NPS Newsletter

Issue No. 1    January 1999    

Message from the Director of National Payment System

  This is the first issue of the Tanzania National Payment System Newsletter, "NPS Newsletter". The "NPS Newsletter" aims at providing quick easy reading, informative briefs on pertinent issues on payment systems to NPS stakeholders and the general public. It is also intended to indicate modernisation initiatives being undertaken in the country. It is also aimed at sensitizing players into identifying and playing their respective roles effectively.

The target groups are therefore individual users of the system as customers, payers and payees of value, financial institutions who offer banking and other financial services including clearing and settlement services, standards bodies, and regulators, providers of non-banking services to the system notably courier, communication and electronic services, network arrangements …etc. Its structure will be kept simple. It will attempt to answer most common questions and will be published once every two months. This issue is for January 1999.

In 1993 Tanzania embarked on a liberalization path of the financial sector. Three years later in 1996, the financial sector in Tanzania had developed into a multi-bank and market-led setting. These developments ushered in the formal establishment of multi-lateral clearing and settlement arrangements. It was at this time that the Bank of Tanzania started addressing issues related to procedures, rules, regulations, standards, institutions and instruments used to exchange financial value, in otherwords the bank started addressing Payment Systems issues.

At the initiative of the Bank of Tanzania, a team was formed to study and analyse the payment, clearing and settlement arrangements in place, and consultations with international as well as local institutions, started.

The study aimed at establishing a payment system that facilitates promotion of economic activities, improvement in the management of monetary policy, and the development of the financial sector.

The study identified serious weaknesses in relation to speed of clearing, certainty of settlement finality, reliability of the transaction processing, safety, security and robustness of the clearing and funds processing machinery, and finally in convenience and cost effectiveness of the existing system.

A National Payment System Project to develop and modernise payment and settlement processes in Tanzania and to address the weaknesses was formally launched in July 1996.

The Bank of Tanzania further embarked on a move to sensitize the general public because substantial changes were needed in order to address the identified weaknesses squarely. The sensitization endevour was aimed at soliciting maximum contribution from everyone in the process of establishing a payment and settlement system for Tanzania which is efficient, reliable, robust and cost effective, and which can adequately support promotion of economic activity, improved control of monetary aggregates, development of the financial sector and assimilation of technological developments and innovations in the economy.

This is a noble cause and I believe it is the obligation of every Tanzanian and more so every one whose responsibilities are to safeguard financial assets entrusted to him by the general public, to see to it that such a system is in place.

I wish to take this opportunity to commend those stakeholders who have assisted the modernisation process of the Tanzanian Payment System to the extent it has reached. I urge all users and stakeholders to make maximum use of this Newsletter and come forward with views, suggestions and comments for the improvement of the payment systems in Tanzania. I also hope that the stakeholders will find the "NPS Newsletter" useful. I welcome suggestions for its improvements. Readers are also encouraged to come up with articles questions and answers on payment systems, comments and suggestions for the improvement of the Tanzania Payment System.

I.H. Kilato

Director National Payment System


By The NPS Project Team


The Tanzania National Payment System Project Team is targeting the year 2005 as the NPS Vision year, that is the year when the imagined and desired payment system will have been put in place. The vision payment system is that which will be able to support the Tanzanian economy in its market oriented manner and foster economic integration, growth and financial stability. The imagined and desired payment system will address to the full the many primary payment needs and settlement requirements of the various sectors of the Tanzania economy. For the personal sector especially in rural areas the system will seek to provide the much needed banking services in the manner and form in which they are needed and at affordable costs, taking into account the convenience of the users and certainty of settlement finality.

For the retail sector the system will address the attribute of speed in transaction processing to facilitate maximum recycling of capital, and the attribute of security to minimize loss and exposure to risk. The choice of appropriate payment instruments backed by appropriate transfer systems and communication network will constitute a crucial factor. The retail sector and the business or industrial and commercial sectors share common primary payment system requirements of high speed transactions and security for high value and for cross country or international transactions. Most such payments are time critical and time sensitive. The envisaged year 2005 payment clearing and settlement system is expected to provide for such requirements for those two sectors.

