Can you give us a brief historical background of the Postal Bank here in Tanzania?
Before 1992 we had the Postal Bank operations being carried out by the Tanzania Posts and Telecommunications Corporation, so you had the Posts, the Telecommunications, and the Banking Services, all of them being run by one institution. Thereafter we saw some weaknesses and we suggested that for efficiency we would better breakdown the three components into separate units. In 1991, the government decided to enact a law establishing Tanzania Postal Bank. In fact this law came in the same session as the Banking and Financial Institutions Act, the BFI Act towards April 1991. After enacting the law we had a spell of time, trying to make all the necessary arrangements and on the 1st March 1992, the Tanzania Postal Bank commenced operations. At that particular time, the government decided to create an independent Board for the Posts and Telecommunications. A separate board, separate management, the Chief Executive was selected and appointed and we started operating. All the assets and liabilities were inherited by the new institution, even the staff was taken. The staff which proved to be no good were left behind and I was one of those who were taken on board.
Who are the main shareholders of the Postal Bank today?
The main shareholders are the Government of the United Republic of Tanzania, the Zanzibar government, the Tanzania Posts Corporation, and 19% of the total equity capital are subscribed by private investors. Currently, we have one circle which has taken part of the 19%. The total capitalization is about 1.04 billion shillings. So it is divided:
United Republic of Tanzania - 41%
Tanzania Posts Corporation - 10%
Zanzibar Government - 10%
Remaining - 19%
Since the liberalisation of the financial sector a lot of things have happened and a lot of new banks have come in. To what extent would you say this movement, the coming up of new banks challenged your bank in terms of the improvement of service quality?
The first thing which we have been trying to do is to position ourselves, both in terms of geography, in terms of the products, in terms of the segmentation of the market, and also in terms of technology. We have products which we have automated. Before 1994 we did not have any automated services in the bank. We came up with one of the savings products whereby the customer can be served within one minute, and he is given, or money is taken and deposited into his account. Also in terms of new products we are operating money transfer business, on behalf of Western Union Financial Services. Through this Agency Agreement we handle transfers outside Tanzania to recipients. We have also opened a network within Tanzania, in fact almost in the whole country and the regional headquarters and the provincial head offices. All together we have about 13 locations in Tanzania. That is one, but the other second and very important development is that now Tanzanians are able to remit funds all over the world. As you know, Western Union has more than 70,000 locations worldwide. So Tanzanians can remit money and the money is received in not more than 5 minutes from the time you leave your money. If you want to send money to Spain, the money will be received in Seville within 5 minutes. You remit the money here (we have a location here) and then come upstairs and make a call to somebody who is in Spain and he is able to collect his money within 5 minutes. That is a very big development. I am sure you must have seen signs of Western Union, one is close to Selendar Bridge, and the other as you come into the Airport. We have other locations for adverts, signalled to get more customers and to make people aware about these services.
In terms of new products, we have established a Correspondent Banking relationship with the Citibank of New York, whereby normal transfers, the traditional transfers, the telegraphic transfers and drafts can be utilized through our Bank to remit money.
In terms of IT we have connected all these 13 locations by computers and the computers are linked with all other locations through the Data Centre in the USA. We use various strategies to make sure that we increase our market share and currently, of the total volume of savings we command about 15% of the total market. In terms of network, I think we are the leading financial institution. The Banking system in Tanzania is divided - you have the commercial banks, and then you have the financial institutions which are non-bank financial institutions, and in that list we are more or less leading.
Recently here in Tanzania there have been a couple of crash downs of small banks. To what extent has your bank benefited from that in terms of customer-base. Have you gained more customers from these crashes?
I would say, our customers are small savers, and when they get frustrated because of the demise of their small banks, most of them, and even the power potential customers, talk about coming to us. There has been an increased number of deposits as a result of the closure of small banks. For the big customers they go to the other commercial banks, the international, reputable banks.
Talking about the competition, what is your strategy and what would you say are your main advantages over your main competitor?
