TPB keen on outreach strategy

The year 2013 can be looked at in two ways – from a positive and a negative point of view in various sectors of the economy.

The Citizen on Sunday Reporter, Sturmius Mtweve, had recently an interview with Tanzania Postal Bank (TPB) managing director Sabasaba Moshingi in Dar es Salaam on the bank’s status on various socio-economic issues. Excerpts...

QUESTION: What were Tanzania Postal Bank (TPB)’s achievements in 2013?

ANSWER: This past year 2013 was without doubt a momentous year for TPB, as ‘TPB Popote’ was officially launched in July 2013 by President Jakaya Kikwete.

This product allows TPB customers to transact using a mobile phone and sale points. This avenue was used for recruiting Vicoba. As a bank, we also partnered with Airtel and their Airtel Money product that enabled customers to link their TPB accounts with Airtel Money mobile money wallets.

We managed to open several TPB mini-branches as part of our outreach strategy. As a pioneer, TPB started agency banking as part of the first move to change a banking scenario in the country by using a mix of private agents, Saccos and post offices.

TPB also won a Tanzania Social Action Fund (Tasaf) project through which we pay poor households and we are now engaged in a pilot project. TPB also partnered with the Unit Trust Tanzania on several projects, including handling Mapinga plots by selling of application forms and receiving plot payment.

We were also engaged by Mbinga Community Bank to become the leading bank in handling the sale of its shares at its initial public offering, a very busy, but extremely productive and rewarding year.

How was your financial performance in all four quarters of the year?

I think it is better to look at our performance over the last three years to put things in their perspectives rather than looking at one year in isolation.

 The year 2013 was a profitable year for TPB despite economic challenges reflected in high food prices in the country. In 2011, we had revenue of Sh24.57 billion, which grew to Sh31.09 billion in 2012 and reached Sh38.35 billion last year.

We have embraced a robust credit system, but this has not hampered our efforts to enhance the lives of Tanzanians. We had loans and advances amounting to Sh66.02 billion in 2011, which grew to Sh100.88 billion in 2012 and reached Sh120.48 billion last year.

TPB has also delivered solid profitability. Our pre-tax profit in 2011 was Sh3.83 billion. In 2012, it was Sh5.67 billion, while 2013 registered Sh6.75 billion. TPB has also had impressive growth in customer deposits.

We ended 2011 with Sh120.92 billion in customer deposits, 2012 (Sh138.86 billion) and 2013 with Sh169.01 billion. Customer deposits grew by 22 per cent in 2013 on the 2012 deposit base.

TPB’s assets grew from Sh136.24 billion in 2011 to Sh167.30 billion in 2012 and to Sh200.41 billion by December 2013.

 We have built a strong balance sheet to ensure we are able to enter 2014 with focus and determination. In essence, TPB grew by 20 per cent in 2013. This is indicative of having a disciplined and balanced approach that TPB has adopted and successfully executed.

What does TPB want to achieve in 2014?

I believe 2014 will be a great year for TPB. Without pre-empting too much, we are optimistic about a possible growth rate above 10 per cent on the net profit we made in 2013.

Which new products and services do you plan to introduce in 2014?

Our entire 2014 product roadmap is driven by our values of customer focus, integrity, financial inclusion, affordability and quality.

We will continue enhancing and deepening our ‘TPB Popote’ platform in terms of its point of sales and mobile banking capability. ‘TPB Popote’ will help revolutionise banking in the country.

We will continue strengthening our outreach strategy by continuously modernising our branches and opening new mini-branches. Furthermore, TPB will also continue pioneering agency banking in terms of increasing agents and the scope and depth of transactions an agent can carry out.

Some new banks entered the market in 2013. What is your core businesses and positioning?

TPB’s vision captures our core business and positioning: “To be the leading bank in Tanzania in the provision of affordable, accessible and convenient financial services.”

We are a local bank for ordinary Tanzanians with a focus of being a bank that any citizen can bank with and save their hard earned money. Our business is to provide affordable, accessible and convenient financial services to all Tanzanians and this includes the unbanked and under-banked.

Our core business is to address this glaring imbalance in Tanzania and as we lead the drive to address this situation, we will face our competition head-on. We are not afraid of them because something greater drives us – our passion for Tanzania.

What is your competitive advantage especially this year?

TPB has a competitive advantage that lies in several areas. Firs, TPB is now a technologically-driven bank where both our outreach and product roadmaps are technologically driven. Second, we have a wide distribution network that would be the envy of most banks in Tanzania in terms of networks we are building and our association with Umoja Switch.

Furthermore, TPB has built a diverse workforce of the best and we seek to further deepen this pool. Also, TPB is a local brand that our primary markets understand, grow up with and identify with. TPB is now 89 years old since its inception in 1925. We have a long and close-knit history with Tanzania.

Finally, we have positioned ourselves as a conduit for the breadth of transactions that Tanzanians wish to make. From mobile money we have partnered with M-Pesa and Airtel Money for international money transfers with Western Union, Tanzania Revenue Authority (TRA) payments and insurance payments. We cover a full scope of financial transactions that make life better for Tanzanians.

