Tanzania Invest and Mr. Maina discussed banking trends and innovations in Tanzania, the role which banks play in driving the socio-economic development of the country and Barclays Tanzania’s strategic focus and competitive advantages.

TanzaniaInvest: Barclays is among the earliest banks in Tanzania. What does this market represent for Barclays Africa?

Kihara Maina: Barclays’ relationship with Tanzania dates back to 1925 when we first opened our doors in this country. Following a 33-year absence due to nationalization, we re-entered the market in 2000.

Over the last decade, there is little doubt that Africa has moved from being one of the world’s economic problem areas to one of its greatest economic opportunities. Tentative overtures made by international companies towards Africa over the past two decades have now turned into fully-fledged interest.

Investment is pouring into the continent and more is poised to come. Africa is now firmly on the radar of every major economy in the world – from the European Union and the United States to China and Japan.

International interest has been driven not only by the prospect of resources, but also by the extraordinary opportunity presented by Africa’s flourishing consumer base. Africa is now the second fastest growing region in the world after East Asia.

The continent is taking the next step in deepening its financial markets as investors increasingly turn their attention towards it. The opportunity for the financial sector to contribute adaptive solutions in and across African countries is immeasurable.

In 2013, Barclays Africa Group was formed by combining Absa Group Limited and the majority of Barclays Africa operations.

Barclays Africa has majority stakes in banks in Botswana, Ghana, Kenya, Mauritius, Mozambique, Seychelles, South Africa, Tanzania (Barclays Bank Tanzania and National Bank of Commerce), Uganda and Zambia. It also has representative offices in Namibia and Nigeria as well as bancassurance operations in Botswana, Mozambique, South Africa and Zambia.

Barclays Bank Kenya and Barclays Bank Botswana continue to be listed on their respective stock exchanges. Barclays Bank PLC has operations in Egypt and Zimbabwe which continue to be run by Barclays Africa Group’s management.

This reorganization boosts us significantly by providing us with the appropriate platform to do business in Africa.

Barclays Africa Group represents over GBP1 billion in profits before tax PBT, £ 4Bn in revenues and we serve over 12 million customers.

The creation of Barclays Africa Group gives us a strong competitive advantage. We offer our clients deep local knowledge and presence and the expertise and support of a global bank; hence, we have the ability to play a key role in empowering Africa by reducing the costs of doing business, by providing and enhancing access to the continent and by being the bridge between local and global markets.

Our strategy to become the “Go To” bank for our customers and clients across Africa is precisely this: to bring the best of our African businesses together with the best of our global franchise so that we are the first choice when clients and customers think about their banking needs.

TI: What’s your focus in Tanzania?

KM: Our strategy is centered around the key opportunities that Tanzania offers.

We leverage our strengths and expertise to serve our chosen market segments which include retail banking for individual clients; our corporate & investment banking segment for multinationals, large corporates and the public sector and business banking for Small and Medium Enterprises.

All these segments are underpinned by our international capability which enables us to fulfill a wide range of needs for our customers across the board.

Barclays Bank Tanzania is also strong in the wealth and investment management space and through our Premier segment in retail, our customers can access these services.

For example, any multinational that is looking to operate in Tanzania is likely want a Group relationship with a global bank like Barclays. It therefore makes business sense for us to relate to them as a client linked to our global network rather than look at them as a single entity operating locally.

This way, we are better prepared to address their complex needs and ensure that they are engaged in the local market while meeting their international obligations. This demonstrates what we mean by being fully global, fully regional and fully local.

TI: What are the new banking trends in Tanzania?

KM: Tanzania’s economy has become significantly open and extremely competitive, which is clear from the impressive and steady growth rates we have seen for the economy.

The retail banking market has grown over time in Tanzania. To put it in context, the banking sector in Tanzania is probably just over twenty years old in its modern form. A wave of competitiveness has kicked in over the last ten years or so.

So, essentially, the retail markets’ demand for modern banking is getting increasingly stronger. We have to ensure that retail banking products not only serve a functional purpose but are also able to compete with current market expectations. They have to be safe and trusted, easy to use and give the customer the ease of access that has now been expanded with the use of mobile phones and the Internet.

Speaking of the mobile phone, we are seeing increased penetration in mobile banking. Current socio – economic constraints still mean the majority of Tanzanians are unbanked, so banking is now moving towards convenience and accessibility. Mobile banking will definitely ensure that we increase the proportion of banked customers across the country.

Over the past four years we have seen the level of banking penetration only increase marginally, with a considerable shift experienced in the larger banks. This definitely means that there is a need to increase the 12% or so penetration of banking in the adult population. The key to this will be financial inclusion, agency banking and mobile adoption.

Telcos have played a significant role in the financial inclusion space, and we have seen a significant growth in this aspect to nearly 57% from just 1% in 2009.

Agency banking is now being offered by five banks and the number of agents has nearly doubled from September 2013 to April of this year.

For Barclays, this shift has demanded that we be more innovative, not only with the types of products and services that we introduce, but also in considering how we target our chosen segments to increase usage and penetration.

TI: Which segments of retail banking do you serve in Tanzania today?

KM: Our retail strategy serves three segments that we define as Premier, Prestige and Personal banking. Premier serves our High Value customers, Prestige serves the aspirational middle class and Personal serves the mass affluent customers. 

The Tanzanian population is quite vast, and currently only 12 % of that population is banked.

We have aligned ourselves to these focus segments because we recognize that targeting the whole population would demand expensive capacity and infrastructure. As a result, we have chosen segments that we can best serve through our focus on technology driven solutions and service. This has in turn enabled us to provide customers with the appropriate products and guarantee the delivery of quality and service associated with the Barclays brand .

TI: What else can we expect in terms of banking innovation in Tanzania?

KM: The big driver of innovation has been the proliferation of technology. It’s completely unprecedented how the mobile phone took off in Africa in terms of the need for communication and the ability to connect to people.

I definitely see that trend continuing as internet access gets easier and more cost effective. That will continue and, as the internet gets cheaper, it’s clear that we will start seeing more innovation in this space.

At Barclays, we’re already facilitating utility and other payments and transfers via mobile banking but we’re also exploring how we can deploy credit facilities and offer savings products over mobile phones.

Experience has taught us that basic needs don’t really change however access channels and the user experience are elements that constantly change. Banking will need to keep up with technology to provide faster, safer and more innovative solutions to fulfill the needs of our customers.

We are always looking at opportunities to deploy the latest technology. We just introduced an innovative array of ATMs that are termed as i-ATMs( intelligent ATMs). These ATMs allow you to make cash or cheque deposits at any time of the day. They are sophisticated interfaces, enabled with sound, and as such can cater for and serve customers who are visually impaired.

These ATMs can also allow Barclays customers to send money to non-Barclays customers who can access these funds via the very same ATMs through our innovative Cash send product. Additionally, we are the only bank that offers dual access mobile banking platform over an applet and USSD access.

The innovations I have described are mainly for the retail space, but similar innovations focused on delivering efficient and cost-effective cash management solutions are also present in our corporate banking offering where we offer the most secure token-based internet banking platform for our clients which facilitates straight-through payments like tax and trade payments.

