AccessBank: Reinforcing the MSME sector in Tanzania

12.09.2008
BIO has invested a 15.8% founding equity stake in AccessBank Tanzania (ABT), a Greenfield microfinance bank created by the German microfinance holding AccessHolding with the support of its technical partner LFS. The other shareholders include IFC, KfW and the African Development Bank. ABT has been incorporated in Dar-es-Salaam as a private limited liability company under the 2002 Companies Act, and operates as a commercial bank regulated and supervised by the Bank of Tanzania in accordance with local banking regulations.

Estimates of the total number of MSMEs (micro, small and medium enterprises) in Tanzania vary strikingly, but the most reliable figures call for 2.5 million informal MSEs and around 100,000 formal SMEs. Recent estimates by the World Bank indicate that the overall size of the informal sector activity in Tanzania could be as large as 58% of gross national income, more than in any of the neighbouring countries. A major obstacle to the growth of these enterprises is the lack of local financing and other related services. Transactions are mainly executed outside the formal financial sector. Moreover, MSMEs and private households at the lower end of the market tend to keep substantial volumes of funds outside the banking system. Mobilising their small savings on a large scale and bringing transactions they generate back into the banking system is deemed as a way of enhancing the position of the formal financial sector as a facilitator of the local economic activity.

With the establishment of ABT, the aim is to create a financially sustainable institution that will become a lasting part of the Tanzanian banking sector, enhance financial services availability to the MSME sector and contribute to the development of the Tanzanian economy as a whole.
ABT offers individual loan products as well as current and savings account tailored to the needs of the local MSMEs and the lower income strata of the Tanzanian population. Other products such as money transfer are being introduced, and micro leasing and micro insurance should be proposed at a later stage. The bank has already opened three branches in Dar-es-Salaam, and will later expand in other cities as well as in the rural areas. Outlets with reduced facilities will also be considered, as well as the possibility of partnering with credit cooperatives.

ABT has to comply with local environmental regulations and to report annually on environmental performance. An Environment Manager has been appointed and an Environmental Management System is being put in place, to make sure that all investments do not support any of the activities prohibited by IFC’s Microfinance Exclusion List.

The bank will bring new MSME products and lending methodologies on the market and hence contribute to the diversification and deepening of the local MSME finance sector. Tanzania belongs to the LIC (Low Income Country) category and is a partner country of the Belgian Development Cooperation. As founding equity partner, BIO joins a group of reputable investors that have provided ABT with the necessary long-term finance in local currency as well as the technical assistance necessary to finance the rapid expansion of the activities of the bank. BIO also plays a significant supervision role through its seat at the board of directors.

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