By Esther Mnyika, Dar es Salaam
Vice President Dr. Philip Mpango has commended the Bank of Tanzania (BoT) and its experts for developing the Integrated Core Banking System (iCBS), a system meeting international standards yet developed at a significantly lower cost compared to international market prices.
Speaking today, July 30, 2025, in Dar es Salaam during the official launch of the iCBS, Dr. Mpango highlighted that the BoT is the first institution in Africa to create such a system. He noted that the use of local experts saved the country Tsh 81.32 billion, significantly enhancing the Central Bank’s efficiency in managing transactions without impediments.
Call for Robust System Oversight
“The BoT, in collaboration with relevant institutions such as the Tanzania Communications Regulatory Authority (TCRA), the e-Government Agency (e-GA), and relevant ministries, must ensure effective oversight of the iCBS and all other payment systems to continue achieving appropriate results for the nation’s economic development,” he directed.
He further emphasized the importance of focusing on the proper use of digital systems for various transactions and payments to reduce the reliance on cash.
Addressing Digital Lenders and Public Awareness
Dr. Mpango urged the Bank of Tanzania to control and take appropriate action against the proliferation of mobile-based lenders, ensuring citizens are not exploited. He also called on the Central Bank to continue educating the public about the dangers of these deceptive lenders and to promote legitimate and affordable loan opportunities available through traditional banks. He highlighted that these informal lenders often charge exorbitant interest rates, invade people’s privacy, and even disseminate borrower information without consent.
Protecting Intellectual Property and Fostering Innovation
The Vice President stressed the importance of safeguarding the intellectual property rights of the iCBS system. He underscored the need for collaboration with intellectual property protection institutions and systems to implement this, thereby fostering a culture of innovation within the country.
Furthermore, he called on all ministries to increase incentives for local innovators who contribute significantly to saving foreign exchange and enhancing overall productivity. He affirmed that the government would continue to take steps to strengthen the research and innovation environment, including increasing research funding, establishing more innovation and incubation centers, and strengthening collaboration between higher education institutions, the government, and the private sector.
Historic Achievement and Collaborative Success
Deputy Minister of Finance, Hamad Hassan Chande, echoed the sentiment, stating that it is an extraordinary achievement for Tanzanians to build such a system, making Tanzania the first country in Africa to have this integrated system. He remarked that this marks a historic entry for Tanzania into such a system in Africa and acknowledged Governor Emmanuel Tutuba’s role in this milestone. Chande emphasized the need for robust protection of the system to keep it secure and urged Tanzanians to value their own creations, noting that “one of the past challenges was that things made by locals were not valued, but we must value what is ours because that is where development comes from.”
Minister of Communication and Technology, Jerry Silaha, also congratulated the BoT for the integrated system that oversees the financial sector and implements President Samia’s directive for systems to be interoperable. “Currently, a total of 898 systems are interoperable, with 514 from the government and 384 from the private sector, and in the financial sector, only BoT is fully integrated,” he stated.
Saada Mkuya, Zanzibar’s Minister of Finance and Planning, stated that the system has resolved previous challenges, and Zanzibar is a beneficiary as banking efficiency has increased. “There has been no period when the BoT has been as close to the Zanzibar Revolutionary Government as this period in improving financial services systems and successfully resolving challenges related to foreign exchange bureaus and creating a conducive business environment,” she added.
BoT Governor Praises Presidential Vision
For his part, BoT Governor, Emmanuel Tutuba, affirmed that the system was developed by the bank’s own experts. He commended President Dr. Samia Suluhu Hassan for enabling these systems, stating that they have been at the forefront of implementing the “4R” philosophy (Reconciliation, Reforms, Resilience, and Rebuilding) to strengthen investment, increase liquidity, and enhance the value of the Tanzanian Shilling.
He noted that Tanzania’s economy continues to perform well despite global challenges, including climate change. Tutuba concluded by saying that the new system is modern and sensitive, designed to eliminate human error, increase accuracy, and overcome challenges in digital systems.
