Customers stranded as Meru bank fails to open

Arusha. Scores of customers were yesterday desperate to know the fate of their money after the Meru Community Bank (MeCoB) was closed by the Bank of Tanzania (BoT).

MeCoB, the first and only community bank in Arusha Region, was among the five financial institutions which were ordered closed for failure to meet capital adequacy requirements.

Until 5pm, the two branches of the six-year-old bank at Usa River and Arusha city centre were still closed as account holders and other clients sat outside waiting to know the fate of their money.

A security guard at the city branch told The Citizen that he had been instructed to inform the public that the bank had been closed and that customers would be updated on any new developments later.

There were armed police officers at the Arusha branch at Nana House adjacent to the central market.

“The public should keep away from here,” the guard said as scores of clients, mainly businesswomen, mobbed him to inquire on when they would be able to access their accounts.

The closure also affected the Usa River branch, some 30 kilometres east of Arusha along the highway to Moshi. The branch there also serves as the headquarter of the bank.

MeCoB officials could not be reached either by phone or physically to provide details about the future of the bank that was established to assist low-income entrepreneurs, especially women.

The Citizen was informed that the bank’s employees had been jointly checking accounts with BoT officials since around 8am.

Reached for comment, the chairman of the bank’s board, Mr Elishilia Kaaya, said it was unfortunate that the financial institution established to support low-income people had been closed.

Mr Kaaya, who is also the managing director of the Arusha International Conference Centre (AICC) and one of MeCoB founders, declined to comment further, saying they were waiting for additional directives from BoT.

In December 2016, the bank was warned that it risked being declared insolvent in line with BoT regulations.

A shareholders’ meeting directed the board and management of the bank to look for a strategic investor who would pump in the required capital.

By then MecoB had a capital of only Sh400 million, much lower than a minimum of Sh2 billion required for the licensing of a community bank.

Although the assets of the bank had by November 2016 increased to Sh5.5 billion from Sh2.6 billion in 2014, it has failed to meet the capital requirements prescribed by the central bank.

Loans extended to clients had shot up to Sh3.4 billion in 2016 from Sh1.8 billion in 2014.

Most of the loans were issued to income-generating groups, including village community banks (vicoba), bodaboda associations, savings and credit cooperative societies (saccos), farming groups, traders, employees and individuals.

Major shareholders include the Meru Diocese of the Evangelical Lutheran Church in Tanzania (ELCT), which has a 10 per cent stake, and AICC, which has seven per cent.