Tanzania National Budget FY 2024-25 and Financial Inclusion

As the Ministry of Finance prepares to present the national budget for the financial year 2024-2025, financial sector stakeholders eagerly anticipate that the sector will be adequately resourced and prioritized for growth. As a financial sector market facilitator, FSDT is keen to see several areas prioritized and strengthened through this budget, which we believe can contribute towards a more inclusive and transformative financial sector, especially for women, youth farmers, and MSMEs. These areas include innovation in agriculture, green businesses, land ownership, loan schemes, universal ID, financial education, and financial sector sandboxes.

Innovation in agriculture

We hope to see more emphasis on innovation in agriculture to improve productivity and market access for women and youth smallholder farmers. Recently, we have seen low productivity due to a lack of access to quality agricultural inputs and modern technology that can increase production and add value to crops. For example, FSDT has been engaging with sugarcane farmers in Kilombero-Morogoro to assess the challenges they face in increasing their yields. We found that, despite having access to a reliable market through the Kilombero Sugar Company, these farmers are still unable to meet the standard yield per hectare compared to the yields observed on the company’s estate. As a result, the farmers have been unable to meet the company’s raw material requirements for sugar production. Therefore, we hope to see an allocation in the FY 2024-2025 national budget for advancing homegrown innovation in agriculture and ensuring the timely, national distribution of traceable quality inputs to increase yields and crop value.

In terms of market access, we hope to see more deliberate efforts to incorporate additional crops into agricultural market infrastructures and models, such as the Tanzania Mercantile Exchange (TMX) and the Warehouse Receipt System (WRS), to ensure transparency and better price discovery when marketing farmers’ produce. As FSDT, we encourage incorporating more value chains with higher numbers of women and youth farmers into these agricultural market infrastructures.

Green businesses

We hope to see the government set aside a budget for awareness creation and knowledge sharing for farmers and small and medium enterprises (SMEs) on green businesses, such as carbon trading and recycling, to promote sustainable climate change mitigation and environmental protection. Tanzania’s National Trading Guidelines 2022 provide guidance on how to operate in this growing global business. Efforts are needed to increase awareness of these guidelines to enable more Tanzanians to participate. Established recycling companies can also create employment opportunities for many micro-enterprises by acting as offtakers. This can be a great opportunity for underserved Tanzanians, especially women and youth, to generate income. We hope to see the government also developing financing mechanisms for SMEs and farmers who want to pursue such businesses.

Land ownership

We hope to see an allocation in the national budget to improve the Land Use Planning Programs in rural and urban areas for the formalization of land ownership through the provision and recognition of Certificates of Customary Right of Occupancy (CCROs) as alternatives to title deeds. This would enable women and youth to access credit from financial service providers (FSPs). FinScope Tanzania 2023 shows that only 3% of Tanzanians have title deeds. Women are less likely to hold such collateral, as they are less likely to own land in general. Therefore, this limits many people from accessing credit due to the lack of collateral, as many FSPs use title deeds as a reliable form of collateral. Moreover, alternative collaterals, such as movable assets, can significantly broaden the bankable population. As such, FSDT hopes to see a deliberate move towards supporting these initiatives

Loan schemes

We commend the government for improving the adminisitration and management of the 10% loans set by Local Government Authorities (LGAs) from their own revenue for empowerment of women, youth and people with disability, which will now be offered through banks. Going into the new financial year, we hope to see more emphasis on scaling this modality to ensure that more women, youth and people with disabilities have access to affordable loans. We believe that the provision of these loans should be bundled with business development, financial education programs as well as other government initiatives such as the BBT program to ensure that the recipients of these loans are able to manage the loans effectively to grow their businesses, increase their contribution towards the economy and minimize defaults.

Universal ID

In August 2023, Tanzania’s NIN discourse gathered momentum as the Government highlighted the necessity for a Universal NIN, which should be issued from birth. Currently, the Registration and Identification of Persons Act (1986) only allows people to obtain a National ID from the age of 18. Therefore, this advancement will be an important step towards enabling all Tanzanians to access essential social and financial services right from birth. FSDT has long recognized that people’s lack of identity documents is a key barrier to financial inclusion, and we have a history of working with the National Identification Authority (NIDA) to issue millions of NINs. In the upcoming budget, we hope to see more emphasis highlighted towards this development.

Financial education

This financial year, we hope to see the government placing more emphasis in encouraging partnerships with FSPs to ensure more sustainable financial education programs for the public. As part of implementation of the Guide for Financial Educators 2023 – 2028 launched by the National Council for Financial Inclusion, we hope to see increased support to the institutions mandated to provide Training of Trainers (ToT) for interested financial educators to start engaging and providing financial education to the public.  

Financial sector sandboxes

Finally, we hope to see deliberate measures towards improving dialogue and partnerships between the government, financial service providers, and fintechs through sandboxes to address the key challenges and opportunities in driving innovation in the financial sector, especially in the areas of developing digital financial solutions and infrastructure to improve access and usage of formal financial services by underserved Tanzanians, especially women and youth.

Are there any other areas you would like to see emphasized on the national budget 2024-2025 to boost financial inclusion in the country? Please share your thoughts and recommendations by commenting below.