Govt opts to recapitalise Postal Bank rather than privatisation

The government will recapitalise the Tanzania Postal Bank (TPB) to the tune of 10bn/- as an alternative to privatisation.

In so doing, it hopes it would become more efficient and competitive in serving low income clients in the country.

The Bank`s Chief Executive Officer Alphonse Kihwele has said this strategy has been taken as an alternative to privatisation, so as to enable TPB provide even better financial services, especially to rural areas.

Kihwele was speaking to the 14th World Savings Banks Institute (WSBI) regional meeting held recently in Zanzibar which brought together various micro-financing institutions.

This far, TPB has managed to reduce its non-performing assets from 25.13 per cent in 2002 to less that 5 per cent last year, the reason it was now regarded as low risk financial institution.

The WSBI is one of the largest international banking associations and the only global representative of saving and retail banking which was founded in 1924 and represents around 1,000 financial intermediaries from 84 countries.

He said that despite paying dividends to shareholders, the bank has been able to increase its level of retained earnings and therefore increase shareholders` funds.

In order to attain the set objectives and mission of enhancing good financial services to lower income individuals as well as small and medium enterprises, the bank embarked on three years� strategic plan (2007-2009).

Under the strategic plan, the direction and aspirations of the bank in serving clients in line with its missions and vision has been spelt out clearly to ensure successes.

One of the steps so far taken was to change the general outlook of the bank including re-modeling and renovation of its branch network to give a new shape of its outlets for easy identification.

On his part, the WSBI President for Africa Nyambura Koigi said that the meeting was convened at a time when most of the clients of savings banks in the world were ``at the low end of the market``.

``Most of the saving banks have also been given specific mandates in the national economies of mobilising savings for national development with specific emphasis to offer financial services to the poor`` he said.

Koigi said it was from the roles given to the savings banks by their nations of serving the poor that such institutions needed to re-think and re-evaluate how best they should save the poor population.

He underlined the importance of saving banks in the East African region through encouragement of entrepreneurship which would in turn impact in poverty reduction in the country.

Koigi urged the participating banks that they must ensure their business were guided by good corporate governance, had beneficial partnership both locally and regionally, and offered market-led products for growth.

He said that to attain better services to the poor, the banks should change and transform themselves from doing business as usual to doing business unusual.

The recent research by Finscope has underlined the importance of the savings banks in the Tanzanian economy when it revealed that 89 percent Tanzanians who would wish to get microfinance lending have no access to such financial services.

As part of the Financial Sector Reform Programme, Tanzania Postal Bank (TPB) was established by the Tanzania Postal Bank Act No.11/1991 which was amended by Act No.12 of 1992.

This bank became operational as a separate entity from the then Tanzania Posts and Telecommunications Corporation (TP&TC) from 1st March 1992 with its own Board of Directors and Management.

It was established as a successor to the Tanganyika Post Office Savings Bank (TPOSB), which was established by the Post Office Savings Bank Ordinance of 1925 and became operational in 1927.

The creation of this new bank took into account its strengths and particularly the advantage of canvassing the masses both in urban and rural areas.

The TPB Act that was passed by the Parliament addressed itself to some of the basic problems, which were besetting TPOSB performance. Among others, it provided for a legal framework that made it a corporate body.

* SOURCE: Guardian