Salim makes case for decent housing

IT gives me great pleasure to join you this evening. I thank you for inviting me to take part in this official inauguration launch of BOA Bank Tanzania Limited; the newest crown-jewel in Groupe Bank of Africa and the bank which we used to know, for the past fourteen (14) years, as Eurafrican Bank.

As we celebrate this occasion, it is also, pertinent to cast an eye to banking in general and its importance, in fulfilling the aspirations and expectations of community.

I need not overemphasize the difficulties facing a Bank. It has to face up the stiff and indeed some may say cutthroat competition from fellow banks, balancing between service and wealth maximization, and confronting all the risks inherent in that business since it is in fact a business in risk.
===

More significantly, your Bank has taken a bold and imaginative initiative to transcend the artificially created divide between the so called Francophone and Anglophone countries.
===
Nevertheless such an environment is quite healthy to the economy and provides a catalyst for growth and poverty alleviation. Under the circumstances congratulations are therefore in order to BOA Bank Tanzania on being able to skillfully navigate through this challenging situation.

Africa in general and more specifically Tanzania need banks that are in as much of international standard as well as being inward looking in terms of market segmentation, customer services, diversity in product offerings and economies in which they serve. That is why I have been truly impressed by your slogan 'As close as a group, As strong as a partner'.

More significantly, your Bank has taken a bold and imaginative initiative to transcend the artificially created divide between the so called Francophone and Anglophone countries. In this respect I note that your operations which were at one time confined to Senegal, Burkina Faso, Cote D' Ivore, Mali, Niger and Madagascar have now included Uganda, Kenya and Tanzania. This is a positive and important move in bridging the existing gap and their contribution to Africa's quest towards economic integration. As a committed Pan-Africanist I can only hail this type of development and wish to pay tribute to Mr Paul Derreumaux and his colleagues in the leadership for theirs vision and contribution.

We are all aware that Africa and its economies are characterized by the following:

. Rapid growth in some of the countries including Tanzania

. Rebuilding of some of the economies

. Hotbed of tensions and active conflicts in some isolated places like the Sudan's Western Region of Darfur, Somalia, some part of Eastern DRC and Northern Uganda.

. Budding private sector as well as the 'informal sector'.

. Very thin corporate sector.

. Despite rapid urbanization, most of our people are still found in the rural areas where economic conditions are as yet very poor.

===
SMEs is nowadays the buzzword. It is also the reality in Africa. By their minimal size and sophistication SMEs remain timid when accessing banking services. They invariably get overburdened with charges and lack of customized services.
===

. Even after 45-plus years of independence, cross-border business is very low. Where it exists, most of it is not done through informal channels. Where it is done through official channels, all the settlement are effected via Europe and United States and in respective currencies as well.

From roughly 1980 to the present, Africa has been going through very severe turbulence, deteriorating and in some instances collapsing economies, internal political conflicts and weakening states and Africa's marginalization within the global system. Though a lot of progress has also been achieved, being able to fill the void that the majority of Africans are facing due to such factors with regards to relevant financial and investment assistance has proved to be extremely difficult.

===
Being able to extend micro-credits effectively whilst creating a win-win situation to both parties will economically and financially transform the lives of the poor, which in turn creates the foundation for increasing the middle class and thus raising employment and exports for our continent in general.
===

The prevailing statistics indicate that less than 10 per cent of our entire population participated in formal banking. A very intriguing figure considering the general outcry of the majority towards the much needed financial support required in all scopes of micro and macro development.

It will be extremely naive to assume that such environment won't negatively impact the prosperity of business development. In a way, all businesses in our country rely on this huge portion of the population for their growth. By empowering and educating the masses on the importance of opening bank accounts and keeping records, will the financial institutions be in a position to monitor progress and asses their eligibility in acquiring credit facilities to further enhance there businesses. Their development will thus empower them to form stronger and more reliable ties with their suppliers and in consequence will spontaneously benefit every stakeholder in the chain and provide the much needed stability that our economy needs.

