Tanzania Diagnostic Review of Consumer Protection and Financial Literacy

Abstract

In 2011, only 17.3 percemt of adults in
 Tanzania had an account at a formal financial institution
 and 56 percemt did not have any access to financial
 services. Most of the population lives in rural areas with
 very low incomes and poor infrastructure, and women are
 especially disadvantaged. Such limited access to formal
 financial services also inhibits financial literacy –
 awareness of benefits and risks, and how to take advantage
 of opportunities. Despite significant challenges, all
 institutional elements of the formal financial sector in
 Tanzania are in place, helping its gradual expansion, and in
 some segments technology is driving rapid growth –
 particularly in mobile and electronic payments. Still, gaps
 and weaknesses in financial consumer protection and
 financial education remain some of the main obstacles to
 sustainability and greater trust in the financial sector.
 This Diagnostic Review was requested by the Ministry of
 Finance of Tanzania in November 2012. It provides a detailed
 assessment of Tanzania’s institutional, legal and regulatory
 framework against the World Bank’s Good Practices for
 Financial Consumer Protection. Three segments of the
 financial sector have been analyzed: banking, microfinance,
 and pensions. Insurance and securities segments will be
 considered at a later stage. Volume I of the Review
 summarizes the key findings and recommendations and Volume
 II presents a detailed assessment of each financial segment
 compared to the Good Practices.