TanzaniaInvest interviewed Margaret Chacha, Managing Director of the Tanzania Women’s Bank (TWB). TWB was created in 2007 by the Tanzanian government and private individuals and entities, to appropriately address a range of problems and challenges faced by women entrepreneurs in accessing loans in various banking and financial institutions. The bank is currently preparing its IPO with the intention to list at the Dar Es Salaam Stock Exchange (DSE) by the end of 2015.
TanzaniaInvest: What is TWB all about?
Margaret Chacha: TWB is a bank specifically designed to cater for women’s banking needs as most women are ignored in other conventional finance institutions.{xtypo_quote_left}TWB is a bank specifically designed to cater for women’s banking needs as most women are ignored in other conventional finance institutions{/xtypo_quote_left}
This pioneering initiative is the first of its kind in Africa and it essentially aims at promoting economic activities undertaken by women while empowering them economically.
The bank comes as a relief for Tanzanian women who, despite their enormous contribution towards economic development, unfortunately do not always have easy access to banking services for many reasons including fear due to low level of education and limited information as well as poverty and culture.
TI: Why the need to address such a specific segment of the population, i.e. women?
MC: TWB is a need-based bank because it was demanded by Tanzanian women after considering the challenges they were facing not only on meeting account opening requirements but even meeting condition on loan application and consideration.
The idea was first voiced during the Dar es Salaam International Trade Fair in 1999. In their statement to the guest of honor, the then President of the United Republic of Tanzania, H.E Benjamin Mkapa, women participants urged the government to facilitate the establishment of a women’s bank wishing to access banking services and loans easily
The Ministry of Community Development, Gender and Children was given the task of overseeing the establishment of the bank, and in collaboration with other stakeholders worked tirelessly and ultimately succeeded in establishing the bank in 2009, with the Tanzanian Government holding 99% of the capital of the bank.
The government offered seed capital for the bank to be licensed because women could not collect enough capital as per central bank requirement. But the money will be returned to treasury soon after selling shares to the public in 2015.
TWB’s existence is a dream come true for many women in Tanzania who waited for this bank for more than ten years.
TI: TWB is focused particularly on women entrepreneurs. What are the challenges they face in Tanzania?
MC: Women entrepreneurs in Tanzania, particularly micro-entrepreneurs encounter a number of problems such as access to finance i.e. short, medium and long term loans including savings opportunities and loans to enhance their working capital/grow their business; lack of entrepreneurship and business skills/competences necessary for business growth; culture and negative legal aspects especially on ownership and inheritance of main means of production; and access to technology and information.
TI: How TWB address these issues? What makes TWB truly different to other banks in Tanzania?
MC: To enable women access to financial services, TWB has simplified many administrative procedures making it easy for women to first have an account, start to save as a step necessary for accessing loans and other financial facilities. {xtypo_quote_right}TWB has simplified many administrative procedures making it easy for women to first have an account, start to save as a step necessary for accessing loans and other financial facilities{/xtypo_quote_right}
With TWB, all that one needs to open an account is an identification document (a letter from the district, vote ID, passport, employer’s ID), one picture for the account holder and a TZS 3,000 Tanzanian Shilling (USD 1.4) deposit. Signature by thumb is acceptable.
There are no monthly bank charges on saving accounts to allow the savings to grow. The interest rate is very competitive compared to the market. All loans are insured against death and accident. This provides effective risk mitigation for the bank and avoids loss.
Apart from other traditional products, the bank has special products for women e.g. Tabasam account enjoying 1% above other savings accounts. Tanzanite mama is a special account for women entrepreneurs enjoying 1% discounted rate on loans.
Women are also encouraged to save and train their young family members through Malezi account and use of home bank boxes.
{xtypo_quote_left}Unlike other banks, informal groups (not yet registered) and ventures are also encouraged to open accounts provided they submit their constitution document and minutes for their general meeting{/xtypo_quote_left}Unlike other banks, informal groups (not yet registered) and ventures are also encouraged to open accounts provided they submit their constitution document and minutes for their general meeting.
This way more funds are mobilized and people are encouraged to effectively engage the bank.
Understanding the difficulties and retardation state of many women business, the bank is offering loans to groups (no security requirement but use peer pressure) and also extend loans to individuals, Savings And Credit Co-operatives (SACCOs), Village Community Banks (VICOBAs), companies and institutions (with security requirement).
{xtypo_quote_right}The bank does accept collateral documents which are not normally considered by other banks like undeveloped land plots, sell agreements, vehicles and residential licenses{/xtypo_quote_right}The bank does accept collateral documents which are not normally considered by other banks like undeveloped land plots, sell agreements, vehicles and residential licenses.
Landed properties with registered title deeds, machineries, cash security, bank guarantees, treasury bills, bonds and floating debentures are accepted.
For houses with no registered title deeds, the bank accepts sell agreements and or village leader’s certificates.
{xtypo_quote_left}Understanding women’s’ special needs, the bank have few papers filling or submission, one could immediately get a loan if her past history with her past history bank was good and there is evidence that her business is managed healthily{/xtypo_quote_left}Understanding women’s’ special needs, the bank have few papers filling or submission, one could immediately get a loan if her past history with her past history bank was good and there is evidence that her business is managed healthily.
