Banking in Tanzania is taking a different shape and form as competitive banks such as CRDB Bank begin injecting serious resources to transform banking and businesses.
Banks are now offering a rather creative element of financial services. Agents, ATMs, mobile and internet banking are transforming how people exercise financial services while bringing the gap between the banked and unbanked population.
- Global Finance has recently awarded CRDB Bank best bank in the country.
- CRDB Bank is the first bank in Tanzania to be rated by Moody Investor Services.
- CRDB Bank singlehandedly becomes the first bank in the country to have pulled a successful deal of raising funds from international markets.
From that standpoint, CRDB Bank is working tirelessly to play its part in improving the welfare of small and medium-sized businesses by offering them realistic and creative banking services that lead as an example for other banks in Tanzania.
Banking in Tanzania
Over the past decade, banking has changed in Tanzania. The past three government administrations have played a key role in supporting and transforming banking operations over space and time.
According to available information from Tanzania Invest, as of August 2021, there were 48 registered banks in Tanzania. Thirty-five commercial banks, five village community banks (VICOBAs), four microfinance banks, two mortgage banks, and two development banks. It is important to recognize also vital efforts exercised across the industry over the years, which have brought up exciting numbers.
Further, data shows ten largest banks- with at least US$428 million in assets-dominated the market in 2019. The latter accounted for 72.20 per cent of total assets, 72.98 per cent of total loans and 74.50 per cent of total deposits.
These banks are CRDB, NMB, NBC, Stanbic, Standard Chartered, Absa, DTB, Exim, Azania, and Citi. However, the top five banks- CRDB, NMB, NBC, Stanbic, and Standard Chartered-accounted for 55.1 per cent and 57.0 per cent of total assets and deposits, respectively.
The dominance was due to a large customer base and a vast branch network. Meanwhile, locally-owned banks continued to hold more assets compared to foreign-owned banks.
The sector went a step ahead and improved the financial inclusion situation in Tanzania. According to Financial Sector Deepening Trust (FSDT), many changes have occurred across Tanzania.
The percentage of adult Tanzanians who access formal financial services increased from 16 per cent in 2009 to 58 per cent in 2013 and 65 per cent in 2017.
Consequently, accessibility, measured by the proportion of the population living within five kilometres from where financial services are provided, has grown from 45 per cent to 86 per cent nationally and is at 78 per cent for those living in rural areas.
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Injecting billions in the industry
CRDB is widely known for its relentless efforts to stimulate the economy and lead the way for other banks in Tanzania. The latter is evident through its recent endeavours which led to CRDB being spotted as a best performer and partner by the world’ prestigious banking forces.
In September, CRDB nabbed US$130 million in a syndicated term loan facility facilitated by Investec Bank and Intesa Sanpaolo. CRDB, which reputable financial bodies have awarded in Europe as the “Best Bank in Tanzania”, comes to the fold with another major win as the capital raised will be utilized for unlocking working capital for the corporate and SME sector in the East African nation, including project and infrastructure finance linked to the commodity sector.
Intesa Sanpaolo, one of the top banking groups in Europe, and Investec coordinated and were book runners for the transaction. Investec also acted as the facility agent for this maiden syndicated loan deal in Tanzania outside the government and public sectors.
According to Investec, the commercial bank in Tanzania singlehandedly became the first bank in the country to have pulled a successful deal of raising funds from international markets.
“We are very excited to have closed this agreement. The raised funds from the international market will improve the bank’s overall capitalisation
and support our lending portfolio to corporate and SME sectors in Tanzania and Burundi. I would like to thank Investec Bank and Intesa for their support,” said Abdulmajid Nsekela, CRDB Bank Group and CEO.
CRDB Bank’s track record in facilitating gigantic local projects implemented by the government of Tanzania speaks volumes. It resonates with the latter’s success as Nyerere Hydroelectricity Project and Modern Railway Project (SGR) amplify Tanzania’s economy.
According to Nsekela, the target was to raise US$50m, but the commercial bank in Tanzania’s strong performance attracted many international investors, resulting in
a total of US$130 million raised.
However, on the aisle side, Rowan King, Head of Africa Structured Debt Solutions at Investec Bank, pointed out that the transaction is a vote of confidence by global financial institutions in CRDB and the Tanzania economy. This nod adds more value to the landscape of commercial banks in Tanzania.
“Tanzania has proved to be a crucial part of the African growth story over the last few years. Many of the essential commodities produced in East, Southern and Central Africa are exported through Tanzanian ports, and in the light of the demand for the key commodities that Africa produces, the country plays an ever more critical role in inter-African trade – opening the region to Middle Eastern and Asian markets from both an import and export
perspective.” He noted.
Further, Leanne Large, Head of Loan Distribution and Syndication at Investec Bank pointed out that the US$130m raised was two-and-a-half times the launch amount.“This indicates a high degree of comfort in CRDB’s creditworthiness, which, coupled with a broad spread of investors in the facility, demonstrates a healthy interest in the placement,” says Large.
However, CRDB’s chief went further to lay down his bank’s unwavering commitment to exploring unchartered waters in the sector in relation to uplifting Tanzania’s economic welfare.
“As a leading Bank in Tanzania, CRDB Bank continues to explore business opportunities in strategic sectors that will bring the much-needed development to boost the country’s economy. This fund will help us boost our lending activities and further strengthen our leadership position,” concludes Nsekela.
READ: Tanzania banking on the Future of Work
CRDB Bank leading the way
Established in 1996, CRDB is an integrated financial services provider and the largest bank in Tanzania, with an asset base of around US$3.8bn as of December 2021.
It is active in corporate, retail, business, treasury, premier, and wholesale microfinance. The bank is also supporting various development sectors in the country, especially agriculture and entrepreneurship.
CRDB Bank is the first commercial bank in Tanzania to be rated among the top ten stable and safer to invest in Africa by Moody`s Investors Services. Moody’s rated CRDB Bank with a “B1 stable outlook” which is the highest rating to have been acquired by financial institutions in sub-Saharan Africa.
This capital boost is yet another win for CRDB since 2019 when it began reshuffling its operations by concentrating on creating sustainable value, increasing financial inclusion and building economy-integrated products, services and innovative service delivery systems.
The bank is striving to expand its operations and garner decent profits. “The lender’s profit for the previous fiscal year stood at US$115 million, representing a 62.3 per cent increase compared to US$70 million recorded in 2020. CRDB recorded a US$74 billion profit in the first half of 2022 compared to US$37.7million documented in the same period last year,” According to The Citizen.
The bank is adamant about supporting the Tanzanian government’s development agenda by enhancing its loan portfolio by boosting its volumes through forging partnerships with leading global financial institutions such as Proparco—the Agence Francaise de financial arm Development Group.
CRDB is financing small and medium-sized enterprises essential for boosting Tanzania’s economic growth.
Further down the line, CRDB is proving to be a crucial commercial bank in Tanzania, whereby this year alone, it entered into credit line and portfolio guarantee agreements of over US$214 million with Proparco, USAID and DFC, IFC, AfDB, and AGF to support business and SMEs in the country.