Maendeleo Bank overcomes challenges

Speaking to Smart Money in an exclusive interview recently, Mwangalaba noted that most community banks in the country face challenges mainly in mobilizing adequate deposits that are a prerequisite for smooth flow of operations.

Citing reasons for Maendeleo Bank’s remarkable performance, the MD said that it hadextended loans worth over 17bn/- and had also managed to lure over11,000 customers to its fold. Further, its assets, he said, had now reached 52.0bn/- whilethe deposits base had topped 46.0bn/- since 2013.

Mwangalaba said that despite the challenges, the bank’s future looks bright because it has customer-tailored products and services that are focussed on its customers’ needs.Among the bank’s challenges, he said, was a limited outreach of its branch network.

“It's not easy to operate a community bank in the Tanzanian market as these banks are subjected to the same rules and regulations applied to commercial banks, which makes their survival very challenging,” Mwangalaba lamented.

According to the Bank of Tanzania (BoT), many community banks have liquidity problems, which jeopardises their well-being and operational prospects.The Governor of BoT, Prof Benno Ndulu says the central bank has taken various measures to assist community banks improve their performance.

BoT’s head of Banking Supervision, Agapiti Kobello, told Smart Money that most banks’ Achilles’ heels was the failure to mobilise enough deposits. He challenged them to be more innovative, seek partners and invest adequately in technological fields.

Currently, there are 12 community banks whose total deposits two years ago were far less than the value of market leader CRDB Bank’s simbanking transactions.

The bank’s other challenges include the small size of its capital base and the market pressures emanating from cutthroat competition posed by over 55 commercial and non-banking institutions currently operating in Tanzania.

The bank recently raised funding through a rights issue to boost its operational fortunes, including investing in new technologies. Maendeleo was established by the Eastern and Coastal Diocese of Evangelical Lutheran Church in Tanzania and listed at the Dar es Salaam Stock Exchange to raise capital through an initial public offer floated in August 2013.