Banking
From The Report: Tanzania 2018
View in Online Reader

Tanzania has a well-developed and diverse financial services sector, with a number of large domestic and multinational lenders present, and a rate of financial inclusion that exceeds that of most other large economies in Africa. However, in line with major markets elsewhere on the continent, just five bodies account for roughly half of total assets. 2017 was a challenging year for Tanzania’s banks, as they adjusted to changes in the economic and regulatory environment. Slowing credit growth and increasing loan defaults have compelled the regulator to intervene, adjusting policy rates and increasing supervision of troubled lenders. Nonetheless, the fundamental stability indicators of the sector remain sound, and the industry is well positioned to take advantage of opportunities arising from the government’s development programme. This chapter contains interviews with Benno Ndulu, Former Governor, Bank of Tanzania; Ineke Bussemaker, CEO and Managing Director, NMB Bank; and Charles Kimei, CEO and Managing Director, CRDB Bank.

Articles from this Chapter

Overview

A stable course: Key indicators suggest the country’s robust fundamentals will see the sector through coming challenges
OBG
plus

Tanzania has a well-developed and diverse financial services sector, with large domestic and multinational lenders present, and a rate of financial inclusion that exceeds that of most other large economies in Africa. However, in line with major markets elsewhere on the continent, just five bodies account for roughly half of total assets. The year 2017 was challenging for Tanzania’s banks, as they adjusted to changes in economic and regulatory environments. Slowing credit growth and increasing…

Interview

Pressing ahead: Benno Ndulu, Former Governor, Bank of Tanzania (BoT), on increasing liquidity and managing economic uncertainty
OBG
plus

Interview:Benno Ndulu, Former Governor, Bank of Tanzania (BoT) What policy reforms will keep inflation within the target band for the next 12 months? BENNO NDULU: Within the medium term, we expect inflation to stay in our target range of 5%, which is currently below the advisory threshold. However, core inflation, which is adjusted for the movement of food and fuel prices, has averaged 2-3% and is expected to stay below 5%. The reason the BoT excludes these specifically is because they are…

Analysis

Central holdings: The tightening liquidity scenario is seeing the central bank take a more direct monetary policy approach
OBG
plus

The government’s process of economic reform is having far-reaching effects on various entries on banks’ balance sheets. Many reform measures, such as the more rigorous implementation of the tax code, are being felt indirectly by the banking sector in the form of rising non-performing loans and slower loan growth. However, a recent decision regarding the finances of parastatal organisations has had a direct and instant effect on sector performance. In January 2017 the government requested…

Analysis

A raft of reforms: The regulator is stepping in to address declining credit growth
OBG
plus

The slowing growth rate of credit to the private sector has emerged as a key industry issue in 2016 and 2017. After expanding at a rate in excess of 20% throughout most of 2015, central bank data shows that in January 2016 growth began to decline sharply. By October 2016 credit expansion to the private sector had fallen beneath the 10% level, and by April 2017 it had declined to just over 3%. Tightening liquidity is a primary cause of this phenomenon, and one which the Bank of Tanzania (BoT)…

Interview

Time for flexibility: Ineke Bussemaker, CEO and Managing Director, NMB Bank, on lending and financial inclusion
OBG
plus

Interview:Ineke Bussemaker, CEO and Managing Director, NMB Bank How are commercial lenders working with the central bank to increase private sector credit? INEKE BUSSEMAKER: Even without the direct influence of the central bank, there are incentives for commercial banks to increase their number of loans to the private sector. Granted, this is done within the parameters established by the central bank, and it is carried out in accordance with the Banking and Financial Institutions Act of 2006.…

Interview

A lending hand: Charles Kimei, CEO and Managing Director, CRDB Bank, on interest rates and better banking
OBG
plus

Interview:Charles Kimei, CEO and Managing Director, CRDB Bank In what ways has the sector been impacted by volatility in commodity markets? CHARLES KIMEI: One of the central risks of commodity financing is the unpredictability of world market prices, combined with the absence of mechanisms for managing this risk in unsophisticated financing markets, where hedging instruments – including price insurance and forward sales markets – are absent. Notwithstanding this risk, a bank the size…

Analysis

Casting a wider net: The authorities set their sights on expanding financial inclusion with new offerings
OBG
plus

For the government, boosting the proportion of the population with access to financial services is a strategic priority. According to a 2016 IMF report, financial inclusion rose by 42 percentage points to 58% of the population between 2009 and 2013 – a surge which the IMF attributes almost entirely to new distribution channels, such as mobile money. However, the government has been keen to push this further, and in 2013 it launched the National Financial Inclusion Framework, which set…