Remote Areas Left Behind: Poverty and Financial Exclusion in Tanzania

Introduction

Tanzania is one of the countries in Africa where poverty and financial exclusion are major challenges. A staggering 18.7% of the population lives below the national food poverty line, with a significant proportion residing in rural areas that are most affected by this issue.

Lack of Access to Financial Services

The lack of access to financial services has led to low-level usage of bank services, with only 6% of households having one or more members with a bank account. The Household Budget Survey of 2000/01 revealed that the level of savings is insignificant among many Tanzanians, and only 4% of households participate in informal savings groups.

Money Remittance System in Chaos

The absence of a regulatory framework for alternative money remittance systems has created a vacuum that is being exploited by criminal elements. This includes expedited mail services, money transfers by bus operators, and cyber transactions. The open door policy on foreign direct investments (FDIs) has also introduced a risk that proceeds of crimes or terrorist financing from outside Tanzania may be laundered in the country.

Lack of National Identity Cards

The lack of national identity cards (NICs) is another significant challenge, with Zanzibar being the only region to have implemented such a system since 2005. This has made it difficult for law enforcement agencies to track and identify individuals, particularly in cases involving money laundering and terrorist financing.

Low Awareness of Money Laundering

There is a general lack of competence among law enforcement officials when it comes to prosecuting and determining money laundering and terrorism offenses. Many people are unaware of the evils of money laundering, which makes it difficult to combat this issue effectively.

Escalation of Predicate Offenses

Predicate offenses such as bank robberies, car thefts, prostitution, and corruption have increased in recent years, generating dirty money. The porous borders with neighboring countries, some of which are economically and socially unstable, have also contributed to this issue.

National AML/CFT Strategy

To address these challenges, the government has developed a national Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) strategy. The strategy sets out key objectives, strategies, and action plans to strengthen the legal framework, improve communication and information sharing among stakeholders, and increase awareness about money laundering and terrorist financing.

Implementation Plan

The implementation plan assigns responsibilities and sets indicative timetables for the various actions outlined in the strategy. The development of this national strategy involved wide consultation with stakeholders to ensure that all relevant sectors are covered and taken on board in efforts to prevent and control money laundering and terrorist financing.