Tanzania Agricultural Development Bank (TADB) Managing Director, Frank Nyabundege, makes a contribution during a panel discussion at the Association of African Development Finance Institutions (AADFI) CEOs Forum in Maseru, Kingdom of Lesotho.
By Habitat Media Reporter
Maseru, Lesotho. The Tanzania Agricultural Development Bank (TADB) has called for regulatory frameworks that balance financial stability with the need for development finance institutions (DFIs) to undertake high-risk, long-term investments critical to Africa’s economic transformation.
TADB Managing Director Frank Nyabundege said although Tanzania had made progress in establishing a regulatory framework specifically for development finance institutions, some provisions still reflect conventional commercial banking requirements, limiting the banks’ ability to fully execute their development mandates.
Speaking during the Association of African Development Finance Institutions (AADFI) CEOs Forum in Maseru, Lesotho, Mr Nyabundege said the existing regulatory environment needed further refinement to accommodate the unique operational demands of development banks.
He cited the Bank of Tanzania’s introduction of the Banking and Financial Institutions (Development Finance) Regulations, 2021 (GN 766), amended in 2023, as an important step towards creating a dedicated regulatory framework for DFIs.
The framework recognises the distinct functions of development finance institutions, positioning Tanzania ahead of many other African countries in providing specific regulations for the sector.
However, Mr Nyabundege said the continued presence of commercial banking requirements in some provisions could constrain development banks from financing projects that require longer repayment periods and involve higher risks.
He stressed that development finance institutions needed regulatory arrangements that recognise their role in addressing financing gaps and supporting sectors that are essential to economic development but may not attract sufficient commercial lending.
Responding to questions on how African DFIs could maintain compliance, strengthen institutional resilience and continue delivering on their development mandates, Mr Nyabundege said financial prudence and development impact should complement each other.
“Prudence and impact are not opposites,” he said, citing TADB’s performance under the AADFI Prudential Standards, Guidelines and Rating System (PSGR).
He said the bank was among the two best-performing development finance institutions in the Southern African Development Community (SADC) region under the assessment system, while continuing to provide financing and support transformation in Tanzania’s agricultural sector.
According to Mr Nyabundege, the experience demonstrates that development banks can maintain sound financial management while extending financing to sectors that require patient capital and long-term investment.
He also underscored the importance of African development finance institutions being regulated by central banks, saying such oversight strengthens institutional governance, improves operational standards and builds confidence among investors and development partners.
He said stronger regulatory supervision could also help DFIs attract the capital and funding needed to expand their financing activities and deliver on their development objectives.
Concluding his contribution, Mr Nyabundege said development banks needed to strike a balance between financial sustainability, development impact and the risks associated with financing transformative projects.
“For us at TADB, the ultimate objective is to strike the right balance between financial sustainability, creating impact and propelling development. We cannot ignore prudential risks, but equally, we cannot avoid all risks and still expect to transform agriculture.
“What we need is a regulatory environment that allows development banks to take well-managed risks, remain financially sound, strengthen our resilience and deliver the transformation our economies need,” he said.
Mr Nyabundege is attending the AADFI CEOs Forum, which brings together chief executives and leaders of African development finance institutions to discuss ways of strengthening their contribution to economic growth across the continent.
This year’s forum, held in Maseru, Kingdom of Lesotho, is themed “Resilient DFIs for Stronger African Economies: Governance, Standards, Regulation and Development Impact.”
The discussions focus on governance, regulatory standards, institutional resilience and the role of development finance institutions in mobilising resources to support Africa’s development priorities.
Editorial note: The rewrite retains the supplied facts and quotations while improving the news angle, flow and transitions. Before publication, it would be useful to verify the exact PSGR ranking and the official title of the AADFI forum.