Saving for a rainy day is the only

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Bank of Tanzania (BoT) Directorate of Economic Research and Policy has said that if all Tanzanians could develop the habit of saving for a rainy day, they could realise positive financial outcomes in the future.

“Setting aside reserves means that consumers can have cushions that will help absorb overwhelming financial shocks during economic meltdown. Saving also helps to create deep and liquid capital markets, as well as a dynamic entrepreneurial economy,” Dr Suleiman Missango, BoT’s Assistant Manager, Research Department told The Banker.

Dr Missango notes that saving helps people in making financial plans and subsequently setting financial goals in life, hence the need for concerted efforts from key stakeholders to disseminate financial information to promote financial inclusion in the country.

He laments that many people have no saving culture in Tanzania but only a culture of consumption, saying saving is important to the country’s development since it’s the primary source of investments that can generate more production and employment.

“As you continue to save, you can utilise diverse savings and investment options like term deposits, equity, property and many other forms of investments over time,” he counselled.

It is not about saving huge amounts of money, he advises, but it’s about developing a culture of saving, however minute. Therefore, no matter how small one’s income is, saving is possible.

Through planning, there is a focus not just on spending to satisfy the needs of today, but of tomorrow as well, the banker says.

The habit of saving makes lives affordable and prevents unnecessary debts that could lead to eventual disillusionment. Instead of getting an item on credit, with a savings plan, an item can be bought with cash, thereby attracting discounts.

Without savings, one can experience huge financial burdens and end up making sudden and costly interim arrangements such as overdrafts and loans.

There are few who actually save but end up putting their money in get-rich-quick schemes, which turn out to be scams and swindling operations, he said.

The finance expert notes that countries that encourage and nurture a saving culture gain a competitive advantage over time, besides their citizens having better standards of living.

Dr Missango observes that saving helps one plan for retirement, and that if well encouraged at all levels of society, it can be passed to future generations.

A robust saving culture not only plays a role in the economy, but it also ensures that the consumer is protected in the event of a life-changing situation or emergency.

He says the country’s desire to shift from the current debt-driven development strategy to a savings-led development strategy could only be possible if Tanzanians make saving a perpetual habit.

Saving with banks, he notes, is one of the ways that make the country more prosperous.

He said more savings mean that the private sector can access funds to invest in activities that spur the country’s development agenda and ensure sustainable growth.

Pointing out that savings would assist to diversify the economy, he notes that it would boost other sectors of the economy like agriculture, tourism and manufacturing thereby improving the country’s Gross Domestic Product (GDP).

He said when more people save with banks, the country would have more resources to invest in diverse sectors of the economy like construction which would in turn create jobs for Tanzanians.

The more people save, the more the banks would have sufficient money to give out as loans which would be utilised to develop various sectors of the economy.