Innovations in risk management solutions will also be seen as the financial markets get more sophisticated. The opening up of the Capital account will facilitate greater depth in our markets and allow banks like ours to offer bespoke risk management solutions to address the unique conditions of our market in Tanzania.

TI: What are Barclays’ ambitions and USP in Tanzania?

KM: Barclays Bank Tanzania’s goal is to be the ‘Go-To’ bank in Tanzania for all clients and stakeholders.

We concentrate all of our efforts on sustaining a customer centric organization by helping our people and clients achieve their ambitions in the right way. Hence, driving transparency in all of our engagements with customers, regulators, partners and other stakeholders is key.

In striving to be the ‘Go–To’ bank, we also look at other performance indicators. We have set a target to achieve a Return on Equity in the range of 20% by 2016.

We have also defined our market share ambitions for the segments in which we want to operate and we target continuous cost efficiency improvements to drive our cost to income ratio to around 50% by 2016.

We want to be sure that we are capital efficient. We will facilitate this by using a range of instruments and also championing and pioneering them where they don’t exist.

TI: What do you think about the introduction of the first two credit bureaus in Tanzania? Are they easing up credit?

KM: Yes. We work closely with credit bureaus and don’t approve any loans in the personal market without their approval.

Naturally this is a process that will improve as it becomes increasingly embedded more widely into credit granting businesses.

As an industry, we need to think about the need to increase information sources, making them mandatory at times to drive early adoption and then also to make sure that people are making decisions that are based on these information sources. Only then will we have started utilizing these bureaus properly. We should constantly challenge ourselves to improve upon such key interventions to enable us to deepen our banking offering in this country.

TI: Banks in Tanzania have a critical role in assisting the socio-economic development of the country via Corporate Social Responsibility (CSR). How do you play such a role?

KM: We see CSR, or Citizenship as we call it in Barclays, as an integral part of our strategy. Barclays has been a leader in this arena and globally sets aside 1% of its profits after tax to engage in Citizenship activities.

At Barclays, our Citizenship agenda takes a particular approach. We have three main elements to our Citizenship pillars: The first is the way we do business: we seek to maintain our business integrity every day by striving to improve the service that we provide, making responsible decisions in how we manage the business and actively managing the social and environmental impacts of what we do.

The second is contributing to growth:we support economic growth and job creation by delivering commercial products and services that help people and society make sustainable progress.

The third is supporting our communities: Barclays plays a broader role in the communities in which we live and work beyond what we deliver through our core business activities.

We do this through our community investment programme aimed at helping improve the enterprise, employability and financial skills of disadvantaged young people across the globe.

In addition, Barclays Bank Tanzania has up skilled over 60, 000 Tanzanians in the past two years.40% of those have managed to open their own businesses and are now fully self-reliant.

We appreciate that the formal sector cannot create enough jobs to take on new entrants to the workforce and entrepreneurship is key to growth in our economy.

TI: Tanzania is witnessing a dramatic socio-economic evolution. If you had to describe what Tanzania is going to be in five years, what would you say?

KM: I think that we’ll be further along the path that we’ve set for ourselves as a country.

We’ve got an elaborate 2025 vision and the various plans in place to achieve that vision. It’s very encouraging to see initiatives like the Presidential Delivery Bureau, which brings focus to how we are going to actually achieve all of these different objectives.

In five years time, I believe we will be better positioned across the region as an economy and we will be more central to the economic well-being of our neighboring countries. As we develop the efficiency of our ports and increase the connections of our rail and road networks, we’re going to play a much more integral role in how we interact with the international community through trade and so on. That is going to mean significant opportunities for growth for us as well.

TI: What would be your piece of advice to investors looking at Tanzania?

We’ve seen the pace at which Tanzania is growing, with a sustained 7% percent GDP growth in the last ten years and longer, from a low base. As the base gets higher, it becomes even more competitive and attractive. This is an opportune time to visit and evaluate the vast investment opportunities.

We have seen this country take the lead in the region in attracting FDI ($ 1.7 Bn in 2012 ). Tanzania is a beautiful country, with some of the richest biodiversity that you can see globally, a rich culture and a vibrant and growing economy. We invite you to come and experience it first-hand.

TanzaniaInvest.com had the pleasure of interviewing Dr Hamisi Kibola, Managing Director of UTT Asset Management and Investor Service (UTT AMIS Pls), a government-owned institution under the Ministry of Finance, which seeks to empower Tanzanians to become stakeholders in Tanzania’s economic development via ownership of shares, savings, and collective investment schemes among Tanzanians.

Dr. Kibola’s career in the financial sector began at the Central Bank of Tanzania, thereafter participating in the establishment of the Capital Markets and Securities Authority and then becoming Chief Executive of the Dar es Salaam Stock Exchange when it was established in 1998.

After serving for a period of five years at the Exchange, Dr. Kibola was appointed the Chief Executive Officer of the Unit Trust of Tanzania and has spearheaded a number of UTT initiatives during its journey of a decade.

Dr. Kibola has also coordinated the UTT restructuring programme into the three companies of UTT AMIS, UTT Microfinance and UTT Projects Management. He became the Managing Director of UTT AMIS in July,2013.

TanzaniaInvest and Dr. Kibola discuss the investment products UTT AMIS currently offers, as well as future product plans.

TanzaniaInvest: The Unit Trust of Tanzania (UTT) was incorporated in 2003 as the successor of the Privatisation Trust, with the purpose of allowing Tanzanians to be involved in the ownership of the equity of privatised and other companies in the country. What has been the rational for its creation?

Hamisi Kibola: In 2003 the privatisation exercise was at its height and questions were being raised about the effectiveness of Tanzanians participation in the exercise.

With the background of colonialism and thereafter socialism, Tanzanians were not familiar with the concept of shares or ownership of companies because in the period of socialism the Government owned the shares of public enterprises on behalf of the Tanzanian public.

When market reform was initiated, it was not possible for a lot of Tanzanians to participate in privatisation and the model that Government selected was to have a strategic investor who would take a large stake in a company, commercialise it, and thereafter having the balance of the shares sold to the public.

Hence the Dar Es Salaam Stock Exchange (DSE) was set up in 1998 the main function of which was to facilitate wider share ownership of Tanzanians.

By 2003 the number of shareholders was only around 60,000. These included institutional investors, pension funds – who took a substantial stake – high-net worth individuals, and other individuals who, due to public education and enlightenment programmes that had been carried out invested in the companies listed at the Exchange.

In 2003 questions were raised of what could further be done to make the participation of Tanzanians more effective and the idea of collective investment schemes was mooted.

The intention was to mobilise funds from a large mass of people, including low-income earners who invest in the range of TZS10,000 – 30,000 and build their capital over time in a unit trust.

{xtypo_quote_left}The Unit Trust of Tanzania (UTT) was established to sponsor and manage collective investment schemes to encourage people with low incomes to invest in companies{/xtypo_quote_left}The Unit Trust of Tanzania (UTT) was established to sponsor and manage collective investment schemes to encourage people with low incomes to invest in companies which were being privatised, as well as other companies which would offer them investment opportunities.