Currently, there are more than 50 banks in the country. In your experience, is this number enough to serve the market? How about competitions?

There are more than enough banks to serve the Tanzanian market. Tanzania has a relatively small formal sector relative to the population and the substantial informal sector. Most banks operating in the country have similar target markets that overlap in the formal sector even if they have used different segmentation approaches.

 A high level of competition we see is driven by many players operating in the same space. If banks were to diversify and utilise the unbanked, who are over 80 per cent of the population, which presents a huge opportunity, the level of competition will drop.

What are your objectives in terms of business development and what are the challenges so far?

Our primary objective is to re-capitalise the bank, expand outreach, continue our superior financial management, mobilise deposits and refine the legal status of TPB. By re-capitalising TPB, our borrowing capacity will be greatly enhanced as will our ability for prudent operations and expenditure.

Recapitalising the bank is tied to refining the legal status of TPB to open the door to capital inflows. The process has moved a bit slower than anticipated, but we are hopeful that soon the TPB Act will be repealed in Parliament and incorporate TPB under the Companies Act (Cap 212).

We plan to continue with a strict focus on revenue, but also managing costs to deliver on the bottom line as we did in 2013. Inflation has been a major obstacle. First, it has driven up our operational costs, but also dampened Tanzanians spending power, thus making deposit mobilisation a challenge as Tanzanian’s disposable income has reduced. The recent major drop and return to single digit inflation is a major plus as this should increase Tanzanians’ disposable income and their propensity to save.

The discovery of natural gas and oil as well as the mining sector in general has attracted so many foreign investors in the county. What is your opportunity as a financial provider?

We are talking about the creation of jobs and the development of financial eco-systems to support these sectors. TPB can provide financial solutions to not only foreign investors and Tanzanians employed in these sectors, but also to those who have business dealings associated with these sectors.

 TPB has a diverse product suite, intimate knowledge of forex markets, employees with a deep and varied skill-set that would meet the needs of all concerned parties.

Furthermore, we have a presence all over Tanzania with the capability to serve any financial needs. We are a one-stop financial solutions provider for any investor and this is not just in the extractive sector, but also in agriculture, tourism, construction and manufacturing.

With the massive mobile banking growth in country, is there still any need for conventional banking and if so why?

Conventional banking will never be phased out totally, but rather mobile banking and branches should grow together and this is simply because there are certain products that at this stage will be very difficult if not close to impossible to sell over the mobile platform like the issuing of credit letters, complex transactions or transactions of sizable amounts of money.

You should also remember that mobile money is backed by physical cash that still needs to be banked in your conventional bank.

Do you think mobile operators and banks can merge?

I don’t think so, but there will be a lot of collaboration between the two as banks and mobile operators have reached a point where they need each other. Both offer services that the Tanzanian customer needs.

Corporate companies especially banks have a critical role in assisting the socio-economic development of the country. How will you play role this year?

TPB is an agent of change and very conscious of the environment it operates in. Our focus on socio-economic development is also tied to our focus on the unbanked and under-banked.

TPB has made a conscious effort to establish a relationship with the Village Community Bank (Vicoba) to provide them with a secure system of saving and making various payments and contributions to the group. We plan to also engage other micro-finance institutions to deepen the Vicoba’s financial inclusion. On top of that, we gave over Sh80 million to social causes in 2013 and plan to continue doing the same this year.

What is your view on the current Tanzania’s banking sector situation and possible evolutions?

The sector will remain very competitive simply because a small section of the Tanzanian population is banked by many banks.

Banks will continue focusing their brick and mortar operations on urban/peri-urban areas, margins will continue being pressed in the short to medium term with regard to historic levels, but this may-not necessarily deter new entrants.

Mobile money services will continue posing challenges. It will be interesting to see if mobile operators in Tanzania will become more bank-like as Safaricom’s M-Pesa in Kenya has – you can save and borrow small amounts of money.

We still hope to have continued innovations from more advanced markets to Tanzania. We have seen micro-finance, international money transfers, mobile money and now prepaid cards services taking place.

How can we reach the Tanzania’s unbanked population?

Several things need to happen together to reach out to Tanzania’s unbanked population in terms of how a bank manages its distribution channel. This is cash economy so the physical presence of a bank matters.

Apart from the more traditional brick and mortar approach, a bank needs a mix of its distribution network. Technology needs to be leveraged as a means to create low cost, convenient, value-adding products like ‘TPB Popote’ where customers can use both their mobile phones and points of sale machines.

Agency banking needs to be embraced as this creates a ‘branch’ in a customer’s doorstep which is what TPB is doing. Banks should also look at a possibility of collaborating with non-traditional banking institutions where partnership and not competition is the way to go as this can be used as a gateway to reach out to the unbanked as well as partnering with mobile operators like Vodacom Tanzania, Airtel Tanzania and Tigo Tanzania in providing services.

As one of the largest banks in country, what is your current focus and where do you see the largest opportunities for TPB.

The unbanked and under-banked are TPB’s primary focus, as part of our core value – that is financial inclusion. Working to move the 36 million plus unbanked Tanzanians into the formal banking, here is where the largest opportunity lies.