TanzaniaInvest.com interviewed Anthony Grant, Managing Director of EXIM Bank Tanzania. In the interview Mr Grant shares profound insights on Tanzania’s banking sector, explains its bank’s positioning and development strategy and comments on Tanzania’s economy and its bright future.
Tanzaniainvest.com : In a few years we have seen the number of banks in Tanzania growing exponentially. What would be your way of looking at this development in Tanzania?
Anthony Grant : The banking sector in Tanzania has in a sense mirrored the change, evolution and opportunity as well as growth in the Tanzanian Economy. The 50 banks that are here presently span the spectrum, from large commercial banks to specialty banks that have a more targeted market. Then you have foreign banks who serve global customers. You have banks with a narrow or fuller service focus.
EXIM Bank is a full service bank and we operate throughout the country and in virtually every market segment, small, medium and large. The banking sector mirrors what is happening in the Tanzanian Economy.
TI : Would you say there is room for growth in the Banking Sector in Tanzania?
AG : There is room for growth in the sense that the economy is certainly growing and diversifying.
The mineral sector, agriculture and tourism are growing and there are new opportunities presented by the gas sector coming on stream. The seaport access that Tanzania provides to landlocked Zambia, Burundi and the Congo is huge and these three economies are also growing.
{xtypo_quote_right} The mineral sector, agriculture and tourism are growing and there are new opportunities presented by the gas sector coming on stream{/xtypo_quote_right}
So yes, I see room for growth in the banking sector. However, the Bank of Tanzania is requiring banks to increase their capital buffer and this may probably continue, as has been seen in other African countries, leading to consolidation and mergers.
TI : What are EXIM competitive advantages in Tanzania with so many banks around?
AG : Several. For one, our shareholders who are local, very successful business people, provide valuable insight into local markets and the business environment. I do think, as for as having a finger on the pulse, EXIM Bank being a local bank with local shareholders, has a strong competitive advantage. I see diversity in my colleagues who are from across the country, and help us to really know local business.
Another, our indigenous pedigree allows us faster turnaround time, and capacity to take decisions locally and not necessarily refer to an offshore parent office. So, perhaps in terms of having a local foundation, local shareholders, faster turnaround time, these are included in the competitive advantages possessed by EXIM.
TI : Banks in Tanzania first launch in Dar es Salaam, then branch off to Arusha and eventually they start to go to more remote parts of the country, where most of the population lives as the key issue is Financial Inclusion. However, there is this major innovation represented by mobile banking. How is this impacting the industry, your bank and your network expansion?
AG : Both are being rolled out in our development plan. That is, regional expansion as well as the broadening of delivery channels such as through mobile banking and reaching out to the unbanked population.
EXIM Bank now has 25 branches across Tanzania and is in almost every region. Recently, we opened up in Kigoma on Lake Tanganyika, which allows access to Burundi and the Congo. This very month we have just opened up in Shinyanga, an important, centrally located and very promising region of agriculture and mineral wealth that includes diamonds and gold.
So we are looking at geographical expansion at the same time deepening the channels and tools we have to reach out to the unbanked population. The mobile product that we have is in even further development.
TI : Most of the banks in Tanzania that do have a presence internationally look first at East Africa region then spread from here. Your bank’s geographic expansion strategy seems to be quite different. Why?
AG : EXIM Bank has expanded successfully inside the country but we have also moved deliberately to grow outside of Tanzania. We were the first indigenous Tanzanian bank to spread its wings and establish banking operations outside the country, specifically in the Comoros Islands where a form of Swahili is widely spoken along with French. Comoros used to obtain a lot of their imports from Kenya and but now increasingly businesspersons turn to Tanzania.
EXIM Bank is also in French-speaking Djibouti. So we have been able to transfer skills within our affiliates. Djibouti is the port for landlocked Ethiopia with 90 million people. There are no Ethiopian banks in Djibouti. So we have identified important opportunities with Ethiopia, relying upon the port of Djibouti.
Our expansion strategy will continue. We have been to Juba, Lusaka and other locations. We continue to assess where there may be an appropriate opportunity for EXIM Bank expansion.
TI : Tanzania recently allowed foreign agency banking. Does this product make it unprofitable for banks to open in certain regions you were aiming at?
AG : I would not say it makes it difficult. We have and are expanding our own agents in certain areas of banking. I would not agree that it makes it unprofitable. In French, it’s called “proximité” – meaning it is important to have banks if not banking services closer to the population.
We want to adopt and diversify opportunities for our customers to access their banking, but at the same time we find it valuable and profitable to actually have a presence in locations where a complete banking facility may be necessary. Having simply an agent working on EXIM Bank’s behalf in Kigoma would not allow us to access the flows of commerce and trade between DRC and Burundi with Tanzania.