Since 2003 we have established five funds.

TI: What’s the focus and purpose of each of UTT funds?

HK: The first one to be established was the “Umoja Fund”, the mainstay of the UTT, which is a balanced fund investing in both the equity and debt segment.

We then set up the “Wekeza Maisha Fund”, which is a Unit-Linked Insurance Plan (ULIP). This provides an investment opportunity as well as insurance cover.

Thereafter we set up the “Watoto Fund”, which is a Children Career Plan. It provides an opportunity for people to save for their children’s secondary education.

We also set up the “Jikimu Fund”. “Jikimu” is a Swahili word that means “subsistence”. This is a Regular Income Plan targeted at retirees who receive a lumpsum after retirement. The fund provides an opportunity for retirees to invest and earn a regular return.

Our research demonstrated that when people retire, they are usually unprepared on how to deal with their pensions so they end up losing it very quickly. We invest their pensions and provide them with an income on a regular basis.

We identified an opportunity to intermediate between the banks and the mutual fund sector so we established the “Liquid Fund”. This fund invests in typical short-term debt securities and allows investors to enter and exit at any time.

We have plans to set up other funds. These include a “Dollar Fund” targeting the Tanzanian diaspora to bring their money home.

There is also a plan to create a Real Estate Investment Trust. We want to provide an opportunity for the small investor to come in through our collective scheme.

Our key strength vis-à-vis an individual’s investment is that we are able to pool resources and invest at higher interest rates and over longer periods of time than an individual would obtain. 

{xtypo_quote_right}Our key strength vis-à-vis an individual’s investment is that we are able to pool resources and invest at higher interest rates and over longer periods of time than an individual would obtain{/xtypo_quote_right}

It is noteworthy that the capital account has now been at least partially liberalised and investors from the East African Community countries may invest in our schemes. We are also working towards offering our products in the East African market.

TI: How many unit holders has UTT reached so far?

HK: We now have around 120,000 unit holders. The market penetration rate has not been great.

We must also take into account that life for the average Tanzanian has become tougher and therefore the job of convincing people to invest into a fund is not an easy one.

Unlike pension funds, investors invest in UTT funds on the basis of confidence and trust. There is no regulatory compulsion for them to do so.

TI: What are the funds’ performances achieved?

HK: The Umoja Fund assets under management are TZS217 billion strong at present, which is about USD 123 million.

{xtypo_quote_left}From December 2013 to December 2014, the Umoja Fund delivered a return on investment of 33.61{/xtypo_quote_left}From December 2013 to December 2014, the Umoja Fund delivered a return on investment of 33.61%, Wekeza Maisha delivered 32.85%, Watoto Fund 36.8%, and Jikimu Fund 27.13%. The 20.47% benchmark was therefore surpassed.

These good performances take inflation into account and have been based on significant appreciation of the shares of Tanzanian Breweries Limited (DSE: TBL), which moved from around TZS 8,700 per share in July, 2014 to TZS 18,000 per share in October, 2014.

UTT AMIS also very aggressively negotiates good deposit rates for funds invested with the bankers. We are also very prudent when investing in other products.

TI: What are the advantages of investing in UTT?

HK: UTT’s managed collective investment schemes provide portfolios which have taken advantage of the limited but yet good yielding investment opportunities available in the nascent market.

The funds provide access to the equities listed at the DSE as well as access to government securities. Our recently launched structured products programme allows investors with various objectives to access various investment opportunities in the country.

TI: In terms of fiscal incentives, are the gains tax-free?

HK: For collective investment schemes, the income distributed is tax-exempt and the 30% Corporate Tax does not apply.

In respect of dividend received from listed companies, the applicable withholding tax is 5% (instead of 10% for unlisted companies), which is final.

{xtypo_quote_right}the income distributed is tax-exempt and the 30% Corporate Tax does not apply.In respect of dividend received from listed companies, the applicable withholding tax is 5%{/xtypo_quote_right}

TI: Towards the end of 2014, UTT gave birth to three separate companies with different purposes: asset management, projects infrastructure development, and micro-finance. Why the need of splitting?

HK: The philosophy of the UTT is to deliver products which are tailored to meet people’s needs. If one considers the Jikimu or Watoto funds one will establish that these were based on certain objective needs.

Over time we established that apart from collective investment schemes, there are still a number of opportunities out there which need intervention.

Given financial skills the UTT was able to intervene and develop innovative financial models for project financing.

We implemented a number of the projects in real estate and delivery of surveyed land. We also established that UTT could deliver a friendlier micro financing model.

A number of interesting proposals have come up, such that we felt the UTT projects development and micro finance activities are areas that need their own specialisation and focus.

Thus we now have UTT Asset Management and Investor Services PLC (UTT AMIS), UTT Projects and Infrastructure Development PLC as well as UTT Micro-finance PLC.

The establishment of microfinance activities and the UTT Micro-finance PLC was based on the requirements of the unit holders who wished to use their unit holdings as security for micro loans.

The UTT Asset Management and Investor Services PLC continues the same fund management function that has been carried out by the UTT since inception.

TI: What are the challenges you foresee in encouraging Tanzanians to invest, and how do you plan to overcome them?

HK: The first challenge is the enlightenment of our people. We should continue to encourage and enlighten them to invest albeit in a small way but continuously and build up their resources.

I don’t see the possibility of poverty eradication without saving and investment.

There are those who discourage people from the villages that they are poor and can’t invest. They forget that in those villages there are businesses as well as valuable properties which could be transformed into financial investments.

People should invest slowly and build up their capital so that they become wealthy or semi-wealthy investors in the medium and long term – NO SHORT CUT.

The second challenge is infrastructural development. To manage funds, complex software which is expensive is invariably needed.

With a small management fee of 1.5% that is charged on schemes managed by UTT it is rather difficult to get state-of-the-art systems. It is an area where we have strived to achieve efficiency and effectiveness.

The software solutions we are currently using are only in respect of investor servicing.

We now have plans to invest in fund management as well as dealing software and that will allow us a more automated way of doing things.

{xtypo_quote_left}We now have plans to invest in fund management as well as dealing software and that will allow us a more automated way of doing things{/xtypo_quote_left}The third challenge is strategic linkages because, as the market is opening up and the capital account is liberalised, it is likely that foreign players will come in.

We should link up with reputable fund managers who have global experience so that the UTT Asset Management Investor Services PLC can also at an appropriate time become a global player.

Depending on the funds we will be setting up, other challenges will arise. If we set up a Dollar Fund, the exchange rate becomes a challenge.

And if we set up a Real Estate Investment Trust, then the value movements of the real estate market becomes a challenge.

However, these challenges bring with them immense opportunities.

TI: The purpose of UTT was to involve Tanzanians. Is UTT planning to open up to other investors as well?

HK: Yes. The Government has decided to liberalise the capital account but we appreciate this will be done gradually.

A time will come when the government may also open up for the global village.

TI: All in all, is in your opinion UTT understood today by Tanzanians?

HK: The UTT has a very good name. After ten years I am proud to say that the UTT has developed into an organisation which has delivered its promises to investors.

