Tanzania’s Remote Areas Left Stranded Without Financial Services
Widespread Poverty and Financial Exclusion
A staggering 94% of households in Tanzania’s rural areas are unbanked, leaving millions of people without access to basic financial services. This lack of financial inclusion has led to widespread poverty, with a significant proportion of the population struggling to make ends meet.
According to the Household Budget Survey of 2000/01:
- 18.7% of the population lives below the national food poverty line
- 35.7% struggles to access basic necessities like healthcare and education
Complicated Situation
The situation is further complicated by the lack of a regulatory framework for alternative money transfer systems, including:
- Expedited mail services
- Bus operators
- Cell phones
- Hawala
- Cyber transactions
This has created an environment conducive to money laundering and terrorist financing.
Risks and Challenges
Tanzania’s open-door policy on foreign direct investments introduces a significant risk that proceeds from crimes or terrorist financing may be laundered in the country. The lack of National Identity Cards (NICs) hinders efforts to implement effective:
- Know Your Customer (KYC)
- Customer Due Diligence (CDD)
measures.
Limited Awareness and Competence
The absence of NICs has also led to a lack of awareness about money laundering and its effects, with many people unaware of the risks associated with financial transactions. This has resulted in limited competence among law enforcement agencies to investigate and prosecute money laundering and terrorist financing offenses.
Escalation of Predicate Offenses
The escalation of predicate offenses, such as:
- Bank robberies
- Car thefts
- Prostitution
- Corruption
has further contributed to the problem. Tanzania’s porous borders and unstable neighboring countries have also created an environment conducive to criminal activity.
National Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) Strategy
In response to these challenges, the government has developed a National AML/CFT Strategy. The strategy sets out key objectives, strategies, and action plans aimed at addressing the issues identified during the self-assessment and Mutual Evaluation exercise.
Implementation Plan
The implementation plan assigns responsibilities and sets indicative timelines for the delivery of results. The development of the 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.
Way Forward
However, more needs to be done to address the financial exclusion faced by millions of Tanzanians living in remote areas. The government must prioritize the implementation of financial inclusion initiatives, including:
- Issuance of NICs
- Development of a regulatory framework for alternative money transfer systems
Only then can Tanzania make significant progress towards reducing poverty and promoting financial stability.
Conclusion
Tanzania’s remote areas are in dire need of financial services to alleviate poverty and promote financial stability. The government must take immediate action to address the challenges facing these communities, including implementing financial inclusion initiatives and developing a regulatory framework for alternative money transfer systems.