He talked to the Smart Money reporter PROSPER MAKENE on the Desk’s impacts on the Tanzania-China financial relationship. Excerpts…
QUESTION: CRDB Bank launched the China Desk in Tanzania with the aim of facilitating continuous business opportunities resulting from trade and investments between the two countries. How is the Desk doing?
ANSWER: The Desk was officially launched on March 27, 2013, with the aim of facilitating banking services for both Chinese Investors and local Tanzanians doing business with the Chinese. Through the Desk, we have managed to recruit many Chinese customers ranging from multinationals Chinese companies, corporate customers and SMEs and retail customers.
The Desk has helped to create brand awareness to the Chinese population in Tanzania. We have also managed to facilitate Chinese customers to access their money while here in Tanzania through Union Pay Card (UPC) through our ATM machines and POS that are available almost all over the country.
Our estimate suggests that we are controlling a significant share of banking business from this market segment.
China Desk as a single window supports all banking businesses related with Chinese investors, exporters, importers in Tanzania /Burundi and importers doing business with China.
What are the impacts of the Desk in terms of trade volume?
It is a single window in the sense that our clients can access all banking services offered by CRDB Bank through this desk which is manned by experienced relationship managers who are fluent in Mandarin and other languages giving the bank a unique position to serve Chinese customers better.
With the inception of the China Desk, the bank has made significant contribution towards facilitation of businesses between Tanzania and China. The volume of financial transactions relating to this business that the bank has participated in transferring has increased by more than three folds between 2014 (US$40 million) and 2015 (US$120 million).
Apart from the transfers, the Desk has enabled the bank to grow its business portfolio from the sector through cross selling of other products offered by the bank. So far, the credit portfolio from the segment has grown to 206.3bn/- in the last two years.
What are the CRDB–China Desk’s prospects for the year 2016?
There are good prospects that our business in this segment will continue to grow further in 2016 both in terms of transfers and other banking services.
Looking at the numbers from the first quarter of 2014, total transfers were around 22.9bn/-; this amount has grown to 96bn/- in the first quarter of 2016.
Have you encountered any challenges in the implementation of the Desk?
The main challenge is on the regulation imposed by the Chinese government on money transfers to China. The regulation allows transfers for business purposes between businesses i.e. from a legal person in Tanzania to a legal person in China. Because of this regulation, SMEs undertaking their business operations on individual basis are not able to use bank platforms to transfer money to China.
These SMEs have a significant contribution in the China – Tanzania trade which the bank would have benefited in if there were no restrictions.
CRDB–China Desk is dedicated in collaborating with partner banks in China including the Bank of China and HSBC Banking Corporation. How does this collaboration improve the operations of the Desk?
We have a correspondence relationship with these two banks i.e. HSBC and the Bank of China. CRDB Bank has been able to leverage this relationship to provide efficient and reliable fund transfers between the two countries.
The Desk offers an entire range of banking products and services designed to meet specific needs- in as far as business with or in China are concerned. Can you describe the services offered by the Desk?
They include term loans- we have long term and short term loans, project financing and working capital, loan syndication, cash management services, advisory services, trade finance, letters of credit, guarantees/ performance bond/bid bond, treasury product, international money, transfer, call and time deposits account, Renminbi (RMB) /Chinese Yuan, alternative banking, card solutions- China Union Pay.
The Desk is a one stop shop for the Chinese community and also for Tanzanians/ Burundians doing business with China and Hong Kong. What contribution has CRDB- China Desk made in controlling the market share of financial transactions between Tanzania, Burundi and China?
China Desk is a business development desk; its main objective is to grow the bank’s business in the segment. The desk has been instrumental in helping the bank achieve the above milestones such as an increase in transfer volumes, portfolio growth and an increase in the number of clientele.
What are the mutual benefits of CRDB –China Desk?
These are, and not limited to, providing a single window service in China in collaboration with banking partners in China Mainland and Hong Kong and enabling business transactions in Renminbi (RMB/CNY) currency as per regulations of China mainland/ Hong Kong offshore market to provide ease of doing international business.
We have also been providing financial advisory services to Chinese customers to enable them optimize their businesses in Tanzania or in Burundi and to help them to export goods and services to/from Tanzania.
Others include providing an enabling platform to the Tanzanian/Burundian exporters and importers for doing business in China or importing or exporting goods to/from China.
CRDB–China Desk is also an ideal platform for the Tanzanian/Burundian exporters and importers for doing business in China or importing or exporting goods to/from China. How can businessmen or investors reduce the transaction costs of doing business?
The introduction of China Desk now brings into the market the use of RMB in trade settlement while importing goods from China. This reduces exposure to exchange risks which normally increases transaction costs. In addition, our alliance with Chinese banks makes it possible for the bank to offer competitive fund transfer fees to China.
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