TanzaniaInvest.com interviewed FNB Tanzania CEO Dave Aitken and he communicated with us, the bank’s reason for entry into the Tanzanian market as well as the FNB Tanzania strategy and goals for banking in the country’s highly competitive finance industry.
TanzaniaInvest.com: Dave. Welcome to Tanzania. What is at this point your perspective of the socioeconomic framework of Tanzania?
Dave Aitken: We see Tanzania as a very exciting opportunity as a country, where the growth has been stunted for many years and has now been allowed to accelerate. We see it being resource driven.
We see exceptionally big changes and socioeconomic development around the country. We see capital Investment coming from all over the globe.
{xtypo_quote_right}We see exceptionally big changes and socioeconomic development around the country. We see capital Investment coming from all over the globe.{/xtypo_quote_right}
Resource-driven initially or tourism based, but with a long-term view eventually on Agriculture food production etc. All these things are significant to an investor. Then you encapsulate that in a population of 45 million, you have a great recipe for investment.
TI: Your bank is in, of course South Africa as well as Swaziland, Mozambique, Lesotho, Botswana, Namibia, Zambia and now Tanzania. Why Tanzania?
DA: FNB takes a view: we want to be in stable, fast growing economies with preferably double-digit growth and sustainable over a long time. Tanzania has delivered on that with a GDP growth rate in excess of 6% for almost the last 10 years. {xtypo_quote_left}we want to be in stable, fast growing economies with preferably double-digit growth and sustainable over a long time. Tanzania has delivered on that…{/xtypo_quote_left}
It is forecast to do that or better going forward. The economic and political climate is stable. It is an investor-friendly country. These are the type of things that differentiated it from other countries in Africa. We see it as a long-term investment.
TI: There are now 50 banking institutions in Tanzania. Where your focus and what is are your competitive advantages?
DA: Admittedly, when we first looked at Tanzania there were not 50 banks but about 27. We have never competed against so many banks before, this is new to us.
But let me take you back to the world where FNB operates in South Africa. You have 5 major banks offering very similar products. Nobody differentiates itself in any way in terms of pricing or products except by campaigns. Clients are won or lost over long-term service delivery standards and attention to detail.
FNB has grown as it pioneered innovation and online delivery solutions to customers. So it is a combination of offering the client an easy and hassle-free way to bank at a low cost with exceptional service.
Coming to Tanzania we extrapolate that to 49 competitors. I am not going to have a point of departure that says I offer anything significantly product differentiating to anybody else. I am going to put down the best bank with the best service.
People do business and banking with people. The only way I can differentiate myself in the long-term here is by putting up the best looking branches, staffed by the most efficient staff and employing highly knowledgeable corporate and commercial bankers. We understand the value of clients and provide solutions for them.
TI: Speaking of branches…there is or was a race of who opens the most branches throughout Tanzania. Now mobile money transfer and agent banking may change that. What is your strategy here?
DA: FNB Tanzania is about to open its fourth branch. Our branch model is a very expensive branch model. It is a very upmarket branch model. Not one that lends itself to opening hundreds of branches. We will not enter the race to open hundreds of branches throughout Dar es Salaam.
We will look at channel delivery. We will enter into delivery across various mediums to customers other than branches. We will expand our branches selectively. Where the population demands it. You will see agency type arrangements; cellphone banking, ATM banking and we believe we lead the field in online banking as we do in South Africa.
TI : You are very focused on technology and online.
DA: Correct. In South Africa we have this definite strategy to take customers out of branches. The delivery channels are priced in such a way that the cheapest forms of interaction and transaction with the bank are outside of the branch environment. We will actively pursue that strategy in Tanzania, trying to make it cheaper and more convenient to do banking.
We will embrace the Mobile Money currency and money transfer schemes in Tanzania. It is extremely well established. It works well throughout East Africa.
{xtypo_quote_right}We will embrace the Mobile Money currency and money transfer schemes in Tanzania. It is extremely well established. It works well throughout East Africa.{/xtypo_quote_right}
I think as a bank you need to acknowledge its existence and partner with it.
TI: Does it mean that a client using mobile money transfer through your bank will be able to use it in other countries?
DA: Remember mobile money in the form we see in Tanzania does not exist in South Africa. This is unique to East Africa. In countries in the South, you have cellphone banking but you do not have the true form of virtual money that exists here in Tanzania.
