Tanzania

Abstract

Tanzania has been a slow and cautious adopter of Basel standards, although a faster pace of adoption emerged after 2009. From 1991 to 2008 Tanzania liberalized its financial sector, but a gap emerged between the commitment to adopting Basel standards and the actual pattern of implementation and enforcement. It was only from 2009 onwards that Basel implementation was prioritized as Tanzania moved to regulator- and market-driven convergence. Regulator preferences reflected the appointment of a new governor at the Bank of Tanzania and the influence of regional commitments to regulatory harmonization. Over the same period, politicians’ commitment to deep liberalization faltered and demands for policy-based lending returned. This led to a selective implementation of Basel II and III and higher levels of enforcement. Domestic and foreign banks initially showed little interest in implementation but their preferences have shifted because of pressures from parent banks and anti-money laundering concerns. The central bank adopted a selective approach to Basel and introduced tailored regulation for development banks.