Tanzania govt backs Prisons bid on commercial bank

Backed by a staggering over 9.6bn/- financial muscle and over 12,476 members, Tanzania Prisons Savings and Credit Cooperative Society (TPS-SACCOS) has everything to convince Bank of Tanzania (BoT) Governor, Professor Benno Ndulu grant them commercial banking licence.

Home Affairs Minister, Mr Matthias Chikawe, told representatives of TPS SACCOS Ltd that growth of the savings and credit society since 2012 has been commendable hence graduating into a commercial bank is a cause for celebration.

“It’s my hope that by 2017 the SACCOS will extend membership to all prisons staff.

Statistics show that your capital has increased from over 8.08bn/- in December 2012 to over 9.69bn/- in December last year,” Mr Chikawe said in a speech read on his behalf by Home Affairs Permanent Secretary, Mr Mbarak Abdulwakil.

He pointed out that with an increase of membership from 11,049 in 2012 to 12,476 last year which includes prisons officers, their spouses and civilian members of staff.

Mr Chikawe further urged members to refrain from giving each other handsome dividend this year and instead mobilise funds for the bank.

Briefing the Minister on progress made by TPS SACCOS Ltd towards becoming a commercial bank, Commissioner General of Prisons (CGP), Mr John Minja said since its establishment in 2005, the institution has seen its number of members increase from 80 who contributed 8m/-.

“During this SACCOS leadership election meeting, members will choose new board members who will take us through to starting banking services,” CGP Minja said.

The Prisons chief underscored the important challenge facing the new board to stir the SACCOS to the next level following years of success. One of the SACCOS members who has enjoyed access to it’s credit facility is Inspector of Prison, Lucas Mboje.

Mr Mboje said since joining the TPS SACCOS close to a decade ago, his life has changed for the better. “Most important is that interest rate payment at SACCOS is modest compared to commercial banks, which makes a huge difference,” Inspector Mboje noted.

According to Bank of Tanzania, commercial banks are charging interest rate of between 16 and 23 per cent which is in many ways prohibitive.

According to BoT regulations, an investor needs a minimum of 1bn/- to get a banking licence with the smallest bank in town having less than 1,000 customers maintaining not more than 5bn/- deposits. Dar es Salaam based Serengeti Advisers Limited’s Annual Banking Survey for 2012, the number of commercial banks reached 45 with entry of four new banks in 2011.

The four banks were Advans Bank, Amana Bank, First National Bank (FNB) and Njombe Community Bank. “Total bank assets in Tanzania expanded by 2.6trn/- from 15.3trn/- to 17.9trn/- between 2010 and 2011 which represented growth of 17 per cent.

The deposit base also grew by 2.2trn/- at 17 per cent from 12.4trn/- to 14.6trn/- during 2011,” the report stated. Lending by the 45 reporting banks expanded by 1.7trn/- from 5.9trn/- to 7.6trn/- during 2011, with most of the growth coming from existing banks.

New entrants added 4bn/- to the total by the end of the year. The industry’s total revenues grew by 22 per cent to 1.46trn/- from 1.2trn/- and net profits increased by 31 per cent from 230bn/- to 302bn/- with the four new entrants adding 58bn/- in new paid-up share capital to the industry.

During 2011 the industry’s total paid-up share capital increased by 116bn/- (20 per cent) with 50 per cent of this increase coming from four new entrants into the banking sector - Advans Bank, Amana Bank, First National Bank (FNB) and Njombe Community Bank.

They added 57.7bn/- to the industry’s paid up share capital, represented 8.3 per cent of the industry’s total paid up share capital, and increased the number of reporting banks from 41 in 2010 to 45 in 2011.

Market share overview FBME, CRDB and NMB maintained their position as the three largest banks by assets, with 48 percent of total industry assets, the same as in 2010.

The next seven largest banks had 33 percent of the industry’s assets, while the remaining 35 banks held the other 19 percent of the total assets.

TPS SACCOS Commercial Bank Limited will likely join the 35 banks with 19 per cent of total assets if it comes to life this year as championed by the Commissioner General of Prisons.
Source: Daily News, reported by Finnigan wa Simbeye, from Dar es Salaam, Tanzania

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