Since its establishment less than five years ago, the Tanzania Women’s Bank has managed to penetrate the market to reach more women entrepreneurs and generally spearhead the war against poverty in the country.
The Bank’s founding Managing Director Mrs Margareth Chacha granted an exclusive interview to Daily News’ special correspondent. Excerpts.
Tanzania Women’s Bank (TWB) is one of the few commercial banks in Tanzania to grow steadily within a short period since its establishment. What is the secret behind this achievement?
Tanzania Women’s Bank PLC (TWB) was awarded banking License No. 038 on 2nd of July 2009.
The bank officially opened its doors to the public on 28th July 2009 and was inaugurated on 4th September, 2009 by President Jakaya Kikwete, The bank operates as a Financial Institution (FI) it provides all traditional banking services including solidarity group lending to MSMEs with exception of cheque account (current account).
The Bank has dual operations i.e. offers both traditional banking products and microcredit activities. Apart from individual and corporate customers, in four year’s time, the bank has already registered over 40,000 Micro, Small and Medium enterprises (MSMEs) customers, comprising of 75% women and 25% men.
Group lending scheme started in 2010 and have so far registered more than 10,000 customers. This means more than 600,000 family members are indirectly benefiting with TWB facilities.
TWB pioneering initiative is the first of its kind in Africa essentially aims at promoting economic activities undertaken by women at the same time empowering them economically.
The bank comes as a relief for Tanzanian women who, despite their enormous contribution towards economic development, unfortunately do not always have easy access to banking services for many reasons, including fear due to low level of education, limited information and exposure, adverse culture, religion/belief, inferiority complex, dependency and poverty and culture.
The steady growth of the bank confirms on the appropriateness of the vision, mission and objective of the bank because it fits well with the Tanzania social economic situation.
The fact that women are the majority in the country i.e. more than 51% and again the fact that out of say 10% of people who access financial services, only 2% are women. By choosing this segment, the bank have big customer base to deal with ensuring the bank huge market share to manage.
Another reason is that Micro, Small and Medium Entrepreneurs makes more than 80% of Tanzanian economically active population but all this time were excluded from main banking and financial services.
By including this segment, TWB is sure of growth all years round. Further, the bank’s market study reviles that more than 85% of our population is engaged in informal sector.
By tapping this population, the bank has become popular so much that averages of 50 relations are established every working day.
Regarding charges, TWB rates are very moderate such that if one is given say TZS 200,000/= for six weeks the person returns only TZS 225,000/= There is nowhere in the market MSME could enjoy such low credit rate.
Like our Moto goes ‘This is the only bank for all’ we also take care of Corporate entities, Government institutions, SACCOS, VICOBA, UPATU, SACAS and informal groups.
TWB offers free basic business training programmes to its potential customers, follows them where they are down to their communities. Bank staff is trained to offer not only quality services but also are friendly and respectful.
As noted earlier, MSMEs sector is fast growing in the county compared to number of banks and financial institutions.
Notwithstanding the big number of banks and financial institutions interested in the sub-sector, the services are still very limited to concentrated areas and complicated/ expensive for many to afford.
The fact that demands for financial services in Tanzania remains high is even higher with MSMEs products. MSME segment has proved to be stable and profitable in short term which supports TWB mission.
The establishment of the bank is seen by many as the commitment of fourth phase government under President Kikwete to see more women get involved in businesses through soft bank loans. How correct is this statement?
I respect President Kikwete for being wise and open minded. Giving a chance to women to be economically empowered is the best thing under the sun all presidents should do if possible.
MSMEs especially women need special attention and programmes. Historically there have been special schools, hospitals and many other services based on gender, I believe women have special needs calling for special preference.
Economic empowerment of women is central to poverty alleviation. In Tanzania Women constitute more than 51% of total population and more than 80% are engaged in agriculture.
Various survey results has shown that despite being majority and active in economic activities but less than 2% are enjoying banking and financial services in the country. Notwithstanding these government initiatives and efforts, the plight of Tanzanian women cannot be overemphasized.
Women participation in the economic activities has been increased at all levels but they are virtually absent from or poorly represented in economic decision making, including formulation of fiscal, monetary and other economic policies.
Women represent the majority of informal Small and Medium enterprise. They dominate the agricultural production, micro-distribution centres for consumer products and other small scale enterprises.
Women’s businesses are focused on traditional outlays such as agriculture, food processing embroidery and sale of food items and in many cases are informal and they are not included in the national incomes.
In addition, the policies and strategies in place have not been able to curb feminization of poverty in Tanzania as it is in other developing countries. Giving special products and prices to MSMEs especially women to encourage them became self dependant is what any national should do to accelerate economic development and sustainable social growth and stability.
Since women used to be ignored, segregated, humiliated and even denied decision power and right to own economically active assets – it is time now for the right things to be done.
People (the advantaged ones) could call it favour or soft loans but we call it ‘Giving the right to the right people-‘ the people who matter.
