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By Kenan Kalagho, 24 June 2013Dar es Salaam, Tanzania — Tanzania's unfavourable financial laws, rules and regulations, including poor infrastructure, have been named as leading handicap to a flourishing financial sector.
Speaking during the launch of the banks agency service dubbed' Faharihuduma' in Dar es Salaam last week, CRDB Bank's Managing Director, Dr Charles Kimei said local banks have been unable to open up more branches due to the government's rules and regulations attached to financial institutions.
Dr Kimei said there were also high costs involved in opening up new branches due to poor infrastructure. He said banks were required to install generators for electricity, recruitment of security personnel as well as laying down the ICT infrastructure which was costly.
"Opening up a new branch in the rural areas of this country costs Tsh700 million ($427,222) which is an expensive business for the bank," Dr Kimei said.
Her said if more Tanzanians can have access to financial institutions this could contribute heavily towards boosting the country's economy leading to poverty alleviation."
CRDB is the first financial institution to launch agency banking. It requires commercial banks to contract an entity or individual to provide specific service on its behalf bound by a written contract between the bank and the agent.
Dr Kimei said that agency banking was aimed at increasing Tanzanians access to financial institutions which will later lead to the expansion of the service to the unbanked population in the country.
He said that only 12.4% of Tanzania representing a population of 5.6 million population was formally banked as compared to Kenya with 19% access to financial institutions where as Uganda has a record of 23%.
The newly introduced model is expected to provide a uniquely placed and profitable avenue to serve the unbanked population within the existing banking environment. This will grow the bank's customer deposits by tapping into the retail market and attracting the bottom of the pyramid.
Dr Kimei said Tanzanian banks have been denied valuable financial service due to low incomes and high cost of banking coupled with lengthy procedures which have resulted into slowing the country's development.
"Agency banking will be good for developing individuals as well as the country's economy by allowing them easy access to loans from the bank," Dr Kimei said adding it was impossible to grow individuals business through personal savings."
CRDB currently has 90 branches and over 200 ATMs and a number of depository ATMs and mobile branches.
East African Business Week (Kampala)
Speaking during the launch of the banks agency service dubbed' Faharihuduma' in Dar es Salaam last week, CRDB Bank's Managing Director, Dr Charles Kimei said local banks have been unable to open up more branches due to the government's rules and regulations attached to financial institutions.
Dr Kimei said there were also high costs involved in opening up new branches due to poor infrastructure. He said banks were required to install generators for electricity, recruitment of security personnel as well as laying down the ICT infrastructure which was costly.
"Opening up a new branch in the rural areas of this country costs Tsh700 million ($427,222) which is an expensive business for the bank," Dr Kimei said.
Her said if more Tanzanians can have access to financial institutions this could contribute heavily towards boosting the country's economy leading to poverty alleviation."
CRDB is the first financial institution to launch agency banking. It requires commercial banks to contract an entity or individual to provide specific service on its behalf bound by a written contract between the bank and the agent.
Dr Kimei said that agency banking was aimed at increasing Tanzanians access to financial institutions which will later lead to the expansion of the service to the unbanked population in the country.
He said that only 12.4% of Tanzania representing a population of 5.6 million population was formally banked as compared to Kenya with 19% access to financial institutions where as Uganda has a record of 23%.
The newly introduced model is expected to provide a uniquely placed and profitable avenue to serve the unbanked population within the existing banking environment. This will grow the bank's customer deposits by tapping into the retail market and attracting the bottom of the pyramid.
Dr Kimei said Tanzanian banks have been denied valuable financial service due to low incomes and high cost of banking coupled with lengthy procedures which have resulted into slowing the country's development.
"Agency banking will be good for developing individuals as well as the country's economy by allowing them easy access to loans from the bank," Dr Kimei said adding it was impossible to grow individuals business through personal savings."
CRDB currently has 90 branches and over 200 ATMs and a number of depository ATMs and mobile branches.
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