If all goes well and as planned, the government will formally launch a National Cooperative Bank (NCB) at a ‘total cost’ of Sh15 billion in November this year.
To that very noble end, Sh8 billion has already been pledged by assorted stakeholders, the bulk of it by extant cooperative unions and other stakeholders in the initiative.
In that regard, cooperative institutions across the country will own 51 percent of the new bank’s shares. The other 49 percent shares will be freely and transparently sold to the general public and other prospective investors outside the cooperatives movement. But – much unlike any other commercial banks which are operating in the country – NCB will focus specifically on cooperative societies. These include the likes of Savings and Credit Cooperative Societies (Saccos) and Agricultural Marketing Cooperative Societies (Amcos), as well as a selection – by the nature and type of their business – of micro, small and medium size enterprises (MSMEs).
For all practical purposes, the envisaged NCB is the product of the transformation of the Moshi-based Kilimanjaro Cooperative Bank Limited (KCBL), formerly owned by cooperative societies under the KNCU (1984) Ltd and other business entities. The transformation was agreed to by the bank’s shareholders in the best interests of all the parties involved – thus creating a national/nation-wide entity from what was virtually confined to the Kilimanjaro administrative region. Our National Cooperative Bank reminds one of its namesake in the United States, the ‘National Cooperative Bank’: the only bank in the world’s economic powerhouse that is “dedicated to delivering nationwide banking products and solutions to cooperatives and other member-owned organisations to help communities thrive...” We sincerely hope that our NCB will work in close cooperation with the Tanzania Agriculture Development Bank (TADB) – not only doing so to their mutual benefit, but also to the benefit of the economy in particular, and Tanzanians at large.
LOW LENDING RATES BEFITTING
The Bank of Tanzania (BoT) has yet again embarked upon efforts to further reduce the lending rates that are usually charged by banks and other lenders on moneys they loan to borrowers. To that end, the bank’s Monetary Policy Committee (MPC) says BoT plans “to execute additional measures” that are designed and intended to “create conditions which would reduce interest rates on loans, and promote credit intermediation.” While the bank lending rate in Kenya next-door stood at 12.06 percent in May this year, the rate in Tanzania in the same month was 13.64 percent – down from 14.05 percent last March, and 17.91 percent in 2003.
This rather unfortunate state of affairs partly resulted in a rather sluggish growth of credit to the private sector in Tanzania – obviously compounded by the adverse impact of the viral Covid-19 pandemic that put a stranglehold on economies at the national and global levels.
As the central bank, BoT is mandated to provide financial and banking services for the country’s government and commercial banking systems, as well as issue currency and implement the government’s monetary policy.
For BoT to seek further reduction in bank lending rates – and, if necessary, put the screws on recalcitrant lenders – should bring smiles to the lips and faces of prospective borrowers across the economy, we venture to say.