1. Introduction to Central Bank Core Banking Systems
1.1. Defining Core Banking Systems (CBS) and Integrated Core Banking Systems (iCBS)
A Core Banking System (CBS) serves as the centralized software platform that financial institutions utilize to manage their fundamental processes and daily operations. These critical functions typically include customer account management, transaction processing, loan and deposit services, and customer relationship management. The term “CORE” originally stood for “Centralised Online Real-time Exchange,” but it has evolved to primarily signify the mission-critical nature of these systems within a bank’s operational framework. Essentially, a CBS is the technological backbone enabling banks to handle transactions, maintain customer accounts, and manage various financial products.
Key functions of a CBS encompass the comprehensive management of customer accounts, including the tracking of balances, interest rates, and transaction histories. It facilitates real-time transaction processing, ensuring immediate updates and preventing issues such as double spending. Furthermore, a CBS is vital for the accurate management of loans and deposits, ensuring correct reflection on the bank’s balance sheet and precise calculation of interest. Regulatory compliance is another fundamental aspect, with CBS generating necessary reports and integrating with anti-money laundering (AML) processes to meet standards set by governing bodies.
An “integrated” Core Banking System (iCBS) extends these capabilities by ensuring seamless connectivity and data flow across all core functions. This often involves the use of Application Programming Interfaces (APIs) to facilitate integration with external services, such as payment gateways or credit bureaus, thereby providing a unified and holistic view of financial operations and customer data. This integration allows for a more streamlined and efficient operation, enabling banks to deliver seamless, real-time services to customers across various channels, including branches, ATMs, and mobile banking platforms.
In the context of a central bank, “core banking” functions differ from those of commercial banks. While commercial banks use CBS for their retail and business clients, a central bank’s core banking operations typically involve managing accounts for commercial banks, the government, and its own internal financial processes. This includes overseeing the national payment system, implementing monetary policy, and maintaining financial stability. The Bank of Tanzania’s iCBS, for instance, replaced a “Central Banking System (CBS) used since 1999,” indicating its role as a comprehensive system for the central bank’s own operations and its oversight functions.
The distinction between a “core banking system” (CBS) and a “payment system” (such as a Real-Time Gross Settlement, or RTGS, system) is critical for accurately evaluating the Bank of Tanzania’s claim. Many central banks, including the South African Reserve Bank (SARB) and the Central Bank of Kenya (CBK), operate highly advanced payment systems like RTGS. However, these systems primarily facilitate interbank funds transfers and settlements. A comprehensive CBS, as defined, manages a broader set of functions, including internal central bank accounts, loans, deposits, and general ledgers, in addition to potentially interfacing with payment systems. The Bank of Tanzania’s claim specifically refers to an “Integrated Core Banking System,” implying a comprehensive internal system that extends beyond merely facilitating payments. Therefore, the presence of an RTGS system alone does not equate to having an “integrated core banking system” in the specific context of BoT’s assertion.
1.2. Strategic Importance for Central Banks
Modern Core Banking Systems and Integrated Core Banking Systems hold significant strategic importance for central banks. These systems enhance operational efficiency, improve data accuracy, and provide real-time insights, which are crucial for effective monetary policy formulation and financial oversight. By automating processes and centralizing data, they allow central banks to manage transactions more efficiently and eliminate operational bottlenecks, leading to increased accuracy and reduced human error.
Furthermore, these systems are instrumental in ensuring regulatory compliance and promoting financial stability. They assist central banks in meeting stringent regulatory standards, generating necessary reports, and integrating with anti-money laundering (AML) processes. This robust infrastructure contributes directly to the overall stability and integrity of the financial system.
From an economic perspective, upgrading from legacy systems to modern, often cloud-based, solutions can lead to substantial cost reductions and enhanced scalability, allowing central banks to adapt to evolving demands without significant infrastructure limitations. This shift towards more agile and adaptable platforms is a continent-wide trend, driven by the imperative for cost-efficiency and improved security in the face of rapid digital transformation. The Bank of Tanzania’s iCBS, by replacing a system from 1999 and focusing on efficiency and cybersecurity, exemplifies this essential modernization wave. This indicates that BoT’s project is not an isolated event but a strategic response to global and regional pressures for digital advancement in financial services.