First we have a very widespread network base. We have 4 branches which are more or less managed by ourselves, 3 branches in Dar es Salaam, 1 branch in Zanzibar. Then we have 18 other branches; 13 locations are sub-branches and are being managed by our own people, but over and above that we have a network of Post Offices all over the country and in the Post Offices the business is conducted by the Post Office staff on our behalf. We have an operating agency Agreement with the Postal organizations. They handle the business and we pay, a fee for handling our business. The Post is managing more or less 220 locations - Out of the 220, 142 are handling Banking Services on our behalf. With that kind of network we are really positioned very nicely. | The other part of the strategy is the promotional. We do a lot of promotions. We do a lot of personal selling and we are also right now trying to come up with a strategy of trying to give Micro-loans to the poor community. We have been trying to do capacity building in terms of training. We have visited a number of countries where micro finance has been very successful; countries like Bangladesh, Indonesia and Thailand. We have been there because they have these banks. We have been to Uganda to learn, and sent people to attend study tours and we have been attending a number of workshops. Some workshops have been financed and sponsored by USAID. We have attended a number of workshops sponsored by the German Service Bank Foundation. We have been sponsoring people to one of the training centres in Arusha.
So we have a lot of strategies and now the government has given the go ahead and they have approved the Micro finance policy. I think this has just been approved, about 2 or 3 weeks back. The Central Bank, I am sure, will be trying to give guidelines. Once we get the guidelines, if they are very much different from the guidelines which we already drew up; then we would like to go slowly by way of piloting and be in place for assisting the poor. When you try to assist the poor to develop and raise their living standards, that is the time we can also raise the savings ration to savings increase GDP.
That is one of the other strategies. Another one which we are trying to pursue now is to improve our IT and possibly build our networking. We are also working hand in hand with other postal organizations so that we can develop together, we can link together and people can get much better improved service through IT.
Currently we are trying to come up with new strategic plans. It should be ready within a week. We have the current copy plan spanning a period of 5 years. But we are also now trying to come up with a strategic plan, just to have a documented case which can guide us ahead.
How about Internet Banking? We talked to a couple of the big banks which want to introduce Internet Banking in Tanzania. Was that something you had in mind as well?
It is something which we are trying to know a little bit more about. I don't think within the next year we can be able to provide Internet Banking. Possibly by way of piloting one of our branches. In fact, we are trying to come up with a modern branch, just here, and I think that is the branch we can offer sophisticated services to use E-Commerce.
Can you give us some more figures in terms of deposits, turnover, number of staff?
In terms of staff we have 360 Tanzania Postal Bank staff. In Zanzibar we have 6 staff in place. The Zanzibar branch is fully automated. In terms of deposits to date, (by end April) we have a turnover in the region of 35 billion shillings. In the non-banking financial institutions we are leading. Also in the middle tyre we are leading.
In terms of investments and assets, most of our assets are in government paper - Treasury Bills, Bonds, Fixed Deposits and a loan portfolio of around 1-5 billion shillings. In total TPB has assets valued at 36 billion Shillings.
When we talked to other banks they mentioned the concern of too many banks being present and that in the future there will be mergers of smaller banks and bigger banks. Where do you see the Postal Bank in that environment of merging up of banks in the future?
There is that possibility. It all depends on how competition is going to take us, and how to foresee. Currently we are making arrangements, trying to prepare the way for the private investors. We are gearing ourselves up for privatisation, but before privatisation we have to restructure. We possibly may be benefiting from the current world bank loan for the financial sector, a development project which is being managed by the central bank, so we are a beneficiary to that loan. We are going to benefit by way of studies for restructuring. After restructuring we proceed to possible privatisation. The privatisation should not be very difficult because we are being very much profitable. In 1999 according to our audited figures we made a profit of 931 million shillings. We made a profit of 606 million in 1998.
We have more or less maintained a profitable trend. That should not be a problem for the capital markets to allow us to enter the stock exchange and perhaps raise capital out of that. Once we raise capital, we have good network, we have good management, capable management, goodwill - Tanzanians know our services, then, I think it should not be a problem of trying to come up with a very good IT and good capitalization, the possibility is there. There is no reason why we should not stand on our own.
Given all these projects and given that the financial sector is a very dynamic sector, where do you see your bank in the next 3 or 4 years?
Tanzania Postal Bank will be a leading service bank in terms of the delivery service. It will be able to participate in the delivery of micro-loans for the poor people. We don't want to lose sight because even the government and the donor community are targeting flow of resources to the poor strata of the population, and we would like to play a role in that kind of strata. I am sure the Tanzania Postal Bank will come up with a strong and effective bank commanding a much bigger market in terms of savings, and Microloans.
What would you like to tell our readers, keeping in mind that they are top businessmen?
Tanzania Postal Bank in its small way has tried to penetrate the market both internationally and domestically. It has been handling customers from all walks of life. We shall send a message that they should continue using our services, and we are there to improve what we are delivering today, to their satisfaction, and for our advancement. |
