Exchange rates £1 – TShs 1,994
$1 – TShs 1,259
While western banks are reeling under the financial crisis Tanzanian banks reported a good year in 2007/8. On average, profit before and after tax for each bank increased by about 60% according to the Tanzania Banking Sector 2007 Performance Review by Ernst & Young. All the other banks, the report said, showed significant improvements and of the five loss-making banks of 2006 all recorded profits in 2007.
Among the commercial banks, Citibank recorded the highest interest income while the Dar es Salaam Community Bank was the highest among the non-commercial banks.
As at 31st December 2007 the banking sector comprised 23 commercial banks, three non-bank financial institutions and seven regional unit banks/financial institutions. The industry averages for return on average assets and return on average equity were 3% and 27% respectively, as in 2006. Standard Chartered Bank was the best individual performer in both cases with 8% and 61% respectively. Only one bank recorded a loss before and after tax – Sunday Observer.
Frank Mwakumbe writing in the Guardian noted that almost all banks experiencing the financial crisis in the USA operated as publicly traded companies and were privately owned and managed. He felt that this was a cause for caution about the privatisation process in Tanzania. A study by the ‘African Forum and Network on Debt and Development’ (AFRODAD) on Tanzanian’s experience with privatisation policies published in 2001 had summarised the benefits of privatisation, tersely: ‘Well performing privatised enterprises can contribute meaningfully to government revenue and to the economy as a whole in the form of taxes, increased production of quality goods and services, creation of more employment opportunities and introduction of modern technology.
‘Has our government considered the impact of privatising financial institutions like the CRDB Bank Ltd, National Bank of Commerce (NBC) and the recently privatized National Microfinance Bank (NMB) he asked. The Tanzania Housing Bank and Greenland Bank had closed. He went on: ‘A little thinking directs us to conclude that entrusting financial institutions into private investor’s hands seems to have a detrimental impact on performance. The British government’s decision to support the Lehman Brothers Bank and nationalise the Bradford and Bingley Bank confirmed our belief that some government participation in the financial system of a country is crucial to keep the economy stable and under control.
The state of our economy and the position of the government leave us with much doubt as to whether the government has any plans or even ability to intervene should we start heading in the same catastrophic direction as the USA and EU counterparts. Think for a moment: What will happen if the CRDB Bank, NBC, and NMB face a shake-up? These financial institutions serve more than 50% of account owners in Tanzania.
Do we have an effective oversight mechanism able to deal with economic woes which may result from an ailing privatisation process?’
The proportion of Tanzanians living in poverty fell by some 2.4% between 2001 and last year, the most recent household budget survey conducted in the country shows. A report on the Development Partners` Poverty Monitoring Group study says 33.3% of the country`s population were living in poverty by last year compared to 35.7% in 2001. The report was issued by the World Bank on behalf of other members of the group.
However, the reduction in the poverty ratio indicated by the survey had not been able to compensate for the annual growth rate of the population of about 2.6%. As a result, it noted, the reduction in the proportion of poor people translated into an increase of a million people living in poverty in mainland Tanzania from 11.7 million in 2001 to 12.7 million last year – Guardian.
Minister for Livestock Development and Fisheries John Magufuli has called for a law that would oblige banks to advance loans to agriculturalists and pastoralists. He said there were some 33 banks in the country, most of them foreign, yet it was unfortunate that despite the contribution of the farming sector to the national economy, they did not wish to finance them. The Minister said there is a need now to table a bill proposing that either the banks change their ways or they ‘pack up and go’. He was responding to MPs who complained that banks in the country did not support farmers – Mwananchi.
A British firm, Petrodel Resources Limited, is to carry out a 12-day offshore seismic survey in Tanga to determine if there is oil. Work was due to start in the first week of 2009, using a survey ship that will collect geological data – Mwananchi.