It is expected that in the year 2005 Tanzanian financial and capital markets will have developed to the full and will be operating on a Delivery versus Payment (DVP), and Payment versus Payment (PVP) basis. The markets will also have a sustainable level of liquidity for tradable instruments and assets to facilitate effective dynamic credit collateralization. The envisaged payment system is expected therefore to have a structure and operate on a platform that will allow DVP and PVP transactions for the capital and money markets sector, as well as automatic provision of liquidity to the system through the process of intraday credit facilitation which is properly covered by collaterals that are liquid.

In addressing the specific payment, clearing and settlement system needs of the various sectors, the envisaged year 2005 system has to be a robust system that is reliable, safe, secure and convenient that has in-built payment system risks management measures, and well established disaster recovery programmes. The system will aim at addressing to the maximum extent possible all major payment system risks including credit risk with its subsets of principal and settlement risks, liquidity risk with its subsets of replacement cost and adjustment risks, operational risk with its subsets of security and technological risks, cross currency risks, legal risks, and mostly the systemic risk. Programmes aimed at minimising exposures to these types of risks and especially those that are experienced often within the Tanzanian environment will be given special attention.

The above requirements are very demanding especially when the realities of the Tanzanian economy are put in perspective. These realities include massive underdeveloped hinterland, poor communication infrastructure, uncoordinated bank branch network and massively fragmented legal infrastructure. The negative effects of these realities are aggravated further by poor technological skills and expertise. The Year 2005 Vision (Y2005V) can in that regard be considered as ambitious. However since it is desirable, it is important that it is achieved.

The Basics of the Vision

The Y2005V would want to see a general Tanzanian public which has fully adopted a banking culture and is adequately aware of payment system issues that affect their financial transactions. In order for this to succeed a massive sensitization and education must be undertaken. The general public will be expected to be aware of the various options available in terms of payment arrangements backing certain instruments and processing programmes. Bank customers will be expected to make intelligent choices on the basis of optimality of the services and effectiveness of risks mitigation measures in place. The banks will be expected to offer attractive products and services to attract customers and enhance financial deepening and use of the banking sector in the economy. At the same time the extent to which each transaction is backed by the existing legal system will need to be transparent and known by all players.

The Y2005V envisages a payment system which ensures the processing and settlement of payment instruments in the shortest time possible and ensures finality with certainty. The system is expected to address the questions of time critical and time sensitive payments, as well as put in place the most efficient way of handling small value large volume transactions occurring regularly. Credit based approaches seem to offer a possible solution. To this effect substantial automation strategies will have to be considered, and the requisite supporting infrastructure in the form of network, transportation system, power supply and telecommunication systems. A comprehensive legal system which encompasses the legal framework, the contractual agreements the clearing house rules, regulations… etc and procedures that allow all aspects of modern payment systems including electronic funds and data transfers will have to be adopted.

The Y2005V envisages a balanced relationship between players in the payment system where co-operation and competition are applied with the basic aim of maximising the benefits of economies of scale for the financial sector as a whole. To that effect transfer networks and other schemes such as ATM Systems, Clearing Bureaux, payment processing infrastructures and courier services are expected to be jointly owned by a number of stakeholders. Umbrella bodies such as stakeholders’ forums and associations will be expected to facilitate and see to it that such cooperation exists and is being implemented. At the same time regulatory authorities including the Government and the Bank of Tanzania will ensure that no discriminative laws, rules or procedures are put in place, and that appropriate standardization in all payment clearing and settlement aspects are established.

The Y2005V expects that the payment system network will cover the whole country and that its services will be accessible by all in the form that is responsive to each ones individual needs, is convenient and of affordable technology. To that effect rationalisation and customization will have to be done. Specifically cost of transaction, security, convenience in terms of frequency of use, distance of transfers, criticality of settlement will determine the development of instruments and transfer systems for the model system covering certain localities. The spread of the coverage of the envisaged system will necessitate truncation of paper instruments where speed and security are considered important. Subsequently paper instruments will be discouraged for non-local transactions, and for all inter-bank transactions.