TI : You mention trade which is one of the sectors in the Tanzanian economy that is growing exponentially. There is also strong growth in construction, agriculture, tourism and more recently, gas. Within this portfolio of investment opportunity in Tanzania where do you see the greatest opportunity for banksand for investors?
AG : I would say that there are multiple and good opportunities – a fantastic position for a country to be in.
{xtypo_quote_left}EXIM Bank is very supportive of the tourism sector{/xtypo_quote_left}
EXIM Bank is very supportive of the tourism sector – for example has the lion’s share of collection of fees for the national park authority. We also have a substantial exposure to the agribusiness and agricultural sectors, along with a strong portfolio in the trading sector.
It may be difficult for me to say A or B is more important. Certainly, right now one might say the greatest opportunity in Tanzania lies in developing the gas sector. But as already mentioned, beyond natural gas, tourism is expanding, the mineral sector including gold and uranium is growing and the important agricultural sector will expand.
TI : Is it said that the Tanzanian population is misunderstanding the time required for the gas discoveries will translate in distribution of wealth. What is your opinion in the way the gas industry will develop in Tanzania?
AG : I am a banker and not a politician but I do think that the authorities are looking forward to providing greater sensitization to the population. It is about a realistic pace at which this sector will develop. As well as looking more carefully into what may be the expectations of local populations.
I am simply saying that the authorities have their finger better on the pulse now and will make efforts to inform and provide for the local needs. There are also the experiences from other countries to learn from, regarding realistic and unrealistic timelines.
TI : Talking about the population and wealth going back to them. The banks in Tanzania are doing well. What are you doing in terms of Corporate Social Responsibility?
AG : EXIM Bank has a very vigorous programme in Corporate Social Responsibility. Not only in Dar es Salaam but also in communities across Tanzania where we have a presence. For example, we are very supportive of education initiatives, of schools.
We have supported schools in disadvantaged communities, with practical basic amenities such as text books and desks for the children. In brief let me say that the bank has strived to be a good corporate partner in the communities where we operate. I think the bank, with our origins purely in Tanzania, feels a special responsibility to be a good citizen in the communities where we are present.
TI : What are the challenges that the country is facing and will face in the next few years?
AG : Among the challenges that the country will face, is certainly to be able to “…look around the corner…”. The promise of the gas sector will also bring new challenges, from new income flows and the new wealth that will be produced. I think that the country will think through what direction and what sort of growth is desired, and how best to use the proceeds.
{xtypo_quote_right}A good partnership between the private sector and the government will help to determine the pace at which Tanzania will develop{/xtypo_quote_right}
My belief is also that the private sector and the government sector will be challenged to continue to strengthen their partnership. A good partnership between the private sector and the government will help to determine the pace at which Tanzania will develop. I look forward to EXIM Bank helping to strengthen that dialogue.
TI : Tanzania was a socialist country. Do you think today, the private sector is ready to have a leading role? Do you think businesses have a capitalistic approach to business?
AG : I can say a free market approach. We have for example SME entrepreneurs in our books. These entrepreneurs are very much committed to growing and strengthening their business.
We are delighted to have a very strong portfolio of small, medium and large businesses. All sectors are very much looking into the future. In time, we are moving further away from the socialist period both from the government and the regulatory sides.
Things are changing. I see the country on a one-way direction toward an increasingly private sector-led economy.
TI : How do you see Tanzania’s role in East Africa?
AG : Tanzania has a wonderful future of contribution to East African harmonization and integration. There is great regional value played by Tanzania’s ports for landlocked Zambia, Malawi, Burundi and mineral rich Katanga Province in the Congo.
Dar es Salaam is the port of choice. So there is a huge opportunity for our economy to play not only East but also Central Africa.
TI : Mr Grant, you refer to “our” economy when you are not Tanzanian. How come?
AG : In many ways one adopts a home. Tanzania is special. I first came to the country in the 1980s on behalf of an international bank, and I am sure many of my staff today had not yet been born. I returned to Tanzania in agribusiness development and consulting in the 1990s, and even more recently again in a private equity capacity in 2006.
So time wise and in multiple sectors, I have enjoyed a longstanding association with the country. Today, I am just delighted to continue to make a contribution with such a promising institution as EXIM Bank.
TI : Mr Grant, what is Tanzania about?
AG : In my own words, I see Tanzania as entering a very promising and golden period. Certainly, the people and the authorities recognize this. But this cannot be a time where we can sit back and hope someone makes it happen. This time in Tanzania is to be seized and worked.
EXIM Bank is very much a partner. As one of the country’s leading banks, we have a vision and strategy to move forward and make even more important contributions to Tanzania and East Africa.