While it may amount to the pursuit of the Holy Grail for one to define and describe an ideal bank for the African environment, my foregoing comments have an implication on what we can expect from such a Bank.

(1) Focus on Small and Medium Enterprises: SMEs is nowadays the buzzword. It is also the reality in Africa. By their minimal size and sophistication SMEs remain timid when accessing banking services. They invariably get overburdened with charges and lack of customized services. As a fresh bank therefore, it should be specifically structured to cater for such business, providing a number of innovative products targeted to the sector and specifically endeavour to opens branches which are within reach of such businesses.

===
You need brave entrepreneurial banks with an eye for the possible. Not those that are only content to stay within their comfort operational areas.
===

(2) Costs and Pricing: This has been a constant complaint by bank customers. We expect an ideal bank to posses a cost-friendly banking service. Having this in place is now becoming universally recognized as an important tool in the fight against poverty and growth to our continent. Being able to extend micro-credits effectively whilst creating a win-win situation to both parties will economically and financially transform the lives of the poor, which in turn creates the foundation for increasing the middle class and thus raising employment and exports for our continent in general. Here we might want to remind ourselves that the concept of cost has to go much further than absolute sums of money. A service and product are priced commensurate to their utilitarian value - their usefulness. I trust that all of us are always willing to pay extra as long as the service rendered goes an extra mile towards fulfilling a valid want.

(3) Flexibility and Innovation: SME Africa is the new frontier in dealing with less structured, less formal and smaller-sized customers and as such a bank needs to be flexible in its delivery structure, decision-making and focus. It is very clear that these are virgin markets, where few, if any, banks have trodden before, and where risk has never been properly mapped and identified before. You need brave entrepreneurial banks with an eye for the possible. Not those that are only content to stay within their comfort operational areas. You need banks that continually experience the changing, transforming Africa, not those whose decision-making machineries only read about Africa and hear about Africa in the BBC or Radio France International. SME need partner bank to hold their hand, take step beside them and grow together for the common good.

(4) Pan-Africa Vision: Let us agree that Africa is slowly coming together. It is today a hive of activities localized in respective economic blocs. While it might seem so far in the future, it is logical to concede that that day will be here sooner than most of us expect. While this is happening we need institutions that believe in this dream and are willing to live it. We need institutions that will bring together exchange of goods and services regionally and across racial, ethnic and regional divides.
===

You should not wait until the customers have grown and actually no longer need you. Start with them much earlier and grow with them.
===

Let me at this juncture state how very honoured I am to officiate at this occasion of launching BOA Bank Tanzania Umited part of Groupe. Bank of Africa. I am encouraged by all the efforts and initiatives shown by BOA Bank Tanzania Limited in as far as what I have been told about its focus on SME and retail Banking as well as corporate banking. By its innovativeness in developing specific SME products - SME Spark and SME Extra as well as Student Investment Teams are very unique but also extremely useful banking products not matched by its competitors. Its effort to reach out to its SME customer in areas hitherto untouched by banks such as Sinza and Tandika is indeed quite commendable.

I am told that you are among the 'International Banks'. The erstwhile Eurafrican Bank was the first to grace the business corridors of our Kariakoo with a branch at Msimbazi Street. I do sincerely hope and expect that your Bank will soon also consider operations in other parts of Tanzania.

Let me conclude by posing two specific challenges for the BOA Bank to seriously consider. These are:

. Long-term finance for such businesses as mortgage - so as to take advantage of a viable opportunity space as well as provide decent housing to Tanzanians. You need to continue being brave and innovative!

. Move into more of cash flow financing instead of the predominant collateral financing. Again this is a veritable opportunity space considering the pedigree and size of your SME client who might have good and feasible ideas but have not yet developed enough to have amassed sufficient collateral to move on with business.

You should not wait until the customers have grown and actually no longer need you. Start with them much earlier and grow with them.

I again thank you for the honour and pledge my support to your cause. And as a practical demonstration of my confidence I intend, with your concurrenceto open an account with your Bank.

SOURCE: DAILY NEWS