The Y2005V expects to have a properly structured management. The management and monitoring systems for the Tanzania Payment System in year 2005 is expected to be based on properly defined roles and relationships of stakeholders. Specifically the Vision expects to have a well defined body responsible for innovations and developments, bodies responsible for operating various payment streams e.g. Large Value Clearing, Paper Clearing, Electronic Clearing .…etc., entities responsible for setting standards for all aspects related to payment clearing and settlement systems, and representative forums. Such associations as Bankers Associations, Clearing Associations, Courier Service Associations, Network Operators Associations ……etc are expected to have formal relationships and to have an agreed venue and forum for exchanging experiences and ideas on a regular basis.

The Y2005V further expects that all payment systems that will have been developed will all be integrated and will be supporting interrelated activities and processes, and will be administered by closely linked institutions and as such facilitate the maintenance of financial stability in Tanzania.

Finally the Y2005V expects that the Payment System in the year 2005 will be supported by a comprehensive and properly framed Legal and regulatory structure that is enforceable and capable of dealing with electronic systems, and clearing and settlement systems that are based on state of the art technology. Specifically the legal component will address the rights, responsibilities and obligations of participants to a payment transaction and define ways and mechanisms of resolving disputes. In the process a number of amendments to existing laws and regulations will be made and new acts will be enacted.

NPS Vision Implications

The basics of the Y2005V as described above have the following implications.

The System will be modern and will have to be in line with other modern systems.

The System will have direct link with the international financial systems, and will be an integral part of the international payment systems.

The System will have to provide for a variety of streams to offer a number of alternatives in payment arrangements.

The system will have to be backed by a firm technical and administrative structure capable of adjusting to various changes and requirements of the system.

To achieve this a modern Large Value Transfer System (LTVS) with Real Time Gross Settlement (RTGS)capabilities will be part of the system to be developed. This LVTS has to have interfacing capabilities with other international systems and particularly the systems that operate in regional groupings that Tanzania is a party. The LVTS has further to have interfacing capabilities with other smaller systems including Deferred Net Settlement (DNS) Systems that may be established within Tanzania.

Specifically the LVTS must be able to link with the Central Banking System (CBS) to facilitate automatic settlements, Central Securities Depository (CSD) System to facilitate Delivery versus Payment (DVP) transactions in equity and securities market, and it must be able to link with foreign exchange settlement e.g. SWIFT systems to facilitate Payment versus Payment(PVP) transactions in cross currency dealings. It is expected that payment and clearing arrangements will include core paper based transfer systems to cover local transfers, core bulk electronic based transfer systems to cover interbank clearing and non-local transfers, and a core large value transfer systems for time critical and time sensitive transactions. At the same time retail payment systems based on ATMs, Cards, and Point of Sale (POS) technologies may be developed by various stake holders and banks. The envisaged RTGS System will have to have linking capabilities with all these systems. To that effect a multiple options settlement (MULTOS) system type offers a possible option for consideration.

Concluding Deliberations

On the basis of the above brief it is hoped that the NPS Vision is clear. It is being suggested that the Bank of Tanzania on long term basis should consider establishing a BOT-NET, a network that will have RTGS Capabilities with all clearing and settlement banks just like the Fedwire, BOJ-Net and SIC Systems. This suggestion corresponds to the LVTS with RTGS capabilities described above. It will be assumed that other parties to the clearing and settlement system will have in place the required hardware and software operating on a platform that can be linked to the network. It is further being suggested that the current clearing operations on a Deferred Net Settlement (DNS) basis be modernised and automated to include codeline clearing and/or MICR Clearing arrangements by an automated clearing bureau (ACB).

It is finally being suggested that clearing centres connected to the ACB electronically be established to cover the zonal setting of the country on the basis of geographical and natural physical features of Tanzania. Five Natural Zones covering North-West, North-East, South-West, South-East, and central areas may need to be considered, in addition to the existing centres housed in BOT branches.

