanians into the formal financial ecosystem.
  3. SME Financing: The focus on SME financing may sharpen, given the sector’s critical role in economic growth and job creation. Banks might develop more tailored financial products and advisory services to support the growth and sustainability of SMEs.
  4. Green Financing: As sustainability concerns become more pronounced, green financing could emerge as a new frontier for Tanzanian banks. Financial products and services that support environmentally sustainable projects may see a rise, aligning with global and local sustainability goals.
  5. Regional Integration: Regional integration efforts within the East African Community (EAC) could provide Tanzanian banks with opportunities for cross-border expansion and collaboration, potentially leading to a broader market reach and enhanced regional economic cooperation.
  6. Regulatory Compliance: Banks will likely continue to navigate the evolving regulatory landscape, ensuring compliance with local and international financial standards. This adherence is crucial for maintaining investor confidence and sector stability.
  7. Cybersecurity Investments: With the digital shift, investments in cybersecurity infrastructure are expected to ramp up to safeguard against potential cyber threats. A proactive approach to cybersecurity will be crucial for protecting the integrity and trust in the banking sector.
  8. Market Competition: The market concentration among large banks may persist, but there could be policy interventions or market dynamics that might foster a more competitive environment, encouraging the growth and innovation among smaller and regional banks.
  9. Human Capital Development: The banking sector may continue to invest in human capital development to attract, retain, and nurture skilled talent, which will be essential for driving innovation and maintaining a competitive edge in the evolving financial landscape.
  10. Global Economic Resilience: The sector’s resilience to global economic uncertainties will continue to be tested, especially with the ongoing effects of the COVID-19 pandemic and other geopolitical factors. A resilient and adaptive banking sector will be crucial for navigating these uncertainties and supporting Tanzania’s economic stability.

In conclusion, the outlook for Tanzania’s banking sector in 2023 is cautiously optimistic. The sector’s ability to leverage digital transformation, promote financial inclusion, and navigate regulatory and global economic challenges will be instrumental in defining its trajectory. Continuous engagement among stakeholders, including policymakers, financial institutions, and the community, will be essential for harnessing the opportunities and overcoming the challenges that lie ahead.

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