What is the significance of your Tanzanian operations for your overall African footprint?
BancABC operates in six sub-Saharan African countries. In Tanzania itself, we are a relatively small in terms of the banking playing field; however, we have the strategic intent to grow our business quite significantly in the foreseeable future. At present, we have five branches, though our focus is not necessarily to develop a brick-and-mortar setup. It has become almost prohibitively expensive for a commercial bank to roll out greenfield brick-and-mortar operations; therefore, we are turning to alternative channels, rolling out agency banking concepts and mobile banking applications, and strengthening a loan distribution network of about 100 loan centers out in the country, with nine zonal offices. Owing to this platform, and other innovations, we have been able to successfully compete in the market, banking around 45,000 retail consumer customers based on our distribution network, which we intend to roll out and grow.
How are these strategies tailored to the Tanzanian market in particular?
It is critical to be ahead of the game. In the MNO space, for example, records show that for the first time total turnover in the mobile banking space has exceeded that of the formal banking sector. This means partnerships with MNOs are critical. Some have already partnered with larger banks, meaning smaller players have to think differently. In that space, we have excelled through our alternative channels, where we have developed a prepaid card that links into a mobile banking application, and this allows customers to do wallet-to-bank and bank-to-wallet transactions.
In line with this strategy, how are you working to strengthen the BancABC brand in Tanzania?
As a relatively small player in the market, our approach to obtaining brand recognition has to be carefully thought out. We have to focus on specifics, which we have been successful doing over the last year. In the past year, we have been successful in the digital marketing space, where we have worked with Google, Facebook, and Instagram to garner between 9 and 12 million hits and views.
What are the challenges of banking in emerging markets, in particular Tanzania?
Many make the mistake of imposing a large corporation attitude on an emerging market. While it is important to consider the governance and compliance agenda, if this is pushed too strongly in emerging markets, it can derail any possibility of significant growth in these markets. There are a number of large international banks in Tanzania, Mozambique, and Zambia that have not seen any significant growth or have in fact regressed. Our way of approaching emerging markets is to remain nimble and react quickly, especially when it comes to decision making. The commodity crisis in the last few years has significantly impacted the Sub-Saharan African market. What is more, it had the opportunity to take advantage of the regional conditions to supply to the East African market.
How successful has the Bank of Tanzania (BOT) been in regulating this environment?
I have a great deal of respect for the central bank. The governor has always been a pragmatic ally of the financial services sector, and we enjoy close ties and strong collaboration. BOT has worked well with other banks in terms of bringing down interest rates. The one-year rate has come down from levels of 16-17% to 9%. There is also the drive to develop, along with the World Bank, the mortgage market in the country, an area that can be a cornerstone for financial stability, with the potential to unlock equity from real estate to develop the economy.