Other bank’s account statements are also considered and even women with no banking history are considered for loans.
Many women’s houses are in un-surveyed areas and most of them find it expensive to register their properties because apart from bureaucracy, they have to pay capital gain and other taxes.
{xtypo_quote_right}Accepting un-registered properties accommodates many women. This way TWB has attracted big number of women to apply for loans and opening accounts with the bank{/xtypo_quote_right}Accepting un-registered properties accommodates many women. This way TWB has attracted big number of women to apply for loans and opening accounts with the bank.
Apart from sensitizing women to save, the bank offers training (capacity building) in basic business skills, record keeping and information searching.
Entrepreneurs are educated/informed on ways to access financial services – most important business discipline and on importance of repayment of loans.
Women are welcomed by professionals who advise and accompany them in their endeavors. It is an inspiring place for small entrepreneurs and a saver, going to the bank is also an opportunity to meet successful women.
At the bank counter, there is always someone to explain things at their own pace and the bank do facilitate the creation of small entrepreneurs groups.
TI: How would you define the success reached so far by TWB in this exercise?
MC: {xtypo_quote_left}In two years the bank have extended more than 10.0 Billion to Micro, Small and Medium entrepreneurs, with companies owned by women and employing other women being given preferential treatment{/xtypo_quote_left}In two years the bank have extended more than 10.0 Billion to Micro, Small and Medium entrepreneurs, with companies owned by women and employing other women being given preferential treatment.
We have lent over TZS 4.0 billion (approximately USD 3.0 million) in groups with no security requirement and trained more than 6,000 women.
In 2014 we have broke even and have become profitable with our non-audited results indicating a Return on Equity of 11. {xtypo_quote_right}In 2014 we have broke even and have become profitable with our non-audited results indicating a Return on Equity of 11%{/xtypo_quote_right}
TI: What are your objectives in terms of business growth?
MC: We want TWB to become a strong sustainable bank capable of providing efficient and effective banking services to the general public; we want to become a leader in providing banking services to Tanzanian women and to all micro, small and medium enterprises.
We want to become a role model bank for women in Africa.
The plan of the bank is to enhance its services and extend its presence to as many regions as possible in the country at minimum cost.{xtypo_quote_left}The plan of the bank is to enhance its services and extend its presence to as many regions as possible in the country at minimum cost{/xtypo_quote_left}
Currently, the Bank is operating on two branches in Dar es Salaam and the proposal is to open up additional branches and Solidarity Lending Schemes centers in other regions.
The bank is aiming at extending its services to rural areas like Mwanza, Dodoma, Kibaha, Mbeya, Iringa, Ruvuma.
We are also planning to use Mobile, Agency as well as Telephone Banking because we believe it will greatly facilitate wide area outreach – for women particularly house wives who normally trade/do business closure to their homes.
Also we want to further develop our capacity building programs and blanket guarantee fund to cover/support loans in favor of disadvantaged women entrepreneurs.
The bank is planning to partner with other interested partners to turn around subsistence farming into commercial farming by facilitating irrigation schemes in various areas of the country and facilitate women to own land.
Also the bank is intending to impact family welfare by facilitating ownership of decent low-cost houses in a way of mortgage lending.
Ultimately, we want to become full commercial bank.
This development requires funding. This is also why the bank is planning to sell shares, mostly to women, by 2015. We want to sell shares to the public via the Dar Es Salaam Stock Exchange (DSE) and reduce government share rate. {xtypo_quote_right}the bank is planning to sell shares, mostly to women, by 2015. We want to sell shares to the public via the Dar Es Salaam Stock Exchange (DSE) and reduce government share rate{/xtypo_quote_right}
TI: Could you tell are more about TWB privatization via the upcoming IPO?
MC: TWB is intending to list at DSE to neutralize the government shareholding in the bank , which is today almost 99%.
The wish the public could by shares and we have already prepared ourselves as we have change form the status of limited company to that of plc to allow more shareholders.
We are intending to raise TZS 20 Billion via the IPO that will allow us to become a full commercial bank.
What is left is to have TWB accounts audited by Tanzania’s Controller and Auditor General and to appointed the required expert to prepare the IPO.
We expect to be listed at DSE before the end of 2015. {xtypo_quote_left}We are also looking for a private equity strategic partner, strong and reputable and approved by the government via the ministry of finance{/xtypo_quote_left}We are also looking for a private equity strategic partner, strong and reputable and approved by the government via the ministry of finance.
TI: What would be your welcoming message to potential investors in TWB?
MC: The Tanzanian economy is growing very fast and attracting many investors because of its natural resources and other potentialities.
I am sure this is the right time to invest in Tanzania, particularly under private, public partnership arrangements (PPPs).
{xtypo_quote_right}I will love to see TWB to be owned by women themselves so I welcome all businesswomen to buy as many shares as possible and be majority shareholders{/xtypo_quote_right}I will love to see TWB to be owned by women themselves so I welcome all businesswomen to buy as many shares as possible and be majority shareholders.