The NPS Team is examining strategies and activities that need to be adopted to implement and support the Vision. To facilitate this further suggestions, proposals and comments are welcome. The meetings of the various committees of the National Advisory Council offer appropriate forums for debate and consultations.


By NPS Project Team


Multilateral Interbank Documents Clearing function was formally established in Tanzania in 1993 when the Dar es Salaam Banker’s Clearing House was established following the liberalization of banking business and the registration of private banks in Tanzania. The expansion of the banking business necessitated the establishment of other clearing centers in Arusha, Mwanza, Mbeya, and Zanzibar with the objectives of:

1.  Enhencing speedy and economic clearing of cheques, bills of exchange and other paper payment instructions.


2.  Establishing procedures and rules relating to clearing.

3.  Capturing and maintaining records and clearinghouse data.

The Clearinghouses are governed by an administrative body which is manned by a Management committee consisting of the Governor, Deputy Governor of Bank of Tanzania and all Chief Executives of commercial banks licensed in Tanzania.

The clearing processes at the Clearing Houses are manual and as such they are subject to:-

1.  Errors such as calculation errors, sorting errors etc.

2.  Slow speed. Manual systems are slow and time consuming.

3.  Poor data capture. It has not been possible to capture records of individual items passing through the clearinghouse. Only participant’s net amount are captured which is not adequate for analysis purpose.

4.  Inadequate risk monitoring mechanism.

The Management Committee decided to Automate Clearing house operations in order to address these weaknesses.

The approach adopted, was that of using mechanised cheque processing system based on Magnetic Ink Character Recognition (MICR), and an off-line/batch Electronic Data Interchange using diskettes.


Following the DBCH Management Committee’s decision to semi-automate clearinghouse operations using computer disk exchange system, the Bank of Tanzania took the initiative of designing, developing, and implementing the prototype system in Oracle, using window 95.

The Disk exchange system has been developed to use participating banks diskettes having particulars of their outward clearing summaries to generate the relevant settlement entries (Netting), and other clearing reports to enhance the efficiency and accuracy of processing data at the clearing house.

Demonstration and Training

After successfully developing the computer program, and the standards to be adopted, the prototype was demonstrated to IT personnel and operational staff of clearinghouse member banks. After the participants accepted both the standards and the system, it was then decided that there should be a training session on how to use the program.

A course to train users on Disk Exchange System functions and performance was conducted at BOT institute in Mwanza from 2nd to 6th November 1998. This course drew participants from almost all DBCH members.

Testing and Parallel Running

Upon completion of the course, DBCH members were requested to start adopting the system by submitting to the clearinghouse information on diskettes in files which conform with agreed standards, alongside their manually prepared schedules. Test run of the system was successfully conducted up to the week ended on 31st December 1998, and the following reports were generated through the computer system.

Input clearing statement detailing the total number of instruments/items due to or by various banks, and total value of debit or credit (F110).

A statement of net value of the amount due to or by the banks (F120)

A balancing statement which is in a format of a trial balance (F130)

A debit settlement certificate authorizing the Bank of Tanzania to debit the account of the bank, the net amount due to other banks (F150)

A credit settlement certificate authorizing the Bank of Tanzania to credit the account of the bank the net amount due by other banks (F160)

Parallel run of the system started on the 4th January 1999. To date, there has been a good improvement in the data handling to input file format. However some problems have been noted including:

Inadequacy of details of transactions being captured by the programme.

Records layout does not conform to MICR code line contents.

Lack of seriousness of some of the banks shown by the nature of errors that their diskettes have. These errors could have been discovered and corrected before submitting them to the clearinghouse.

Failure of some of the banks to interface the system with their processing system, thus causing the need to process the same data twice.

The cut-off date of the parallel run has been provisionally set for the 31st January, 1999. It is hoped that this will make banks see the need to take immediate measures to comply with the standards.

