VP urges bankers to utilise fully credit bureaux to boost integrity

Bankers should utilise fully credit rating bureaux to minimise lending risks and ultimately push down interest rate in the market, the Vice-President, Dr Mohamed Gharib Bilal, said.

The VP said credit bureaux would assist banks to follow up paying culture of a particular would-be-lender to minimise the agony of loan defaulting.

"The credit bureaux are good in making reference to the status of a lending person, use them to minimise risks," Dr Bilal said when officially launching Maendeleo Bank in Dar es Salaam. 

There are two licensed credit reference bureaux in the country, Credit-info Tanzania and Dun & Bradstreet Credit Bureau Tanzania.

The VP reiterated the government commitment to create a good environment to enable the financial sector to prosper further as it's the catalyst for development spurring of this economy.

The Maendeleo Bank, listed at Dar es Salaam bourse second window, is the first bank in the history of the country to raise capital through selling shares. "Let's all congratulate the bank, as it has entered the competitive banking market while already listed.

This is a leap ahead. Many other banks (including bigger ones) have yet to do so...congratulation," Dr Bilal said. The main challenges the banking industry is facing today, the VP said, include rural penetration while stringent lending conditions are putting off lenders.

"I advice you (Maendeleo Bank) to look around the possibility to lower interest rates as most of them are prohibitive to borrowers," Mr VP said. The bank service annual penetration is estimated at around 14 per cent while the sector growth was at 10.2 per cent last year.

The loan interest rates are between 10 and 30 per cent. The Maendeleo Bank Managing Director, Mr Ibrahim Mwangalaba, said the community bank is targeting low income earners and small businesses which would be loaned-out using grouping methods or SACCOs.

"Since we opened our doors to the public two months ago we have already loaned-out 40 clients (many) being groups and enterprises," Mr Mwangalaba said during the launching ceremony at the bank HQ along Sokoine Drive.

The Deputy Minister for Finance and Economic Affairs, Ms Janet Mbene, said the bank has opened the way for other SMEs to use Enterprise Growth Market (EGM) to raise the much needed capital.

"This bank shows that the country has many financial vessels for raising capital that could be used by SMEs," Ms Mbene said, "and I advise you to not only dwell on bricks and mortars branches, use technology to reach many."

The Maendeleo Bank Chairman, Mr Amulike Ngeliama said the first dividend is expected to be offered either in 2016 or 2017 depending on the operational activities and economy performance.

According to Evangelical Lutheran Church of Tanzania (ELCT) Archbishop Dr Alex Malasusa the bank invested 200m/-on preparation of its existence while the idea of establishing it sprung in 2008.

"I thank the BoT bureaucracy, which was done in good faith to us to ensure safety our money and shareholders' funds," Dr Malasusa said amid laughter and cheers.

ELCT is the main shareholder. The launching of Maendeleo Bank increases the number of financial institutions in the country to 51. But most still concentrate on urban market as it is where the big clientele is.
Source: Daily News, reported by Abduel Elinaza from Dar es Salaam, Tanzania
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