Friday, July 3, 2009

Education on financial savings importance


The Tanzania Consumer Advocacy Society (TCAS) is a non governmental, independent consumer’s organisation, which has been established with interest to promote, protect, disseminate, and advocate for consumers’ right in Tanzania. Our reporter, Erick Toroka had an interview with the Executive Director for TCAS, Bernard Kihiyo, on the importance of education on financial savings.

Kihiyo says TCAS would like to be a Bank of Tanzania (BoT) advocacy implementing partner, on supplementing BoT’s honourable efforts in controlling and regulating banking industry and financial institutions in Tanzania to have sound financial management and financial accountability.

It has been habitual for most of the banks and financial institutions in Tanzania to favour big business on capital investment and ignore the poor (low-income consumers) due to their lack of security; however with the government project like MKURABITA this is not going to be an obstacle any more.

In recent years a number of good achievements happened in financial market in Tanzania; one being an abrupt increase in the number of Banks, SACCOS, and other financial lending institutions in Tanzania.

As the world is in the era of globalised economy, banking and financial customers all over the world (including Tanzania) are forced to be competent with; e-banking, e-business, e-commerce, international banking; which associate with the high degree of fraudsters and money laundry.

And it has been revealed that more than 80 per cent of consumers (including those of banking and financial services) in Tanzania suffer from lack of understanding of their consumers rights. They remain unaware, vulnerable, with no ability to fight or claim for their rights.

It is against this background whereby his organisation’s management feels that it is equally important to establish viable campaigns on raising customers awareness on several banking and financial issue under the partnership between BoT and TCAS.

“This campaign will provide information and capacity-building support to the customers to realize their potential and actively take part in country economy development in this foreseeable expanding financial market in Tanzania,” he states.

For instance, Ally Goronya says, there is a need for fraud prevention campaigns; we think personal customer safety is of paramount importance; the campaign should revolve around importance of chip and pin on fighting credit or debit card fraud, advocate for several different ways of reducing fraud and risk of identity theft.

there must be an intensive advocacy to money lenders on their rights and obligation that aim to raise borrower’s awareness on the true rate of interest being charged, loan’s terms and conditions, default, borrower’s right to restate, foreclosure procedures; arming preventing customers from being unfairly penalized or exploited unknowingly.

The campaign should also involve lobbying and advocacy on introduction of common money-lenders payment protection scheme; TCAS would like to work hand in hand with BoT, and the government on having fair insurance cover scheme that meet the demands and needs of those customers who wish to ensure that their payment protection needs are met.

The TCAS boss also notes that the scheme should cover any failure of moneylender to service his/her loan due to unforeseeable accident or sickness, involuntary unemployment, loss of business, hospitalization, death and general calamities like war, riot, commotion or other similar events.

Other unforeseeable like; case of theft-fraud, money laundering, loss acquired through misuse of e-banking card by someone else without holders permission should also be considered on the cover.

“We think the campaign should also advocate for responsible lending practices, issues such as minimum payment while serving a loan; frequent sharing of information on loan servicing, banks interest rates, default charges and insist on the banks/financial institution to have court order during enforcement on a customer who bleached a contact,” he says.

Other rights and obligation to be emphasized during the campaign are; what if someone is getting unsatisfactory services from the banks which lead to failure on paying the loan and interest in time – can the borrower sue the banker? Customer’s right to cancel loan agreements, complaint procedures, Rights to take legal proceeding, confidentiality on customer’s information.

Overall objectives of this proposed; TCAS/BoT Advocacy campaign are;- To raise customers’ awareness on banking and financial rights, increase customers familiarity with banking and financial services, inform customers about specific feature of a financial services, indicate distinctive features and/or benefit of a service, establish credibility of financial product or services, and Encourage potential customers to use such service.

Others are; to maintain loyalty of existing customers, Expand the reach of financial market, Overall enhancement of investment climate; with required necessary financial support and schemes, Catalyze effective competition in financial market, Raise customers’ financial discipline.

there is no way one can talk of citizens economic empowerment in this globalised economy without having plans in place on raising consumers’ awareness on their consumers rights, and consumers awareness is the back born of country’s sustainable economic growth.

“Let us work together to achieve the fundamental trust of the government in power to bring the benefits of banking and financial institutions to the poor people”, Kihiyo concludes.

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