How Coop Bank positions itself at the heart of inclusive finance drive

In this exclusive interview, we sat down with Godfrey Ng’urah, the Managing Director and Chief Executive Officer of Coop Bank Tanzania.

Our discussion delved deep into the bank's phenomenal rise, its highly unique and tailored business model, the integration of digital solutions like CoopNet and CoopPesa, and precisely how the institution is aggressively addressing the stark financial divide that leaves nearly 80 percent of Tanzanians unbanked and marginalized from formal economic participation.

Can you explain the bank's performance from its establishment last year up until the first quarter of 2026?

Our success story is a result of our strategic horizon and the purpose of our existence.

Within a year, we have delivered significant achievements across all key performance parameters.

The bank is pursuing a socioeconomic transformation focused on addressing the financial divide.

Currently, only 22 percent of the population accesses banking services, meaning close to 80 percent do not have an account.

The board and the government made a deliberate move to provide an alternative banking option focused on the underserved: small-scale farmers and traders, who account for over 60 percent of the population. By addressing access, cost, proximity, and convenience, we grew our balance sheet from Sh49 billion to nearly Sh178 billion this quarter, equivalent to a rise of 263.2 percent. Deposits grew from Sh16 billion to Sh102 billion, representing a 537.5 percent increase.

Our loan portfolio also expanded from Sh14 billion to Sh102 billion. Furthermore, shareholders' funds grew from Sh27 billion to Sh42 billion, reflecting immense market confidence.

You're operating in an environment with high credit risk, especially extending loans to cooperatives and MSMEs. We've seen exponential growth, but how sustainable is this boom, and how are you managing non-performing loans (NPLs)?

If you look at our numbers, our portfolio quality is impressive. We have reduced non-performing loans to 1 percent, down from 2 percent in 2024 and 3 percent in 2023 (prior to the merger that formed the bank). This isn't a one-time occurrence. We have established a robust governance system and credit quality management framework.

We ensure loans are given to the right people in the right businesses. We focus heavily on the cooperative movement, where group peer pressure and collective membership ownership bring more accountability to repayment compared to individual loans requiring collateral.

But collective decision-making comes with its own risks. How do you handle the power dynamics within cooperative unions?

We address governance and decision-making by supporting financial literacy and working with the Cooperative Regulatory Authority. However, our model focuses on the project and "following the money." We've created an infrastructure where we can track funds even if a cooperative faces internal challenges.

For instance, when a farmer takes produce to an auction market coordinated by the Tanzania Mercantile Exchange (TMX), buyers from all over the world participate. We are digitally connected to the auctioning, payment, and fund transfer processes.

The entire value chain is linked to a bank repayment account, ensuring our repayment whether or not the union functions perfectly.

You are catering to a volatile ecosystem—agriculture is subject to global and domestic shocks. What happens to the bank's massive loans if there are price shocks or supply chain disruptions?

That is a critical point. While you must have checks and balances, you focus on the business first while maintaining backups. We understand the sector risks: Tanzanian agriculture is rain-fed and seasonal, and global geopolitical issues can disrupt supply chains.

To address this, we don't focus solely on agriculture; we have a balanced portfolio. Agriculture makes up about 60 percent of our portfolio, but we also lend to SMEs and MSEs.

You're offering below-market interest rates, single digits for cooperatives. Given your spending on infrastructure, how is this sustainable from a profit margin perspective?

That specific rate is for a specific segment. Pricing takes the cost of funding into account. We have alternative funding sources that attract lesser costs than the market rate.

For example, we extend loans at 10 percent because our funding costs are no more than 3 percent, thanks to strategic partnerships with the Ministry of Agriculture and global partners supporting the agri-value chain. For SMEs, our pricing is between 16 percent to 20 percent.

Our business model focuses on mass banking and volume rather than high profit margins. By leveraging economies of scale, the cost per unit goes down.

Moreover, the cooperatives are the owners of the bank. They provide equity capital and serve as a primary, loyal market for our products.

Co-op Bank has registered close to Sh150 million PBT in the first quarter of 2026, while the largest bank registered close to Sh300 billion. The dominant forces in banking consider agriculture risk-averse. Realistically, what are the main challenges and real risks associated with your model?

First, you cannot compare a one-year-old bank to those that have existed for 30 or 40 years. However, our trajectory shows the future could be different.

Our main challenge isn't competition, because we are treading a new path with fewer competitors willing to take on this risk appetite.

The real challenge is addressing the market segment itself: improving financial literacy, tackling informality, and enhancing governance within cooperatives.

There is also a need for policy interventions. Currently, there are similar banking requirements across the board regardless of sector limitations - a collateral required for a high-level business is also demanded from a small business.

We need deliberate, collective moves by the government, private sector, and farmers to address these policy limitations.

You mentioned addressing informality. How exactly is Coop Bank bringing the unbanked, informal population into the mainstream economy?

In the next five years, we aim to bring the entire unbanked population into the mainstream economy.

The first step is ensuring they have a bank account, which requires some critical documentation, thus initiating formalization.

When we provide a loan, we formalize the entire value chain. Borrowers need a business license from the Tanzania Revenue Authority (TRA), registration with the National Identification Authority (NIDA), and the Tanzania Cooperative Development Commission (TCDC).

Though often labeled "informal," these farmers have registration IDs and farm numbers for government subsidies.

We use technology to capture this data, who they are, where they are, their farm size, and what they farm.

This database allows us to make critical decisions and systematically address the informality that has long excluded them from the financial sector.

Coop Bank has set an ambitious target of reaching 10 million accounts by 2030. How achievable is this goal, and what must be done to turn that vision into reality?

It’s possible. If mobile network operators were able to build customer bases of more than 40 million people through mobile money services in just two decades, then we can do it too.

Our ambition is to diversify and demystify the banking industry. It is time to make banking accessible to everybody.

There is no better place to begin this movement than within the cooperative sector, which represents nearly 65 percent of our population.

To achieve this, we must address key challenges facing the sector, including digitisation, affordability, accessibility, and access to critical infrastructure and financial services.