Modern CBS also form the technological bedrock for broader digital transformation initiatives. They enable the seamless adoption of emerging technologies such as Artificial Intelligence (AI) and blockchain, and support the implementation of Central Bank Digital Currencies (CBDCs) and open banking frameworks. In an era of escalating cybercrime, possessing robust and secure systems is paramount for safeguarding sensitive financial data and protecting national payment platforms. The ability of these systems to provide real-time transaction processing and centralized account management further strengthens compliance efforts, enabling immediate detection of unusual activity and supporting faster audit trails.
2. The Bank of Tanzania’s Integrated Core Banking System (iCBS)
2.1. Overview of the iCBS
The Bank of Tanzania’s (BoT) Integrated Core Banking System (iCBS) represents a significant technological advancement aimed at enhancing the central bank’s operational capabilities. The primary purpose of the iCBS is to improve financial data management and overall operational efficiency for the Bank of Tanzania. This new system replaces an older Central Banking System (CBS) that had been in use since 1999.
The development of the iCBS commenced in November 2021 and was successfully completed in September 2023, marking it as a three-year project. The official launch of the system took place on July 30, 2025 [User Query]. A particularly notable aspect of this project is the significant role played by local expertise. The system was developed entirely by the bank’s “own experts” and “local experts,” which not only demonstrates the value of domestic talent but also resulted in substantial cost savings for the country. It is reported that the use of local experts saved Tanzania Tsh 81.32 billion compared to international market prices, while the project itself cost approximately Tsh 10.63 billion.
The considerable cost savings achieved through in-house development underscore a strategic shift towards greater self-reliance and the building of local capacity in critical financial infrastructure. This approach could potentially serve as a replicable model for other developing economies seeking to reduce their dependence on expensive foreign vendors and foster domestic technological sovereignty. The emphasis on local expertise and cost reduction indicates that beyond the technical achievement, BoT’s project exemplifies a successful strategy for national economic benefit and technological independence.
2.2. Stated Benefits and Objectives
The Bank of Tanzania’s iCBS is poised to deliver a multitude of benefits and achieve several strategic objectives for the nation’s financial sector. A primary objective is the enhancement of the Central Bank’s efficiency in managing transactions, aiming to eliminate impediments and operational bottlenecks. This improved efficiency is expected to increase accuracy by significantly reducing human error in financial processes.
The system is also designed to provide greater control over financial data and systems, a crucial capability in the contemporary financial landscape. Cybersecurity is a paramount concern, and the iCBS is described as modern and sensitive, specifically designed to address the challenges posed by escalating cybercrime. The Vice President emphasized the need for robust oversight of the iCBS and all other payment systems, advocating for collaboration with relevant institutions such as the Tanzania Communications Regulatory Authority (TCRA) and the e-Government Agency (e-GA). The strong emphasis on cybersecurity and the protection of intellectual property rights for the iCBS reflects a sophisticated understanding of the inherent risks and strategic value associated with critical digital infrastructure. This approach extends beyond mere system functionality to encompass strategic asset management. The Bank of Tanzania is not only modernizing its systems but also establishing a precedent for how central banks in the region should manage and protect their digital assets, potentially influencing future IT strategies across Africa.
Furthermore, the iCBS is intended to promote the proper use of digital systems for various transactions and payments, thereby reducing the country’s reliance on cash. This aligns with broader national goals of fostering a less-cash society and increasing financial inclusion. The Vice President also stressed the importance of safeguarding the intellectual property rights of the iCBS system. This includes the need for collaboration with intellectual property protection institutions to implement necessary measures, thereby fostering a culture of innovation within the country. This strategic focus extends to increasing incentives for local innovators who contribute to saving foreign exchange and enhancing overall productivity, with the government committed to strengthening the research and innovation environment through increased funding and the establishment of more innovation and incubation centers [User Query].
The successful development of the iCBS provides a strong foundation for Tanzania to further its financial inclusion agenda and accelerate the transition to a less-cash society. This aligns with broader regional and international development goals. The Vice President’s explicit call for the Bank of Tanzania to “continue educating the public about the dangers of these deceptive lenders and to promote legitimate and affordable loan opportunities available through traditional banks” and to “reduce the reliance on cash” indicates that the iCBS is viewed as a foundational tool. It is seen not merely as an internal central bank operational upgrade, but as a catalyst for broader societal financial transformation. This suggests that the iCBS is a critical enabler for national policy objectives related to financial inclusion and the widespread adoption of digital payments, contributing significantly to the country’s overall economic development