{xtypo_quote_right}I am proud to say that the UTT has developed into an organisation which has delivered its promises to investors{/xtypo_quote_right}There have been no scandals in the operations of the UTT. From the 120,000 investors there have been very few complaints over the years mainly centred on communication of investor information.

I am not getting younger and I trust that the people who take up the organisation in its next safari will move it to higher levels.

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.

TanzaniaInvest interviewed Devota Mdachi, Acting Managing Director of the Tanzania Tourist Board (TTB), to learn about the Tanzania tourism products, the marketing strategy and the investment opportunities available in this sector.

TanzaniaInvest: You recently underwent a rebranding of Tanzania’s tourism, with a new tagline “Tanzania, The Soul Of Africa”. Why?

Devota Mdachi: We decided to have a new brand in order to show the world Tanzania’s other tourism assets; Tanzania is not only about its wildlife in its national parks and game reserves, beaches and its mountain, Tanzania has more to offer.

We want Tanzania to be seen as the best destination in Africa, not just a safari destination.

Wildlife is found everywhere in Eastern and Southern Africa but for Tanzania it’s not only about the wildlife, it’s about peace, culture, a rich history, serene beaches, a rich language and people.

When we talk about The Soul Of Africa, we are trying to tell the world that besides Serengeti, besides Kilimanjaro, besides Zanzibar, Tanzania is also famous for its rich history, as it is in Tanzania that life in the world began. It is said that the human kind has his roots in Tanzania, at the Olduvai Gorge, where the first man made his first steps.

We also want to tell the world that Tanzania is one of the most peaceful countries in the continent. That is why we opened up our doors to neighboring countries before their independence.

It is no doubt that the warm and hospitable people of Tanzania opened their doors to other people in the continent giving them a place to call home; indeed refugees would always find solace and peace in Tanzania.

TTB has launched in 2015 its Tanzania Tourism App available on Google Play and AppStore

TI: In 2014 Tanzania received about 1.1 million tourists. What are the main source markets today and what are the new markets you are aiming at? What are your growth ambitions in terms of arrival?

DM: Our primary markets are the USA, the UK, Germany and Italy. Our secondary markets include France, Canada, Australia, the Netherlands and Spain. Those are the markets we are expecting to get more tourists from.

We are also looking keenly at the emerging markets such as Brazil, Russia, China, India, UAE and South Africa.

But it’s not just about international markets, we also looking at the Africa region; right now we have started receiving many visitors from Eastern, Western and Southern Africa, coming for leisure and business.

And the reason is that certain things are only found in Tanzania. Other countries may have the beach and the safari but mountain climbing on Mt Kilimanjaro, the roof of Africa; the white, sandy, unpolluted beaches of Zanzibar; the blend of cultures, and the hospitality offered in Tanzania by its people, cannot be compared with anything else in the region.

In terms of growth we are looking forward to continuing receiving more tourists which will exceed a number of tourists we received in previous years. This goes together with the increment in revenue receipt.

Actually, we would like to reach the 1.3 million tourists by December 2015 and 2 million by 2017.

TI: How feasible it is?

DM: It can be done, with the new brand campaign and tourism portal launched recently, more people will come to know about Tanzania and what it has to offer. The promotion campaigns, such as those done in the EPL and publicity given to Tanzania in our various target markets by the media and celebrities who have visited Tanzania, over the past four years will definitely pay off.

More investors have made the right decision to invest in tourism in Tanzania, we have more international hotel chains opening up establishments, these include Four Seasons, Ramada Resorts and Ramada Encore, Hyatt Regency, Holiday Inn, Melia, to mention a few which will cater for upper end tourist markets.

Now that we have more International airlines flying into Tanzania and others trying to do so in nearby feature, after seeing the potential, we believe that there will be more traffic coming to Tanzania.

We don’t have a national carrier at the moment but I don’t see it as an issue. Airlines like Qatar, Emirates are increasing their frequency of flights and aircraft capacities to Tanzania. That shows that there is interest.

The Tanzania Tourist Board (TTB) is lobbying with the Tanzania Airports Authority (TAA) and the Tanzania Civil Aviation Authority (TCAA), to introduce incentives to these airlines that have interest to fly to Tanzania.

If you look at the Tanzania tourism product, you will see that it was great potential to diversify.

There is great interest in developing cultural tourism in other circuits other than the Northern Tourist Circuit.

At present TTB has over 60 Cultural Tourism Enterprises located mostly in the Northern Circuit and efforts are being done to develop more in other parts of the country such as the Lake Zone, The Southern Tourist Circuit and the Coastal area.

Tanzania also has great opportunities to promote conference tourism, with the opening of new conference facilities such as the Julius Nyerere Conference Centre in Dar-es-salaam and others in building of new conference facilities in Dodoma, Arusha and Mwanza and the decision of the Arusha International Conference Centre and TTB to join forces in developing a National Convention Bureau.

We do believe that this will change the image of conference tourism in Tanzania, and bring prospects of hosting big conferences.

TI: Which challenges do you see to the development of tourism in Tanzania and how do you plan to overcome them?

DM: We still have challenges in terms of infrastructure development in tourist areas as well as delivery of service; we lag behind our competitors in these two areas.

That is why we have been promoting aggressively investments in the sector and well as doing our best to develop the available human resources.

This is why the National College Of Tourism (NCT) is working to ensure quality training is offered which can cater for international markets.

In terms of supportive infrastructure the present government has made a tremendous good job in developing new airports and airstrips. The new Dar Es Salaam international airport will be officially opened in 2016 to attract and serve bigger airlines.

Zanzibar’s airport is also being upgraded and there are new airports in Mwanza in the north, Songwe and Mpanda in the south, and Mafia in Mafia Island.

In terms of road network, now all major cities in Tanzania are connected to very good tarmac roads.

TI: Where are the best investment opportunities available today in tourism in Tanzania?

DM: Investors traditionally focused on the northern tourism circuit of Tanzania, but now we are trying to prove that there are thousands of opportunities elsewhere.

For example we are promoting Dar es Salaam as the gateway to the southern tourism circuit and also as the commercial hub of Tanzania.

And that’s why you have investors like the Ramada group, which have opened two hotels this year, one in the city of Dar Es Salaam, Ramada Encore and Ramada Resort on Jangwani Beach, north of Dar Es Salaam.

There are also a lot of investments taking place in Kigamboni, south of Dar Es Salaam.

We are trying to encourage investors not only to invest in the lodges but to bring in town hotels and resorts because right now there’s a lot of business people coming to Tanzania.

We are also encouraging investors to invest in hotel establishment in the south because we believe the north has reached a point of saturation.

Tourists are hungry for new destinations in Tanzania and we are trying to draw traffic to the south to places like the Selous, Ruaha, Katavi along the coast, Lake Tanganyika and lake Nyasa.

TI: All in all, where do you see the Tanzanian destination ten years from now?

DM: I think in ten years from now people will still refer to Tanzania as the best destination in Africa.

We have so much to offer, there’s so much interest from investors to come and start up projects in Tanzania in the tourism sector.

