 Finance and Insurance:
the investment channel |
Under the control and co-operation of IMF, World Bank and the international community, Tanzania has been continuously creating firm monetary premises. "The inflation is under control, the budget deficit is not out of hands and we try to balance our budget as much as we can. We try to make sure that our reserves, small as they are, grow and that the economy generally grows and it has been growing fairly stable. If you consider inflation, three years ago it was at 25-30% and we brought it down to 6.2%, and we should keep it there or even lower if we can", are the milestones of Tanzanian economy described by The Honourable Mr Daniel Yona, Minister of Finance.
Bank of Tanzania's (BOT) Governor Daudi Ballali said that apart from allowing private banks to operate, the Tanzanian government is also privatising parastatal banks. The first ever parastatal bank to be privatised was CRDB, later on called CRDB Limited. It was followed by the privatisation of the largest state owned commercial bank, National Bank of Commerce, which was divided into two: National Micro-finance Bank to deal mostly with regional and rural financing, and NBC (1997) Ltd , which is currently the largest commercial bank. The latter has already been privatised to Amalgamated Banks of South Africa (ABSA), while NMB is on the verge of divestiture. NBC Holdings Corporation, a holding company for the split up NBC immovable property, is already selling property to recover money. "We got 338 landed properties with a value of 14 billion shillings. We have already sold 200 plus, fetching a total of 13 million shillings, and we are remaining with 159 estates," NBC Holdings Corporation Director General Mrs Edwina Lupembe said.
Other state owned banks, such as Tanzania Investment Bank (TIB) and Tanzania Postal Bank (TPB) are restructuring and adopting commercial strategies while awaiting divestiture. "TIB is currently undergoing a fundamental transformation. The bank has broadened its scope of operations. In addition to its core activity of term lending, TIB will also carry out short term lending, trade financing, treasury operations and will do broking and dealing business in the Dar es Salaam Stock Echange," TIB Managing Director Mr W.A. Mlaki said.
| Tanzania Postal Bank (TPB) , another public non-banking financial institution, was formed in 1992 out of Tanzania Posts and Telecommunications Corporation (TP&TC) as a move towards the telecommunications company's restructuring. TPB has successfully managed to forge business links with reputable international institutions such as Western Union Money Transfer and American Citibank. "As you know, Western Union has more than 70,000 locations world wide. So Tanzanians can remit money and the money is received in not more than five minutes from the time it is sent," TPB Managing Director A.R. Kihwele said.
The insurance industry has also developed tremendously since parliament enacted the 1996 Insurance Act, followed by the establishment of an insurance supervisory department at Ministry of Finance to liberalise the industry. The number of insurance companies has since increased dramatically from one (NIC) in 1997/98 to 11 by mid 2000, and includes reputable international insurance companies. The giant state run National Insurance Corporation (NIC) , one of the four major utility companies earmarked for privatisation within the next few years, is struggling to hold on to its major clients as private companies are quickly luring them by offering better services at low premium rates. NIC is still the leading insurance provider in Tanzania accounting for 60 percent of all premium collection. "Most of the companies which have been established here are really not big companies. They are branches of companies from Kenya and Uganda, which have simply extended their operations to Tanzania," NIC Managing Director Mrs Margareth Ikongo said.
 Introducing stock market |
The oddest entrant to Tanzania's liberalised financial sector is the securities market, which emerged in April 1998 for the first time ever by the establishment of Dar es Salaam Stock Exchange . Currently it has four listed items constituting three privatised companies: TOL Limited, the sole industrial gas manufacturer, Tanzania Breweries Limited (TBL) owned by South African Breweries, and Tanzania Tea Packers Limited (TATEPA), the first ever private company to join the bourse. The fourth item listed at DSE is a debt instrument, a 12m dollars East African Development Bank (EADB) bond, which was listed in December 1999 and is due to mature in 2003.
More companies are due to join the bourse soon, as the government is using it as an outlet for its shares held in privatised parastatal enterprises. "There is one immediate one, Tanzania Cigarettes Company (TCC), which is due to join us by July this year. A local bank, CRDB Bank, is likely to join in the near future. Latest example is Tanzania Telecommunications Company Limited (TTCL), currently being privatised, which has also shown a lot of interest in being listed," DSE Chief Executive Officer Dr Kamisi S. Kibola said. The securities market, which by legislation does not allow foreigners to participate in trading activities, is also expected to eliminate that law. Since foreigners are playing a significant role in the country's liberalised economy, Tanzania cannot afford to exclude them from trading at the bourse, a barometer to measure the country's economic performance. |
