The recent launch of the Absa Africa Financial Markets Index (AFMI) 2025 here in Dar es Salaam gave us an important moment to look at the progress Tanzania has made in developing its financial markets—and to recognize the areas where more work is still needed.
For nine years, the AFMI has been one of Africa’s most trusted tools for assessing how financial markets are growing. It does more than rank countries. It helps governments, regulators, and financial institutions understand what is working well, what needs improvement, and where reforms can have the biggest impact.
The 2025 report shows that Tanzania is moving forward steadily, supported by a foundation of stability, but also highlights opportunities for further growth
A foundation of stability and transparency
One of the most positive findings from this year’s report is Tanzania’s continued strength in macroeconomic stability. Our country has enjoyed steady and predictable monetary policy; low and stable inflation and more open and consistent communication from policymakers. These elements help build investor confidence. They also create a stable environment for businesses and households
The report also reflects steady improvements in market infrastructure and the regulatory environment. Ongoing efforts to strengthen market governance, align frameworks with international standards and enhance transparency across key segments of the financial system are beginning to show results. This progress is not accidental; it is the outcome of sustained commitment by policymakers and regulators to build a credible and resilient financial ecosystem.
Growing Market Activity and Financial Products
The Absa AFMI 2025 further points to gradual but meaningful advances in market depth. Tanzania’s financial markets are becoming more diverse, with a broader range of instruments and increased use of capital market solutions. While bank financing remains dominant, the growing role of bonds, structured products and risk management tools signals an important shift towards a more balanced financial system.
From a global markets’ perspective, these developments are critical. Deeper markets enhance liquidity, improve price discovery and reduce concentration risk. Over time, they also lower the cost of capital for both government and the private sector - freeing up resources for productive investment and economic growth.
Where More Effort is Needed
While we have made progress, the report also points out areas that need more focused attention.
a) Low participation from local institutional investors
Pension funds, which are long-term investors, play a vital role in deepening financial markets. Tanzania still lags behind other markets in this area. Increasing their participation would help provide a steady source of local capital.
b) Strengthening legal and institutional frameworks
Clear rules and effective enforcement—especially around financial contracts and insolvency—are critical for building trust. These are not technical issues; they directly affect how confident investors feel about committing long-term funds.
c) Improving financial literacy and access
Technology has already helped expand access to financial services. But more still needs to be done to ensure that ordinary citizens and small businesses understand and can meaningfully participate in financial markets.
Looking ahead: A positive Policy Direction
Encouragingly, the policy direction articulated by the Government and the central bank aligns closely with the reform priorities highlighted in the Index. Continued efforts to deepen capital markets, modernize legal frameworks, strengthen pension fund participation and support product innovation are likely to have a compounding effect over time.
If pursued with consistency, these actions can fundamentally reshape Tanzania’s financial markets - enhancing liquidity, improving resilience to external shocks, and positioning the country as a more competitive investment destination within the region. The benefits would extend well beyond the financial sector, supporting private sector growth, infrastructure development and broader economic transformation.
A shared responsibility
Ultimately, building deep and resilient financial markets is not the responsibility of any single institution. It requires collaboration across government, regulators, financial institutions, market infrastructure providers and the private sector. The AFMI serves as a valuable common reference point - one that helps align ambition with evidence.
The discussions during the report launch made one thing clear: Tanzania has built a solid foundation. The next step is to accelerate reforms so that our financial markets grow stronger and support the country’s long-term aspirations
Our journey has begun. With continued collaboration and dedication, Tanzania’s financial markets can move from steady progress to truly transformative change
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