TanzaniaInvest interviewed Dr. Adelhelm Meru, Permanent Secretary of the Tanzania Ministry of Natural Resources and Tourism (MNRT), to learn about the role of the Tanzanian tourism sector in the country’s economic development, the sector’s development strategy and ambitions.

Prior to his appointment ta MNRT Dr Meru was Director General of the Tanzania Export Processing Zones Authority that he led from his establishment in 2002 until end of 2014. Total export earnings from members registered under EPZA legislation have reached the USD 794 million in the last five years.

TanzaniaInvest: What is the role of tourism in the economic development of Tanzania?

Adelhelm Meru: Tourism has a very big role in the economic development of Tanzania.

Currently, Tourism is the number one foreign currency earner among all sectors of our economy.

Five years ago, the mineral sector was the main foreign exchange earner, but it was progressively superseded by tourism.

In 2014 alone tourism generated around USD 2 billion which constitutes 25% of all the forex that came to Tanzania.

Not only that, tourism is also at the forefront of the contribution to the country’s GDP: in 2014, 17% of Tanzania’s GDP came from tourism.

As for employment, around 600,000 people are directly employed in the Tanzanian tourism sector, and up to 2 million people indirectly.

So we see tourism among the significant sectors which can contribute even more to the economy of Tanzania, if properly developed.

TI: Tanzania has become a top safari destination in Africa, reaching a record 1.1 million tourist arrivals in 2014. What is the Tanzania tourism strategy for the years ahead?

AM: Our strategy is to strengthen our tourism promotion campaign.

We plan to organize several road shows, participate in major International Tourism promotion exhibitions and intensify our electronic promotion operations.

On the other hand, we are planning to diversify our tourism attractions.

In the past we have been giving much attention on wildlife tourism; now we want to go beyond that.

We are developing a new tourism strategy that will be out in mid-2016; the major focus is to ensure that we fully exploit all the tourism potentials that Tanzania has.

Such potentials will include beach tourism, cultural tourism, resort and conference tourism just to mention a few.

With that strategy in place, we are confident that we will be able to make Tanzania a tourist destination of choice in the region, thereby increasing significantly the number of tourist arrivals.

TI: What is your objective in terms of positioning within your new tourism development strategy?

AM: The strategy we are laying down will ensure that Tanzania will become the best tourism destination in East and Central Africa.

It is evident that, Tanzania is gifted to have several attractions which have not been appropriately exploited.

If we diversify our tourism potentials, we will definitely be unbeatable in the region.

Our mission is that, in a few years to come Tanzania becomes the best tourism destination in the entire African continent.

TI: Tanzania already boosts with Zanzibar one of the world’s best beach tourism destinations. What else do you aim to do in term of beach tourism?

AM: Zanzibar is doing very well in beach tourism; what we are planning to do, is to extend the good work already done by Zanzibar to be able to position ourselves very well on tourism attraction along the eastern coast of Africa.

Tanzania and Zanzibar is one country and we can only complement one another to be able to be stronger.

Our future plan is to establish a Special Economic Zone (SEZ) specific for tourism on the mainland coastline.

This will be a new dimension in African tourism as it will be a very special area, which will feature hotels, resorts, conference centers, and that will become a must visit place in Tanzania.

TI: And in relation to cultural tourism?

AM: Tanzania has so many cultural sites: Olduvai Gorge, the Ngorongoro Crater, the museums, the monuments, historical caves, old ruins and many others.

We want to make sure that we feature all these in the world map as we believe they will represent a major attraction to tourists who come to Tanzania to see other things than wildlife.

TI: How adequate is Tanzania as a tourism destination in term of infrastructure and connectivity?

AM: At a national level, we have been able to develop the infrastructure to the extent that investors in tourism that can now move their clients within the country, from one attraction to the other.

The only challenge is connectivity of tourists from US and Europe to Tanzania as we have very few international airlines that can fly tourists directly to Tanzania.

We are doing all what we can to encourage more international airlines to fly directly to Tanzania.

As a result of such efforts, Etihad is serving Tanzania from December, 2015.

At the same time, the ministry of Transport is now working to make Air Tanzania, our national carrier, able to fly to Europe and other parts of the world, this will allow us to break through and bring in more tourists.

TI: Why invest in tourism, in Tanzania?

AM: The range of attractive sites in Tanzania is comparable to no other destinations: Mount Kilimajaro is the highest mountain in Africa and the highest free-standing mountain in the world; Ngorongoro Crater is the largest unbroken caldera in the world; Selous, is the largest faunal reserves of the world; Serengeti National Park has the highest diversity of wildlife in the world; the stone town of Zanzibar has unique structures and is a world heritage site.

With all these at the country’s exposure plus many more, we see Tanzania as a destination difficult to beat in Africa.

TanzaniaInvest interviewed Dr. Freddy Manongi, Conservator of the Ngorongoro Conservation Area Authority (NCAA), in charge of administering this UNESCO World Heritage Site located  in the Crater Highlands area of Tanzania. Manongi and TanzaniaInvest discuss tourism development strategy at Ngorongoro and the investments opportunities still available.

TanzaniaInvest: What makes safari tourism in Tanzania unique and why is it so special in Ngorongoro?

Freddy Manongi: The Serengeti, the greater migration, Ngorongoro are incomparable to any natural setting in the world.

The amount of wildlife seen in Tanzania cannot be compared to any other country in the world.

Also the landscape and the geologic features that you find in Tanzania are phenomenal.

In geo tourism The Ngorongoro crater itself is outstanding, but we also have cultural heritage, and we have fossil age tourism or cultural tourism. That again is fantastic.

In terms of geologic feature and attractiveness, Ngorongoro is the world’s largest unbroken caldera in the world, which has outstanding universal value.

In terms of wildlife the area contains over many species of large animals including visible population of black rhinoceros.

The crater also has the densest known population of lions.

Higher up, in the rainforests of the crater rim, are leopards, elephants, mountain reedbucks, buffalos, spotted hyenas, jackals, rare wild dogs, cheetahs, and other felines.

Over 500 species of bird have been recorded within the NCA.

These include ostrich, white pelican, and flamingo, with East Africa’s major breeding ground.

But in Ngorongoro we also have cultural sites, like Oldupai Gorge, one of the most important paleoanthropological sites in the world, where more studies for human evolution have been carried than any other site in the world.

We also have Laetoli with earliest evidence of bipedalism with hominid footprints preserved in volcanic rock 3.6 millions years old and represent some of the earliest signs of mankind in the world.

We have very good evidence of footprints up to 4.5 metres long, and that make Laetoli an outstanding cultural heritage site.

Because of those comparative advantages that we should focus on promotion of sustainable tourism, protecting our natural, cultural and geologic resources and manage them in a sustainable manner.

Ngorongoro is the world’s largest unbroken caldera in the world and home to over 30,000 animals

TI: What is the profile in investment you are looking to further attract at Ngorongoro?

FM: First of all before we have to understand, why do we need investment in tourism in Ngorongoro?

The number one reason is that Ngorongoro Conservation Area Authority (NCAA) requires funds to achieve its goals.

The law that established Ngorongoro requires the Authority to protect wildlife and natural resources but also to promote the interests of the local people.