Future plans

As mentioned above, the system has initially been developed to facilitate the processing of data at the clearinghouse by using diskettes. The system is expected to enable banks process low value bulk payments for their customers by submitting customer’s payment instructions and instrument information on diskettes to the ACH. The clearing houses computers can process the information in the diskettes and generate detailed reports on individual transactions on item by item bases, and can summarize reports for settlement purposes. The system will also capture and keep records of each individual transaction passing through the clearinghouse.

It is further expected that the system may have other uses, such as facilitating payment of salaries by employees directly to their employees bank accounts without having to handle physical vouchers, and code line clearing development.


By John Kyaruzi: NPS Researcher on Y2K Compliance

Over the past years companies in Tanzania kept telling their customers not to worry about the year 2000 problem. Why? Because their systems are not as sophisticated as those in the first world. Because their suppliers are recognised world-wide and are working on the problem. Because their Y2K projects are going on well and scheduled for completion by the beginning of 1999 and they are working on it,… etc.

Here is a news flash…."It’s January 1999, the beginning of 1999 is with us". Have the promises been kept? Is your project on time? Are we in line with the set deadlines?

The votes are not in yet. As this is being written there are no statistics on completed vs. delayed Y2K projects in Tanzania, not even for the NPS stakeholders. More to the point, there is a basic lack of data from which statistics might possibly be created. Tanzania seems to be joining the corporate world, spurred on by well-intentioned lawyers in co-operating in a convergence of silence on the issue.

Look at the corporate disclosure statements generated by a number of NPS stakeholders. They read like a parade of political promises. All is well. It’s under control. We’ll be ready in time. There’s no risk to our company. There’s no threat to shareholder value. All is well. Relax. Trust us….., etc.

Look at the responses to Bank of Tanzania questionnaires, for example, as filled in by banks to reveal their Y2K project status and readiness. Company after company are replying to the BOT’s Y2K team that ‘we will be compliant.’ Assurances like this are nice, but they would have more weight if they were based on statements more credible than the following commentary from summaries of the NPS stakeholders’ Y2K readiness review:

"Only 60% of the NPS stakeholders have completed Y2K assessment and inventory phase. Most are still conducting internal audits and hope to have a better understanding of the issues involved, as well as the costs of compliance, by beginning of 1999".

To clarify, this means 40% of these companies have no clue as to how big their problem is (or- and this is important – have no clue to whether they have a problem!). Some official reports immediately follow this rather shameful admission of Y2K inactivity with the following:

"…. Nonetheless, approximately 80% of our companies expect to be fully compliant by Dec. 31, 1999".

This statement requires no commentary; it collapses silently, without even a whimper, under the compelling weight of naive optimism. By December 31st 1999 all will have been lost!!

Looking at the BOT’s assessment and case study questionnaire, they are aimed at categorising the Y2K respondent banks under three ratings: hopeful many "Will Certainly be Compliant", some will "Likely be compliant" and others will receive a "Don’t know" classification. Since a bigger percentage of the answers will be obtained through questionnaire rather than physical inspection of individual stakeholders, the degree to which the respondents are certain about their answers is of great importance, not only to BOT but also to the banks themselves.

We would like to suggest to NPS stakeholders that if you don’t know how big your problem is you couldn’t state with any certainty that you can even fix it, never mind meet a fixed deadline. Your evaluation is less than accurate.

But… to be fair. Some companies which have said "trust us we will finish on time". And companies that have said, "we’ll get it fixed on time" even before they’ve examined their problem, will behold – actually deliver on their promises. Stranger things have happened in the past and will happen again in the future!!

But here’s the catch: We’re at the beginning of 1999. It’s time to start hearing some good news. Corporations have made promises to their customers and to their shareholders…. "Trust us, we’ll fix this". It’s now time to start communicating what has been achieved, what services have you secured?

So… here’s the challenge. Has your company made promises about Y2K compliance? Are you now willing to communicate your achievements to the world? What have you achieved… what is now compliant… what are you now willing to guarantee to your customers and shareholders? When will you send out a press release detailing what is ready for 2000?