We are made to understand that since its inception, the bank has been very instrumental in supporting women’s Small and Medium Enterprises (SMEs). How much has your bank dished out so far to entrepreneurs as loans to-date?
TWB has contributed to the development of people’s livelihood in the country including Dar es Salaam, Mwanza and Dodoma by offering loans to the tune of TZS 55.0 billion as at 31st December, 2013 through salaried loans, SME loans, and Solidarity Group Lending and Micro loans.
Given the main focus of our bank being women most of whom are engaged in small scale activities (whether business, agricultural or otherwise) we have special products for women entrepreneurs e.g. Tanzanite account such that more than 85% beneficiaries are women.
This is a big achievement if you consider the age of the bank and confirms that the bank is living its vision. The bank issues different types of loan facilities to all types of customers engaged in various sectors of the economy.
We offer long and short term loans, overdraft facilities and group loans with no security, letter of credits, guarantees and tailor made subject to negotiations.
Is your bank a gender-based financial institution? if no what are the criteria for one to become your customers?
No, TWB is a women’s bank (intended to be owned by women) and not a bank for women – as our motto goes ‘TWB is the only bank for all’ with time we wish women could become majority share holders of the bank.
Of course, women are our special segment but the public is given equal opportunity to enjoy the bank’s products and services.
As a long time experienced banker in Tanzania, how can you describe the performance of banking and financial sector in the country?
Banking sector is rapidly growing in Tanzania, confirming health growth of the economy and good business atmosphere.
Tanzania is now increasingly embarking to mining I strongly believe that this will eventually stimulate industrial development and foreign investors in the country which to a great extent supports improvement of the country’s balance of trade.
The banking sector in Tanzania offers great potential, with the number of players increasing every day. The country currently has over 40 registered banks and over 17 financial institutions operating all over the country.
There are a number of international corporate names in the banking sector and the list is still increasing.
The market is currently experiencing turnaround of commercial banks from corporate business to SMEs segment but considering our bank experience and special segment this is not considered as a threat at all.
Despite this u-turn, unfortunately many are still demanding high level of minimum deposit and interest rates on their loans facilities, forcing big number of MSMEs to come to TWB.
Most of the banks are well capitalized with strong financial muscle. The World Bank has expressed its optimism in Tanzania’s economy which is growing and has shown clear signs of becoming robust and resilient over the next decade due to efforts directed at sectional diversification.
Tanzania has successfully managed to diversify its economy away from over- concentration on primary farm products to investments in mining, manufacturing, telecommunications and infrastructure.
Economic growth in Tanzania is expected to continue to pick up, owing to mining, manufacturing and construction sector’s strong performance, bolstered by increased demand and improved electricity supplies.
It is no doubt that the stable macroeconomic environment continues to attract foreign direct investment in the country. Harmonization of tariff by Tanzania Revenue Authority (TRA) between East African Countries has facilitated and still continues to facilitate the smooth flow of business between neighbouring countries.
Many traders especially from land locked countries and neighbour Islands have been exploring the opportunities and ultimately conducting their businesses in Tanzania, particularly in Kariakoo, without much encumbrance.
Generally, Tanzania’ s economy has shown healthy growth over the last few years with an average growth of 6% per annum.
Further, inflation which had soared to the heights of two digits since December 2009, it has now been tamed such that is down from single digit. This has positive implication to the banking sector.
Late last year, Tanzanians witnessed the bank extending its wings by opening a new branch at the busiest area of Kariakoo in Dar es Salaam. What is the bank’s coverage so far?
Generally, growth in the economy along with growth in the country’s population, migration of big numbers of people to the city, tremendous increase in self employment activities through Micro, Small and Medium businesses (MSMEs) especially among the women segment.
All these mean a lot of business and hence a lot of customers being served at the Mkwepu Street Branch which has limited space.
This is what has pressed the bank to put up a second branch in Dar-es-Salaam and establish solidarity centres in the regions. The second branch better connects the customers who are engaged in business within Kariakoo but who were failing to fully utilize the TWB services due to distance and security reasons.
Furthermore, Kariakoo being one of the major business centres/markets has large number of people from the rural areas, regions and neighbouring countries, especially women, engaged in informal sector which forms part of the branch’s targeted market.
The bank is therefore operating with two main branches i.e. Mkwepu situated along Mkwepu Street in town and Mjasiriamali Kariakoo located along Aggrey Street near Likoma street junction both are in Dar es Salaam.
Although conventional banking will be the main driver of the business, Solidarity Groups scheme and services will inevitably attract big number of customers who do not have securities to cover their loan facilities especially women and Micro traders. For this reason, the branches are of two windows i.e.
Solidarity Group Lending Scheme Products with Free Training programmes and conventional banking operations. TWB Sell outlets: Mwanza office is located in the old Postal office building near Kamanga ferries within Mwanza Town and Dodoma office is the main regional Postal office building adjacent to Tanzania Railway station in Dodoma.