All those needs funding, if without it there’s no way we could promote the interest of the local people, and protect the natural resources.

At the moment the challenge is poaching, but it does but in small scale compared to areas outside Ngorongoro but again we need funding to tackles this.

The demands from communities within Ngorongoro are massive with more than 90,000 living inside.

Communities require a lot of support in terms of food security, education, infrastructure development and maintenance.

So in order to generate revenues for conservation and community development we need investments since the only source of revenue for now is tourism.

TI: Tanzania’s Norther Safari Circuit is said to be reaching saturation. What are the opportunities in Nogorongoro Conservation Area?

FM: There is room for further development in Ngorongoro, although we have not yet conducted a comprehensive study to know how much of tourism that we need to develop.

This is what majority of the stakeholders feels.

They perceive the crater to be the most precious part of NCA and any physical development around the crater will further damage the scenery and visitor experiences.

It is therefore important to diversify and invest elsewhere.

There are two other volcanic craters: Olmoti and Empaka where there are no roads at the moment.

We have other areas that are wider than Ngorongoro but very beautiful and natural, we have Oldupai Gorge where there is still room for some development.

So we want a unified strategy to identify other areas order than Ngorongoro where we can push tourism physical investments, that has to be consistent with protection of nature and the high value kind of tourism we have in the Area.

That’s a long term strategy that would ease the tension along the main crater.

TI: Are you looking for high-end type of lodges only, like 5 stars?

FM: Any type of investment is welcome as long as it is consistent with nature conservation and comfort.

So any kind of sustainable tourism can be allowed in areas that are less developed.

TI: Tanzania is gaining global attention as an investment destination of choice thanks to the recent large discoveries of natural gas. What makes tourism still a crucial industry for Tanzania?

FM: Gas and oil prices move up and down depending on the supply elsewhere but you cannot create the natural environment that we have in Tanzania.

The tourism offer in Tanzania, particularly wildlife tourism, cannot be compared with any other country on earth.

I still feel that the income that we receive from tourism is not optimal and can be increased through careful planning.

So I still feel the government has to plan better, develop better sustainable tourism because comparatively we are better than any country on earth.

TanzaniaInvest had the pleasure on interviewing Nehemiah Kyando Mchechu, Director General of Tanzania’s National Housing Corporation (NHC), the Government’s company established to undertake an array of business in real estate.

Mchechu explains about NHC’s current performances and development strategy and the investment opportunities available in housing in Tanzania.

TanzaniaInvest (TI): NHC was established by the Government of Tanzania to undertake the construction of housing throughout the country. You came to lead this institution in 2010. What has been achieved so far and what is NHC’s current development strategy?

Nehemiah Mchechu (NM): I was entrusted by the Government with the responsibility of heading the NHC in 2010.

I was mandated to restructure this institution, get it back on track, restore its operational efficiency and instil the private sector culture in its delivery systems.

Five years later, we are proud that NHC boasts of a balance sheet of around USD 2 billion.

This balance sheet places the Corporation among the largest real estate developers in East Africa.

The Corporation is also one of the largest real estate companies in the Sub-Saharan Africa in terms of property base.

It owns nearly 20,000 housing and commercial rental units located in almost all of the major urban areas of Tanzania Mainland.

My first duty in office was to determine NHC’s new strategic direction.

In this respect, we managed to evolve the strategic plan for the 2010/2011- 2014/2015 period.

This strategy revolved around six key goals, which we have decided to retain as pillars for the Corporation’s course for the coming 10 years i.e. during the 2015/16-2024/25 period.

Under the first goal, we aim at turning around NHC into a main real estate developer in Africa.

The second goal is focused on making NHC a leading real estate management firm.

The third goal is aimed at improving the corporate operational efficiency.

The fourth goal is people/employees centred in terms of developing both their competencies and wellbeing.

The fifth goal is directed towards creating a conducive legal environment for smooth corporate operations.

Under the sixth goal, we nurture our brand for both our products and services.

The first three goals I have mentioned are particularly important for us.

First, bearing in mind the mandate of alleviating housing poverty in the country that was bestowed upon NHC immediately after independence in 1962 and our current balance sheet muscle, we are dutiful to meet both the Government and public expectations of effectively responding to the housing demand and thereby reducing the housing shortage.

It is through this noble responsibility that we have assumed a lead role in the growth of the real estate sector in the country.

In the context of the foregoing role, we want to become the leading and mostly preferred real estate developer.

Against this backdrop, we are aiming at delivering more units in the real estate market place of Tanzania.

The said units include, residential houses, shopping malls, offices, and retail shops.

Secondly, we are enroute towards becoming a leading real estate manager in the East African region.

As I said earlier, we own nearly 20,000 residential and commercial units and we have clear future goals on these properties.

For long, these properties lacked proper maintenance. The rent rates charged were indeed far below market rates and thus generated inadequate revenues to the detriment of property upkeep.

The security of tenure for a good number of these properties was ambiguous.

Our objective in this regard, is to redress these maladies and enable NHC to earn an adequate return on its properties.

Thirdly, we are devoting our considerable efforts on enhancing the corporate operational efficiency and internal control mechanisms.

As the scope of our products and services countrywide is enlarging, it is increasingly becoming imperative that we need to put in place better controls that are in tandem with the increasing portfolio size.

Having good controls in place, ensures that our products and services are promptly delivered; mischievous behaviour are eradicated; right qualities are maintained through best local professional skills; and ultimately costs are minimise and affordable prices are achieved.

As you know, delivery systems involve people. With people, there are always risks of varying magnitude that can easily kill businesses.

It is therefore no wonder that, at NHC we are putting much attention on the control measures so that we can run our systems as effectively and efficiently as possible.

TI: What are you doing on the financing side to promote access to housing to Tanzanians? To which extent are financial institutions operating in Tanzania lending to individual to buy houses?

NM: Unfortunately and for long, in Tanzania banks have been shy on offering mortgage loans.

However, with the enactment of the Mortgage Law in 2008 and the establishment of the Tanzania Mortgage Refinancing Company (TMRC) in 2010, banks have started to be forthcoming with mortgage lending.

Public awareness on mortgage has also helped to increase the number of clients seeking for mortgage loans.

Nevertheless, mortgage business though fast growing, is still nascent.

For example, by the end of 2014, the ratio of outstanding mortgage debt to Gross Domestic Product (GDP) stood at 0.46%.

The present mortgage market dynamics have motivated NHC into signing memorandum of understandings (MoUs) with 16 local banks for the purpose of providing mortgage loans to buyers of its properties.

Under these MoUs, our property buyers are guaranteed favorable terms and conditions that include relatively lower interest rates.

The fact that NHC is committed on repurchasing properties of defaulting buyers, affords mortgage banks an extra comfort to ease lending terms.

Besides the foregoing initiative, we also devote time to understand the buyers’ banking requirements.

We have thus opened a banks’ window at NHC which is dedicated to enlightening clients on banking and mortgage issues.

TI: Another of your key issues for NHC is branding. Why is it so important?

NM: After assuming my duties at NHC in 2010, apparently the Corporation had donned a bad image among the public.

It was perceived by many as an inefficient institution that doesn’t care for its clients.

