The Central Bank of Tanzania has issued a circular requiring all banks and financial institutions operating in the country to set up local primary data centers.
Speaking on the direction, Bernard Kibesse, Deputy Governor, BoT, said:
“The bank of Tanzania has noted with serious concern that most of the banks and financial institutions have not provided a true position on compliance with the requirements to put in place a primary or secondary data center in Tanzania.”
The circular further states:
“Any bank or financial institution, which will be found not to have complied with the above requirements, shall be liable to a penalty of 5 billion shillings (Approx. $2.1M).”
The central bank says it has issued three previous circulars since 2014 for primary and secondary data centers to be located in Tanzania. The regulator has now re-issued 3-month ultimatum otherwise it will impose penalties on institutions that fail to comply.
Having access to direct data is expected to enable the regulator control the local market.
Tanzania’s top financial service providers and banks have recently been hit with a spike of bad loans with at-least nine banks having their licenses revoked since 2017.
The IMF has said that nearly half of the 45 Tanzanian banks are vulnerable to global financial shocks and at risk of being insolvent.
The announcement comes at a time when the recent drive toward localization of data globally in light of data protection and privacy concerns is at an all time high.
The Central Bank of Tanzania has officially made a public notice on the same.