We the NPS Team are willing to help you communicate good news. We want to publish case studies about what you’ve accomplished through our NPS newsletter. We want to post company profiles who you are, what you’ve made compliant, how you did that, if that’s interesting. We, and more importantly your clients and shareholders, want to know what promises you’ve kept, and how you kept them.

This will all be collected in a special issue of our newsletter called ‘Y2K Promises Kept’.

If you’re interested in us helping you to communicate your Y2K success, then please send e-mail to   and/or address it to The Director, National Payment Systems, BOT, P.O. Box 2939, Dar Es Salaam Tanzania.



The Tanzanian National Payment Systems Project Team is planning to convene an NPS "Grand Committees Meeting" in March 1999. This is the annual meeting of all members of the National Advisory Council Committees which is a forum for consolidation of the various aspects of the NPS Activities performed by individual committees. It will be a one day event. Exact dates and details will be communicated to members.

The NPS Project Team will be facilitating a "Vision Quality Assurance Workshop" in March 1999. The Workshop is intended to examine the details of the "Vision Strategy and Conceptual Overview" paper and come up with the first draft of the "Tanzania NPS Green Book". The Green Book is intended to have details of general principles, strategies and framework for the reform of the national payment system in Tanzania. The Workshop is programmed to be a five days event and will involve all stakeholders.


Basic Statistical Data






Population (Millions Units)





Gross Domestic Product (Bil. TAS) Curr. Pr.





GDP Per Capita (USD)





Exchange Rate (End Year) TAS per USD





Exchange rate (Average) TAS per USD





Settlement Media Used (Values in Billion TAS)






Notes and Coins (bn.)





Narrow Money (M1)





Broad Money (M2)





Extended Broad Money (M3)





Transferable deposits





Treasury Bills (traded)





Government Stocks, bonds and notes





Cashless Payment Instruments (Volume in Thousands)






Cheques issued





Credit and Debit Cards





Paper-based Credit Transfers





Non-Paper based Credit Transfer





* Provision figures


Payment System:

Payment System: A payment system consists of a set of instruments banking procedures and interbank funds transfer systems that ensure the circulation of money.

Clearing: Clearing is the process of transmitting, reconciling and confirming payment orders or security transfer instructions prior to settlement. Clearing may include netting of instructions and the establishment of final positions for settlement.

Clearing House: A central location or central processing mechanism through which financial institutions agree to exchange payment instructions or other financial obligations. The institutions settle for items exchanged at a designated time based on rules and procedures of the clearing house.

Settlement: An act that discharges obligations in respect of funds or securities transfers between two or more parties.

Settlement finality: Settlement which is irrevocable and unconditional. It is also known as final settlement.

Settlement lag: The time-lag between the initiation of a payment instruction and its discharge by the final exchange of a financial asset for payment. It is sometimes referred to as a payment lag.

Network: A set of units connected to each other to facilitate exchange of inputs and functionalities and enable a desired output pattern.

Automation: The process of setting a system that is self-acting and self-directing moving spontaneously.

Time Critical Payments: Payments whose settlement at due date trigger other financial transactions. Non-settlement of time critical payments lead to a non fulfilment of the secondary transactions.

Time sensitive payments: Payments whose non-settlement at the due date draws immediate legal and other implications including penalties and other obligations.

DVP (Delivery Versus Payment): A mechanism in an exchange-for-value settlement system that ensures that the final transfer of one asset occurs if and only if the final transfer of the other asset occurs. DVP is mainly used in reference to securities trading where the transfer of securities ownership is tied to the transfer of respective funds.

PVP (Payment Versus Payment): A mechanism which ensures that the final transfer of one value is conditional to the final transfer of the correspondent value. PVP is used in foreign exchange or cross currency transactions.

Dynamic Collateralisation: A system in which automatic lending to a net deficit clearing participant is fully covered automatically by collaterals drawn from a reserve of liquid collaterals usually securities.

