Interview with Boni Nyoni Managing Director BancABC

TanzaniaInvest.com interviewed Mr Boni Nyoni, Managing Director of BancABC Tanzania. In the interview Mr Nyoni reveals insight on Tanzania’s Banking Sector and highlights some of the most vibrant economic sectors for investment.

BancABC has operations in Botswana, Mozambique, Zambia and Zimbabwe and operates as a merchant bank in Tanzania since 2002. It introduced retail banking operations in the country in 2008.  The bank opened its first branch in March 2010 and aims to rollout more branch outlets in various parts of the country. 

TanzaniaInvest.com : Mr Nyoni, Bank ABC’s vision is to be the preferred Banking partner in Africa. What does Tanzania represent within your African reach?

Mr Boni Nyoni : Bank ABC is a major player in the financial landscape. We operate in Zimbabwe, Botswana, Mozambique, Zambia and off course, Tanzania. We have the headquarters in Johannesburg, South Africa but the businesses are operational in those five countries. In time we will be able to grow beyond the borders of the countries in which we operate.

Within this framework Tanzania is a market that interests the bank a lot. It is a growing market and you can see from the growing patterns of the economy that definitely the potential is to grow bigger. We want to be a part of that, to contribute and make Tanzania a better financial destination. The population-bank ratio demonstrates that the banking sector in Tanzania is a huge potential to tap into. We are here for the long haul.

TI : You mention that a small percentage of the population has access to banking. At the same time Tanzania is experiencing the revolutionary product, the mobile payment system- M-Pesa which is currently provided by the mobile phone operators. Is this a threat or an opportunity for banks?

BN : We prefer to look at it in a positive spin. We regard it as a complement product. It will also assist banks to tap into the unbanked market. What you find is that those mobile companies keep their trust accounts with the commercial banks in Tanzania. They may not keep it with all the banks but a few. So already you will find that the inflow of money generate by M-Pesa transcations are managed by the financial institutes.

The banks are actually partners to the mobile operators they allow clients to transfer money using the mobile network to an actual bank account. To give an example, we have agreements with Vodacom and others telecom companies. Our clients can use the mobile banking services under those networks to credit accounts in BancABC. So we can partner with these mobile phone companies and achieve representation we otherwise will not have, in specific areas.

TI : BancABC started in Tanzania as a Merchant Bank to expand more recently in retail bank? What is the overall development strategy of the bank?

BN: As you say, we used to be a Merchant Bank which focuses on corporate clients. I think as the landscape kept changing the bank looked to expand its products and range, specifically for the corporates we were dealing with and also specifically for the employees within those corporations. Having said that, it also allowed us to go into a wider market. So we spread the product range and increased revenue streams.

Also, when you deal with corporate clients, most of the time they demand cost effectiveness and higher return. So the better market to approach was the retail market where there is a larger customer base and increased revenue through transactional activity. We have started retail banking in Tanzania two years ago and we are happy here. It is not spectacular yet but it has been very steady.

Over the past two years we were actually able to launch four branches in Tanzania: three in Dar es Salaam and one in Arusha. We are still looking at expanding into more cities in Tanzania.

TI : There are however more than 40 banking institutions in this country. Out of 45 million people it is estimated that only 15% has access to banking. Is there room for so many banks? What are you bank’s competitive advantages?

BN : It can be argued that Tanzania is overbanked. If the statistics are correct it is 85% of the population without banking, and to be conservative 40% are bankable. So there is great opportunity to present products to this market. Our view is that there are still a lot of people that have not had the opportunity to use financial services and they are waiting to be approached with products.

{xtypo_quote_right}85% of the populatiois n without banking so there is great opportunity to present products to this market.{/xtypo_quote_right}A lot of financial concentration is in the big cities; Dar es Salaam and Arusha. But there are a lot of areas in Tanzania, it is a huge country. So we need to put effort and understand where there are no banks able to serve clients and then open a presence there. Of course there should be a business analysis to find out what products we can offer that can actually make a difference.

In terms of competitive advantages at BancABC we focus on three main areas. First, our relationship management is what we stress. We get to know our customers, they are not just an account number. They are persons who must be known. We understand their needs and structure products that relate to their needs.

We also look at turnaround time, because that is key. When someone wants to apply for a card, a loan or an advance they want the answer promptly whether it is a yes or a no. So we want to reach customers within a reasonable time.

We also look at accessibility, which is why we design products that give customers access to their finances or to the bank 24 hours a day. Those three pillars for us are key.

TI : Banks in Tanzania have a critical role in assisting the socio-economic development of the country. What do you do in this area?

BN : We have done a lot. Over the past year we sponsored some students who are orphans. We had flood situations in Dar es Salaam, we also took part in assisting families by donating items of clothing, books, uniforms and so forth. We donated desks at a school in Zanzibar. We continue to look at areas of need where the bank can assist. We have a formal budget for Corporate Social Responsibility.

TI : The Economic Growth of Tanzania is attracting decent amounts of foreign direct investment but this is now expected to grow exponentially because of the latest discovery in natural gas. What are ABC Bank’s ambitions toward the expected investment inflow in Tanzania?

BN : We always try to work with not only Government Ministries but agencies that come into the country to work on gas, power generation and tourism. So we are aware of the huge find of gas in Tanzania.

We are exploring possibilities of setting up representation in those areas in the near future. We are focused on getting there early so are able to participate in the boom. In our dealings with clients we try and play a part in either financing or advising as we can.

TI : What are in your opinion the economic sectors, in addition to oil & gas, that include the most interesting investment opportunities in Tanzania?

BN : I would say tourism, definitely which is a sector of interest for us. Tourism in Tanzania will continue to grow as the Tanzanian economy grows and the sector will experience the exponential growth that it deserves.

{xtypo_quote_right}The good thing about Tanzania is that it is a peaceful country.{/xtypo_quote_right}The good thing about Tanzania is that it is a peaceful country. Construction is also another sector that is booming. People are building for residential and commercial purposes.

TI : Mr Nyoni, you are Zimbabwean. How would you assess the investment framework in Tanzania? Are there any challenges?

BN : I think like any other country, like any other business: there will always be challenges. In terms of attractiveness, I find Tanzania much more attractive than other countries, which are heavily regulated.

To invest in Tanzania you obviously need to apply through Tanzania investment Centre and get approval, but I find it is much more user-friendly. It is very attractive in terms of the exchange controls. I would say investors find Tanzania attractive since they are able to remit profits back home.

TI : From your direct experience in the country, what would be your piece of advice to investors looking into Tanzania?

BN : My advice is do the paperwork right, deal with agencies that are credible. One of the things I found to be a disadvantage was the judiciary system. It still needs to be developed. The banking side tended to favor the borrower rather than the lender. In terms of the laws and the people; I think it is a very favorable destination. All people are welcome to Tanzania.