15 banks close in Tanzania as the economy consolidates

As financial sector contraction picks up speed in Tanzania, at least 15 banks have shut down in the preceding five years. The number of banks reached a peak of 59 in 2017, before dropping to 44 in 2022 as a result of the acquisition of failing financial institutions, according the Bank of Tanzania (BoT).Although the banking industry was liberalized in the 1990s, which promoted growth and competition among lenders, current economic shifts have caused capital concerns for some institutions. Despite the existence of a considerable number of competitors, banks control the majority of the market. For instance, the top six banks controlled the deposits made by the banking industry because they had a greater network of branches, agency banking, and Internet financial services. According to the central bank, which regularly monitors the situation to identify and reduce any potential systemic risks, these banks accounted for 65.4% of all deposits. The number of financial institutions, according to bankers and economists, may be good for competition, but Tanzania needs stronger financial institutions that can match the market's demands. “Consolidation in the banking industry is actually a very good idea to form strong and well-capitalized institutions,” said Tanzania Commercial Bank (TCB) managing director Sabasaba Moshingi.