Payment instrument: A device or system or physical unit used to initiate instructions for transfer of value from a payer to a payee in settlement of an obligation, Cash, cheques and cards are common payment instruments.

ATMs (Automated Teller Machines): Electromechanical device that permit authorised users to withdraw cash from their accounts and/or access other banking services such as balance enquiries, transfer of funds, and acceptance of deposits using machine readable plastic cards.

Y2005V (Year 2005 Vision): A payment system being designed and developed for the year 2005. Tanzania is targeting the year 2005 as the year in which the new desired payment and settlement system will be in place.

Truncation: A procedure in which the physical movement of paper based payment instruments is curtailed or eliminated, and is replaced in whole or in part of their electronic data contents for further processing and transmission.

Credit based Payments: Payments made by placing funds at the disposal of the beneficiary. The payment instructions and the funds described therein move together from the bank of the payer to the bank of the beneficiary.

Credit Transfer System (Giro System): A system through which payment instructions and the funds described therein may be transmitted for the purpose of effecting credit based payments.

LVTS and/or LVCS (Large Value Transfer/Clearing Systems): Interbank funds transfer/clearing systems through which large value and priority funds transfers/payments are made between participants. They are sometimes referred to as wholesale funds transfer/payment systems.

RTGS (Real Time Gross Settlement) System: A settlement system in which payment instructions are processed one by one in their gross nature (no netting) continuously, that is in real time as they are initiated and received.

Settlement finality: Settlement that is irrevocable and unconditional. In this regard receiver finality refers to a point at which an unconditional obligation arises on the part of the receiving participant.

DNS (Deferred Net Settlement) Systems Settlement systems in which payment instructions are bunched and off-setting positions calculated between participating banks before settlement is done. Netting reduces a large number of individual obligations to a smaller number of obligations based on multilateral net positions of participants. Netting may take several forms which have varying degrees of legal implications especially in the event of a default.

CBS (Central Banking System): A payment and funds transfer System being developed by the Bank of Tanzania to replace the current IBS System. The system will be open and will include multiple options settlement functionalities to accommodate the Y2005V National Payment System.

CSD (Central Securities Depository) System: A securities trading system will facility for holding securities in a book entry from and enables securities transactions to be processed and transferred in a dematerialised and immobilized manner through electronic records. The system may incorporate safekeeping comparison, clearing and settlement functions.

SWIFT (Society for World-wide Interbank Financial Telecommunication): A cooperative organisation that operates a network for the exchange of payment and other financial messages between financial institutions throughout the world. The organisation is owned by banks.

Credit Cards: Cards indicating that the holder has been granted a line of credit. It enables the holder to make purchases and/or draw cash up to a pre-arranged ceiling.

Debit Cards: Cards enabling the holder to have his purchases or expenses charged directly to funds on his account at a deposit taking institution.

Chip Cards: Cards containing computer processors for identification, data storage, authorisation verification….etc. They are also known as Integrated Circuit (IC) Cards or Smart Cards.

Point of Sale (POS): A retail location used for payment by the use of payment cards. The payment information is captured either by paper vouchers or by electronic terminals which may also be used to transmit the information.

MULTOS (Multiple Options Settlement) System: A payment clearing and settlement system that allows several payment processes of different types and streams to be done simultaneous using same transmission and processing system. Users of such a system have options to select the type of processing path they prefer.

Systemic Risk: The risk that the failure of one participant in a transfer system or in financial markets to meet its required obligation will cause other participants or financial institutions to be unable to meet their obligations too. The risk refers to a payment and settlement system. It is important to differentiate systemic risk from systematic risk a term used by financial analysts to describe a situation where all share prices may fall leading to a major market setback and losses in investment opportunities. Systemic risk is also different from systems risk a term used by computer programmers to describe the possibility of a failure or malfunctioning of a group of hardware, software and peripherals working together.


Isaack H. Kilato - Chairman
Cashmir J. Nyoni - Member
Angelita K. Mbatia - Member
Simmon E. Jengo - Member
Bernard J. Dadi - Member