I think in Tanzania we are going to get to the point where money will need to be moved freely from actual currency into networks in the form of virtual currency and then back into the form of real currency using a bank or another agent channel.
TI: Do you think Virtual Money will influence how the banks have looked at development?
DA: It will definitely influence the way banks look and think. It will influence what is the mass market and which part of the mass market is actually available to the bank.
TI: FNB started in Tanzania in February 2012 and you just took over. What are your main objectives and challenges you are faced with?
DA: Let us break it into life cycle phases and stage. Up to my arrival, my predecessor and his colleagues built a bank, literally. We arrived in Tanzania and we built a bank. My brief is to build a business. So you are going to see a rapid expansion now and focus on customer acquisition and you are going to see a distinct focus on corporate, commercial and SME activities.
We are going to aggressively lend to this growing economy in Tanzania. FNB has a bank here to provide working capital and developing finance to entrepreneurs. We are an entrepreneur’s bank. That is going to be the thrust of our focus.
We will be Dar es Salaam based in terms of infrastructure probably for the next year. The intention is very much to go national. We will start with the national strategy as early as the next quarter. Focusing on the areas of economic concentration of the great lakes, the mining activities, Arusha and other places.
TI: In which other economic sector do you see the most interesting opportunities in Tanzania for you as a bank and for investors in general?
DA: Obviously, the mining companies are very important to us. Let us not ignore agriculture in Tanzania. The agro-process is of great interest to us. Distribution and road freight industry, Tourism is also something we specialize on. There are a lot of skills that are yet to come to Tanzania within the FNB framework and these will be arriving in the first quarter of our new financial year.
TI: Tanzania has been experiencing a cusp of FDI inflow and this is expected to increase. Which role if any do you want to play in this inflow of investment in Tanzania?
DA: The foreign direct investment is going to be largely of a capital nature. It is funded outside of the country and invested here. Each of these will translate into a project. An investment in infrastructure; we would ideally like our capital asset financing team to finance any infrastructure, we are active throughout Africa doing large ticket items in terms of infrastructure investment.
But as FNB is a transactional bank, we will typically focus on all the industries related to plant, the supply to it, the value chain supporting a project, the road freight and Working Capital will be our prime focus.
TI: Banks in Tanzania are very much involved in Corporate Social Responsibility. What do you plan to do in CSR?
DA: One of the things I am actually busy with is the Code of Ethics. FNB was established by entrepreneurs. Giving back Corporate Social Investment is key to it. Because this is a start-up we have a culture of investments on staff level. So the staff will initially choose all projects for investment. We would do fundraising driven by our own staff. The company policy is to match or double any funds staff raised and the staff will then determine where that fund is invested. Be it in education, or schools or for the needy.
Over and above that, you have the corporate investment in giving back to the country. That is still a policy that we are working on. If Tanzania is growing as rapidly as 7-8%, I believe a lot of that growth is concentrated in Dar es Salaam.
It is becoming ever more apparent to me that there is a very large rural population that is not benefiting equally from the economic investment in this country. I foresee a strategy of FNB investing in those communities, so rural investments, probably in schooling and education.
TI: What would be your way of describing Tanzania to foreigners?
DA: I think the first time the plane landed and I took the drive from the airport to the hotel, I was reminded of South Africa prior to the 2010 Soccer World Cup. The level of excitement, the amount of buildings going up.
The level of activity here[in Tanzania] exceeds anything that I have ever seen before. I think this is a country that is alive to the opportunities around it.
{xtypo_quote_left}The level of activity here[in Tanzania] exceeds anything that I have ever seen before. I think this is a country that is alive to the opportunities around it.{/xtypo_quote_left}
I believe that all it needs is investment in infrastructure, careful consideration of where you spend and invest the profits that are going to flow.
I have yet to be this excited about any opportunity that confronted me. I believe it is sustainable. I plan on being here for as long as I can to be a part of that.
TI: Lastly, what would be your piece of advice to anyone looking at this country?
DA: I would say that anyone who comes to Tanzania would need to understand that Tanzania is unique. Do not try and make this something it is not.
What I am trying to say is, I do not think a European or South African can come here and try to do things a South African or European way.
I think bring your knowledge, passion and experience here and then stop, listen, watch, there is a Tanzanian way that works.