Additional Sell Outlets: Management succeeded to obtain BOT approval to establish more sell outlets in Ruvuma, Mbeya and Iringa/Makambako.
Following the approval, Management managed to locate office spaces for the regional offices i.e. in Ruvuma, the office is located in the main Regional office compound whereas Mbeya and Iringa/Makambako offices will both be housed in Postal office premises.
Management effort to have all the centres operational first quarter 2014 is in good progress.
When inaugurating the Kariakoo Branch in Dar es Salaam, the Prime Minister, Mr Mizengo Pinda, praised the expansion and competitive services the bank is rendering to its customers. What makes this bank unique?
Product differentiation: TWB products are user friendly and cost effective. The quality of services rendered to our customers, women in particular are competitive and attract many customers who are locked out or intimidated by other financial institutions with bulky instructions/ requirements.
We have two windows running parallel i.e. traditional (conventional) banking and Solidarity Group Lending/saving scheme. The bank is striving to enhance solidarity schemes with minimum charges for the product.
Traditional Banking (Conventional Banking) has seen TWB do the following: make it easy for people of all categories to open and operate their accounts, having two page account opening forms written in Swahili and English attracts many people especially the ones engaged in the informal sector, allow customers to sign using their thumb has motivated many MSMEs especially women to choose TWB bank against others.
Our study confirmed existence of big number of such customers at Kariakoo. Other initiatives have been: allowing minimum balance of TZS 3,000, joining Umoja switch, which is an added advantage for TWB because customers can access their accounts all over the country, attractive and competitive interest rate on customer savings and loan facilities is another catch for care deposits and loan portfolio, special products and attractive packages on Tabasamu mama saving account, Tanzanite for women entrepreneurs, Malezi for potential, Tajirika for bid depositors, Maendeleo for growing MSMES, Juhudi (charge free) group savings attract many customers especially MSMEs to prefer TWB.
Also Umoja ATM, M-pesa, Western Union, TISS, SWIFT international money transfer and other more products are increasingly drawing attention of many business women and individuals, international money transfer is done instantly attracting many customers using our money transfer services.
The fact that all TWB loans are insured, removes the fear among members and borrowers of losing their properties or paying for their fellow members in case of misfortune.
Hence a big number of customers are attracted to join the bank. TWB interest rate is cost effective because is calculated on annual base not otherwise, this makes the bank more competitive and attract a big number of MSMEs to the bank while free training offered by the bank encourages many people to join the scheme with TWB.
Experience has also proved that trained customers perform better and manage to timely repay their loans; hence the branch business is catching up very fast.
TWB flexibility in determining repayment period and minimum loan amount is another catch to many MSMEs engaged in informal sector while availability of funds for loans is another advantage to TWB customers, as they do not need to wait for long time before their loans are approved.
As the founding Managing Director of the bank, what challenges do you face in running dayto- day activities?
At infant stage, TWB is faced by several challenges which have impeded and some continue to retard the overall performance of the bank.
Some of the notable challenges faced by TWB include the following:- Making sure that all regulatory and authorities polices are fully covered and complied to, staff mobility as new banks continue to take skilled staff from already established banks.
Other challenges are; limited skills in the market especially at managerial levels, lack of integrity to some of staff and or customers, inadequate capital base which impacts on the banks capacity to expand and reach more customers country wide especially rural areas, operating with few branches has been a challenge because it limits the bank to reach wide geographical areas and also some people especially men are challenged by the bank’s name.
Finance is among the sectors of economy that grow very fast in Tanzania. What is your plan to better the bank’s position in the market in next two years?
Despite the challenges being faced by TWB, the bank’s future is bright. As outlined in the business plan, TWB has a potential to grow and attain its vision of ‘being the leading bank for women in Tanzania’.
TWB will remain focused on maintaining its core business model and develop opportunities for growth in a conservative and sustainable basis. This will be undertaken within a framework of prudent risk management.
As noted earlier, the bank is expecting early capital addition in the near future and in support of the government effort, the bank intends to sale shares to the public as a means to increase its capital base with a view to increasing its ability to serve a wider public.
Issuance of shares to the public will also enable it, particularly women, to own the bank. Apart from opening more branches countrywide, the bank is committed to take advantage of intensive use of technology and agency banking network to swiftly and speedily reach rural areas.
The bank will continue to manage alternative channels to ensure safe and reliable service delivery to the clients through continued expansion of services offered through the website, ATM, Mobile and now Point Of Sale (POS) channels that saw continued growth in hits and transaction volumes. Staff skills will continue to be sharpened for quality service delivery and sustainability
Any special appeal to the government or public?
I call upon the government to allocate special fund for MSMEs empowerment especially women.
All government funds intended for women should be routed through TWB for effective management and sustainability.
As we go public, women are encouraged to buy as many shares as possible and become majority shareholders of the bank and most importantly, I call upon Tanzanian’s to fully utilise the bank’s services.
Originally Published on Daily News Tanzania