The recent launch of the Africa Financial Markets Index 2025 (AFMI) in Dar es Salaam offered a timely opportunity to reflect on Tanzania’s financial market development — the steady progress achieved, and the reforms still required to unlock deeper transformation.

For nine consecutive years, the AFMI has served as one of Africa’s most authoritative benchmarks for assessing financial market maturity. 

Beyond rankings, the Index provides a diagnostic framework that enables governments, regulators, and market participants to identify structural strengths, pinpoint weaknesses, and prioritize reforms with the greatest developmental impact.

The 2025 findings show Tanzania advancing on a foundation of macroeconomic stability, while also revealing clear opportunities for market deepening and institutional strengthening.

A Foundation of Stability and Credibility

One of the most encouraging insights from this year’s report is Tanzania’s sustained macroeconomic stability. Predictable monetary policy, relatively low and stable inflation, and improved transparency in policy communication have reinforced investor confidence. Stability is not merely a statistical achievement — it is the bedrock upon which capital markets are built.

The report also recognizes steady progress in market infrastructure and regulatory alignment. Continued efforts to enhance governance standards, modernize trading and settlement systems, and strengthen oversight mechanisms are yielding measurable improvements. 

This evolution reflects deliberate and sustained commitment by policymakers and regulators to build a resilient and credible financial ecosystem.

Expanding Market Depth and Product Diversity

The AFMI 2025 further highlights gradual but meaningful gains in market depth. Tanzania’s financial system is slowly diversifying beyond traditional bank intermediation. While commercial lending remains dominant, the expanding role of bonds and structured instruments signals an important structural shift.

From a global markets perspective, deeper and more diversified capital markets enhance liquidity, improve price discovery, and reduce concentration risk. 

Over time, these improvements contribute to lower borrowing costs for both government and the private sector. More efficient capital allocation ultimately supports productive investment, infrastructure development, and sustainable economic growth.

Areas Requiring Strategic Focus

Progress notwithstanding, the Index underscores several areas demanding targeted reform.

First, participation by domestic institutional investors — particularly pension funds — remains comparatively limited. Long-term capital is essential for market stability and depth. Enhancing the regulatory and investment framework to encourage greater pension fund participation would provide a consistent domestic liquidity base and reduce reliance on external flows.

Second, strengthening legal and institutional frameworks remains critical. Investor confidence hinges on enforceable financial contracts, efficient dispute resolution mechanisms, and predictable insolvency procedures. These are not abstract technical reforms; they directly influence risk perception and long-term capital commitments.

Third, while technology has expanded financial inclusion — especially through digital channels — financial literacy remains uneven. Expanding access must go hand-in-hand with improving public understanding of capital market instruments, risk management tools, and long-term savings options. A market cannot deepen meaningfully if participation remains narrow.

Policy Alignment and Reform Momentum

Encouragingly, the policy direction articulated by the Government and the central bank aligns closely with the reform priorities identified in the Index. Ongoing initiatives to deepen capital markets, modernize legal frameworks, broaden pension fund engagement, and support product innovation are well calibrated.

If pursued consistently, these reforms could have a compounding effect — enhancing liquidity, improving resilience to external shocks, and positioning Tanzania as a more competitive regional investment destination. The spillover benefits would extend beyond the financial sector, accelerating private sector development and supporting broader economic transformation.

A Collective Responsibility

Ultimately, developing deep and resilient financial markets is not the mandate of any single institution. It requires coordinated action among government authorities, regulators, financial institutions, market infrastructure providers, and the private sector. The AFMI serves as a shared reference point — anchoring ambition in measurable benchmarks.

The discussions during the launch made one point clear: Tanzania has laid a solid foundation. The next phase demands accelerated implementation and sustained collaboration to convert steady progress into structural transformation.

The journey toward mature and competitive financial markets is well underway. With discipline, partnership, and reform continuity, Tanzania can transition from incremental gains to truly transformative change.

Irene Rwegalulira (pictured) is the global markets expert based in Dar es Salaam.