Tough year for Tanzania businesses
Monday December 31 2018
2018 been a rough year for the banking sector and other businesses.
The year started with the Bank of Tanzania closing several banks due to undercapitalisation and violation of the Banking and Financial Institutions Act of 2006 and its regulations and ended with temporary revocation of bureau de change services for the interbank foreign exchange market.
Five Tanzanian community banks Covenant Bank For Women Ltd, Efatha Bank Ltd, Njombe Community Bank Ltd, Kagera Farmers’ Co-operative Bank Ltd and Meru Community Bank Ltd were in January closed over undercapitalisation.
Kilimanjaro Co-operative Bank Ltd, the state-run Tanzania Women’s Bank Plc and Tandahimba Community Bank Ltd which has partnered with CRDB, were given until June 30 to raise the Tsh2 billion minimum core capital or have their licences revoked.
Bank of Tanzania’s outgoing Governor Prof Benno Ndulu advised banks to partner so as to minimise operational costs and board size, simplify their overall systems and create capital for sustainability and growth.
Some banks reduced their workforce; Access Bank from 776 in June 2017 to 634 employees in June 2018, while Ecobank reduced their branches from eight last year to seven and retained 128 employees down from 185 employees in 2017.
President John Magufuli has asked several times that the Bank of Tanzania act against non-performing financial institutions.
“We have 58 banks but we would rather have a few viable ones than many that are failing,” said President Magufuli.
At the Dar es Salaam Stock Exchange, total market capitalisation for all 28 listed equities decreased by 7.7 per cent, to Tsh1.696 trillion ($738.2 million).
Also, by the end of October, the government had bought the entire cashew nut harvest of around 220,000 tonnes for $1.43 (Tsh3,300) per kilogramme directly from farmers, locking out private companies.