Among my top priorities, was to turn around this negative image and making NHC into a trustworthy institution.

This is why throughout the past five years we have embarked on the rebrand of the corporate products, services and culture.

It is axiomatic that the stronger the brand, the more the people who trust in your products. Equally, important clients always want to be associated with strong brands.

It is exhaling that today people have trust in us and regard NHC as one of the top performers among the government institutions.

Over the spell of five years, the public compares us with other efficient private sector companies.

Equally, clients have confidence in NHC’s products as a result of our strong brand and goodwill.

Importantly, most clients are willing and ready to buy our products off the plan.

To me, in today’s business life, developing a strong brand is more important than during the times we were undertaking the corporate reforms.

It is therefore compelling to become more sensitive and cautious on the brand in the present competitive business environment.

This is why we are always keeping ourselves abreast with the market dynamics so that we can maintain a positive perception of our brand.

Today we are boasting of the realities of the new NHC as well as the ability to deliver good quality products and services, on time and at affordable prices.

Besides, respectable brands with high reputation also win the trust of funders. It needn’t to be overemphasized that, investors will not put their capital in an institution which is shaky, weak, unrespectable and untrustworthy.

In today’s business life, without a good reputation, credible partners wouldn’t like to associate with you,

TI: Talking of investment, why invest in real estate in Tanzania and why with NHC?

NM: Tanzania has a housing deficit of around 3 million units which is growing at the rate of about 200,000 units per annum.

NHC is mandated with the role of providing housing and other buildings including shop and office spaces to general public.

Like in many other countries, investing in real estate business in Tanzania guarantees one of a fair return on investment.

We are optimistic that we will be able to deliver not less than 1,500 units per annum for the coming 10 years.

This is a small number given the acute shortage of housing facing the country. Nevertheless, I believe that this is fairly a good start.

With regards to financing mechanism, our catch differs across projects. We have adequate financial resources for some of our projects.

We also borrow to finance other projects. In some other projects we encourage developers to participate as either partners or sole investors.

Under the later mode of financing we normally sell plots of land to such investors and enforce building standards. That is, we assume the role of a master developer.

It is also noteworthy that, NHC is proactive when seeking for partners to finance its real estate ventures. These partners include both local and international investors.

While seeking for partnership, NHC also endeavours to play the role of a gateway for investing in real estate in the country.

On the other hand, NHC being a wholly public institution, has an advantage of being in direct relationship with the government.

In other words, our efforts to propel the real estate industry to greater heights, have won the trust of the government. In this position, NHC can play an active role in shaping policies related to real estate sector development.

It is in this regard that, for an investor being in partnership with the NHC, helps to resolve concerns relating to investing in real estate in Tanzania.

TI: Is there a specific profile of investors you are looking at?

NM: Yes, for foreign investors we have a capital threshold of USD 30 million.

However, we are also open on this angle. Apart from capital, we also seek for skills, experience and other resources that can be exploited in our business undertakings and partnerships for mutual benefit.

We really want to make use of the experiences of our partners. In this endeavour, we do not sit on the sidelines but we take an active role to learn new technical issues from these partners.

TI: Is there any specific project for which you were urgently looking for investors?

NM: Yes, we are looking for investors for the Kawe satellite town project which is locate in a prime area of Kinondoni District in Dar es Salaam City.

In this area, we are developing a new commercial business district (CBD).

We have started developing this project since November, 2014. I have no doubt that for the coming 7 to 10 years, Kawe area will be bustling with businesses ranging from shopping malls, offices, high class residential, hotels and recreational facilities.

We are inviting partners to come in. We are flexible on what these partners can contribute as well. We consider each of investment options on its own merits.

Kawe Satelite city project, in the Kinondoni district of the Dar es Salaam Region, will include shopping malls, schools, hospitals and sports facilities

Besides the Kawe satellite town project, we also have two similar projects in Arusha in north-western Tanzania. Arusha is a gateway to Tanzania’s famous national parks that attract tourists from all over the world.

At completion, these projects that are located in Burka and Usa River areas, will provide some 2 million square meters of properties that include, inter alia, trade centres, shopping malls and residential properties.

TI: Prior to joining NHC you were the MD & CEO of the Commercial Bank of Africa Tanzania, [at that time the youngest CEO within the banking sector in East Africa] and have a long experience in the private sector in the country. How do you see Tanzania few years form now? What would be your piece of advise to investors looking at Tanzania?

NM: I foresee a very, very bright future for this country. Now we have a new Government that is committed to preserving the political stability and conducive investment environment that have prevailed all along.

I firmly believe that, today’s political constituency will set a new platform for what the country is hitherto to be.

I am wishing that there will be more big investments flowing in apart from those going to the natural gas industry. I mean, not just investments related natural resources like gas or minerals.

There are many other investment opportunities which have bigger positive socio-economic impact as well as the wellbeing of our citizenry.

The real estate industry in Tanzanian has the potential of generating USD 2 billion each year. This is more than 6% of the country’s GDP.

As you may be aware, this industry has the greatest multiplier effect on other economic sectors. It impacts on almost all industries.

Besides, it employs professional and non-professional skills, that is, be it the educated or the non-educated labour force.

Presently, NHC has about USD 400 million worth of ongoing projects in real estate. In my opinion, this will reach USD 800 million during the coming five years.

Finally, I am strongly convinced that Tanzania is one of the most attractive countries to invest in.

Though the country’s infrastructural capacities are not as developed as those of the developed world, foreign investors coming to Tanzania will find the country a passionate place.

In view of this, they need to listen to local counterparts, understand them and understand the country’s laws and policies.

Tanzania is endowed with a spectrum of investment opportunities and good people. These endowments are complemented by investment friendly policies.

TanzaniaInvest interviewed Mr. Joseph Sheffu, Country Managing Partner of EY Tanzania, a global leader in assurance, tax, transactions and advisory services.

Sheffu discuss the state of the Tanzanian economy, the tax and investment framework and opportunities, with a particular emphasis on the booking real estate market of Dar Es Salaam.

TanzaniaInvest: In 2014, EY published its Africa Attractiveness Survey and once again we see that Tanzania is among the top FDI destinations after South Africa, with Kenya, Ghana, Mozambique, Uganda and Zambia.

However in 2015 we have seen that the recent fall in commodities prices has negatively impacted some of these economies on their trade revenues and inflation rate, mostly Zambia.

How do see impacting Tanzania and its positioning among the best spots for investment in Africa?

Joseph Sheffu: Tanzania is still among the leading frontiers for investment in Africa.

One of the reasons is the fact that the GDP growth is still around 7% and that has been consistent.

I think this particular point gives confidence to investors, in terms of the general state of the economy and the investment opportunities.

Of course Tanzania is not protected from fall in commodities and inflation.

We saw the inflation almost going to double digits in the past and the government tried hard to contain it and brought it down to around 4-5%.

But again, pressure on the domestic spending and also the performance of the Tanzanian Shilling has undermined the growth.

So those are the risks that exist but intervention by the government has helped, otherwise, it would have been much worse, given the conditions of the commodities and the price of crude oil.

