Tanzanian Banking Sector Welcomes Machinga Bank

The Tanzania Banking sector is preparing for the establishment of a new community bank to be used by small traders in Dar es Salaam, with planning now entering the second phase which is expected to include the sale of shares to the public.

In a recent interview that was given to The Guardian Tanzania, Gaston Kikuwi, an official of the envisaged Tanzania Machinga Bank Ltd, said that the bank had raised TZS 90 million of the TZS 250 million that is needed to complete the new community bank.

According to Mr. Kikuwi, both the general public and small traders had shown an interest in buying shares in the bank.

“We are planning to start selling shares soon after a meeting to be held this month which will assess the first phase collections,” said Mr. Kikuwi, “We’re determined to raise that money as we have enough members who are determined to see the bank established.”

Each share in the bank is sold for TZS 1,000, with small traders being granted permission to buy at least ten shares each.

The Tanzania Machinga Bank official, Mr. Kikuwi, went on to explain that once the first phase has been completed, the bank is planning to widen the shareholding base throughout the country with 50 percent of the shares being sold to the organization, 40 percent to members, 5 percent to other individuals and 4 percent for investors.

Amidst rumors that the creation of the bank was politically motivated, Mr. Kikuwi explained that the establishment of the bank was, in fact, primarily influenced by the alarming growth rate of population of Dar es Salaam City, particularly among its youth.

According to estimates, between 2001 and 2002, the population of Dar es Salaam City totaled 2.8 million people; since then, but the number nearly doubled to an estimated 4.3 million inhabitants.

As a result of the tremendous growth, a solution was needed in order to address the increased need for the facilitation of business and trading in the region.

Among solutions that were discussed, three permanent solutions to these concerns were created that would involve the building of business parks, industrial parks and financial parks.

Within these specifications, the business parks include areas such as the Machinga complex in Dar es Salaam where small traders conduct their business, industrial parks, on the other hand, are more occupied with small businesses that are focused on small-scale production to be later sold to the business park traders.

Finally, the proposed financial parks would provide affordable loans with reasonable to the small traders so as to facilitate and make it possible for the small business people in the country to succeed.