Tanzania’s has been one of Africa’s fastest growing economies in recent years, with annual GDP growth rates in excess of 6.5 percent (see Fig. 1). However, despite this growth, data still shows that strong economic growth has not translated into shared prosperity and better livelihoods for many Tanzanians. The country recognises that growth has to be inclusive to be socially and politically sustainable. One key component of inclusive development is financial inclusion, an area in which the country has been struggling. Currently, only about 15 percent of adults have access to an account at a formal financial institution. Broadening access to financial services will mobilise greater household savings, marshal capital for investment, expand the class of entrepreneurs, and enable more people to invest in themselves and their families.
World Finance spoke to NMB’s Managing Director, Ineke Bussemaker, about the role NMB is playing in boosting Tanzania’s banking sector and economic development.
How has the banking sector supported the country’s economic growth?
The Tanzanian banking sector is both a driver and beneficiary of the strong macro economic growth that has been realised over the years. Banks play a crucial intermediary role within the economy; gathering savings, then facilitating the transfer of financial capital towards alternative productive uses in the form of credit. For instance, at NMB, we hold over $1.5bn in customer deposits and provide net loans of over $1bn. The distribution of this credit to all the segments of the economy, by NMB and other banks, has fostered private sector consumption and investment that have been key drivers for the country’s economic growth.
What measures is the government taking to increase financial accessibility for Tanzanians?
The Government of Tanzania has been putting in place regulations, processes and initiatives that will make financial services more accessible to the majority of the population. For example, in 2012 the Bank of Tanzania, the primary regulator of banks, published guidelines for agency banking in the country. This now enables banks to utilise small businesses and entrepreneurs to become an ‘agent’ of a bank with the ability to collect deposits, allow withdrawals, facilitate transfers and open accounts. Agency banking has proven to be enormously successful at significantly increasing financial inclusion in Brazil and Kenya, we’re now looking to emulate that access in Tanzania. As the leading commercial bank in Tanzania, NMB continues to work closely with the government in helping devise and implement financial inclusion initiatives.
How does NMB help to improve accessibility for Tanzanians?
NMB has always been committed to making financial services accessible to all Tanzanians. To this end we have sought to leverage our branch and ATM network to reach customers far and wide. Our bank has 173 branches across the country; we’re the only bank present in 98 percent of all government districts – in many places NMB is the only bank around. Our NMB banking agents are spread out across the country. As they grow in number, unbanked Tanzanians will find their nearest banking agent within walking distance. Tanzania is a very large country, larger than Kenya, Rwanda and Uganda combined, the distance to a bank branch has traditionally been one of the biggest impediments to financial inclusion. Our banking agent network greatly reduces this barrier.
Technology has become a critical determinant of banking success in Africa. How banking is conducted and how customers engage with their bank has changed dramatically. At NMB we recognise this shift. We were the first in Tanzania to launch an SMS-based mobile banking service, which we called NMB Mobile. NMB Mobile currently has over one million users.
How will NMB continue to promote Tanzania’s economic development in the coming years?
Our lending activities will continue to boost consumption and investment in the economy. For example, agriculture is a sector that has massive potential for Tanzania but has traditionally lacked such capital investment. At NMB, we’re already reaching over 600,000 small-holder farmers by financing their crop production. We’re also targeting larger commercial farmers and supporting their growth. Furthermore, we have tens of thousands of micro enterprises and SMEs that we provide credit to. In our corporate social responsibility activities we provide financial literacy and basic business training to many Tanzanians, empowering them with the knowledge and understanding they need to manage their finances.
What does the future hold for NMB?
We will soon be implementing our new five-year plan, under which we aim to align our product and service offering with the market environment Tanzania will find itself in by 2020. NMB will pursue a transformation in its scale and scope of operations by utilising its infrastructure and technology capabilities to drive efficiencies, growth and value. We believe that these initiatives will move us closer towards achieving our vision of transforming the lives of Tanzanians.