There are challenges that put pressure on public spending, which also undermined economic growth.

Scaled down into the area of exploration, there is investor’s perception that the government is not putting enough focus on the area of mining, so there has been declining investment in the mining sector, as the government appears to favour oil and gas exploration.

We understand the next big phase in investments will be into commercialization of newfound gas reserves that will create a huge economic activity.

The question is whether the country is prepared to absorb those types of economic effects.

There’s going to be a lot of infrastructural development in support of commercialization of gas, in terms of the construction activities in putting up infrastructure.

This will absorb some workforce, but also financial flows.

Understandably, materials for infrastructure have to be imported so, there will be a lot of spending in forex, putting pressure on our currency.

But the problem will be compensated by the foreign investment that’s coming in.

We will not see the revenue for the gas coming in at least in the next decade, but there will also be an increase in tax revenue related activities in terms of transportation and infrastructure in preparation of development of the port, pipelines, security activity around pipelines and community development activities.

TI: Which are other hot sectors to invest in Tanzania at the moment?

JS: Real estate is another area that is booming, but we also need to balance with promoting investment in middle-class housing, which is very critical for the economy.

Housing is important in terms of affordability, creating the consumer society which is the middle-income citizens and those will stimulate growth in multiple sectors and consumption through value.

There has been under-investment in the real estate in the country whereby, access to finance was a big issue as it expensive to actually borrow money to build a house.

Banks were reluctant to lend long-term, as the government was borrowing at better rates.

So banks would rather lend money to the government, because, they were floating bonds, treasury bills, and bonds with much more competitive rates.

So, at some point, banks had over 50% of the deposit in treasury bills and bonds rather than giving lending out to the private sector.

As a result no one could actually think about taking of a mortgage, so there has been no mortgage products in the country.

Also there was no clarity in the past with regards to how to secure a lease or a loan.

The government later clarified its legislation such that banks can now accept leasehold certificates as collateral; which is an improvement.

But the interest rates are still a challenge.

TI: So how interesting is to develop real estate in Tanzania now?

JS: The rates in Tanzania for lease and sale of land are actually higher in Tanzania compared to the rest of the region.

For example, in Kenya, the rates per square meter are much cheaper compared to Tanzania.

My personal belief that at present they are not market rates and in the medium terms, the rates that are being offered will level down.

There are several habitable apartments, which however have been locked out for many years by owners because the owners could not actually secure their desired rents however hiked.

So, they lock them up rather than offering them at lower rents in order to avoid maintenance costs. But more and more properties are being developed.

TI: Do you think Tanzania is experiencing a real estate bubble?

JS: We need the economic activity that will support the rate of increase in real estate. But at present, it could be a bubble.

We see banks being concerned. It may become risky for the financial sector – those providing loans on speculative real estate projects.

When you analyse yearly financial reports of banks, the larger percentage of non-performing loans can be related to infrastructure.

So, it is an area that needs to be looked at to be prudent in these particular types of investments.

Some banks are now issuing loans for real estate projects on the speculation that the developer will secure tenants at the end of the day.

They want developer to already have signed up tenants before they can actually consider lending money, and they also want to see large sum of deposit upfront, so the risk is spread between the owner and the bank.

TI: The new government in place is focusing on reducing public spending and increasing tax compliance. Do you expect the increase in tax revenues able to compensate for the reduction in public spending?

JS: The government has been pretty prudent so far, because the rate of public debts is increasing, well beyond the public terms in terms of percentage of GDP.

So, the government has got the responsibility to make efforts to cut down.

I think the question around taxes is with regards to being able to capture all sources of revenue and plugging the holes on revenue leakages.

I think that area itself without say, revising tax rates, will be sufficient to get everybody into the tax framework. Preventing leakages of those revenues is most important.

Then we should see much better government revenues commensurate with the size of the economy and economic activities in the country.

That’s one way of managing public spending and ensures that the funds are used to meet government spending, as the government has to resolve issues around areas of payment of supplies, which has really piled up.

I think the solution is private sector participation; catapulting itself into growth and new industries set up.

For this the government can set up partnership with the private sector to deliver those goods and services to the public, charging some reasonable returns.

TI: But don’t you think as you are reducing public spending from one side, you should stimulate private sector business activity?

JS: Yes and that is an area the government has to look at.

For example, in the issue of ease of doing business, Tanzania has been performing really badly in the last two years.

It’s pretty sad that at some point we were actually going up in terms of removing the bottlenecks and then we made a reverse and put on so many bottlenecks.

Nowadays, you can’t renew your business clearance unless you get tax clearance certificates; which in my personal opinion is a regression. So what comes first? Pay tax first and do business later or do business now to make money to pay tax?

So, these so called “nuisance taxes “need to be removed; all barriers to do business must be removed and allow business to grow.

This will in turn create revenue to the government: it will result in more businesses being set up, more employment, easing pressure on the government on the spending on the public goods and services.

TI: Do you think corporate tax rate at 30%, VAT at 20% and a number of withholding taxes, are adequate?

JS: I think the current tax rates are pretty fair.

The 30% corporate tax rate is fairly within the average of Sub-Saharan Africa.

The VAT rate is probably on the high-side with other countries in the regions at 18-19%.

TI: Tanzania is the only country to be simultaneously member of the East African Community (EAC) and the Southern African Development Community (SADC). How is the country leveraging in this?

JS: looking at its strategic position, Tanzania is and trying to balance between trades with Southern and Eastern Africa.

Tanzania is finding itself in the middle of it, and it’s friendly with both the South and with the East.

Tanzania at present is actually geared very well to grow much faster in its relationship with East Africa, who is the natural partner to Tanzania.

Particularly there is a natural connection between Tanzania and Kenya, East Africa’s largest economy, with almost similar culture and demographics.

Supply and demands are pretty mixed up in those two economies.

Kenyan products very easily reach Tanzanian retailers and consumers; similarly, agricultural produces also find their way from Tanzania to Kenya.

So, it’s a pretty natural relationship between the two countries.

TI: What are Tanzania’s competitive advantages in welcoming investments compared to Kenya?

JS: When you look at the advantages of Tanzania, it lays mostly on its natural resources, with plenty of unexploited opportunities in terms of greenfields.

Having a port means also means the ability to export easily.

Certainly, there are challenges with infrastructure but Tanzania is also a good entry point: it gives you access to Kenya, Uganda and Rwanda through the common trade tariffs.

At present, Tanzania is really friendly in terms of foreign exchange with market driven rates and externalization of foreign is controlled but pretty liberal.

Tanzania has got a higher population compared to Kenya so consumer base is much larger here.

In terms of purchasing power, Kenyans has got bigger purchasing power compared to Tanzanians, so with low level consumer products, investors could make more money out of Tanzania compared to Kenya.

There is also a limited diversity of products in Tanzania so opportunities exist in bringing in new variety of products that are not in the market at present.

TI: Isn’t there the risk of Tanzania being a consumption economy, with no value addition generated here?

JS: Tanzania didn’t fully utilized opportunities like the AGOA with only two or three companies from Asia setting up base in Tanzania to make use of the Tanzanians position in the AGOA.

But Tanzania is endowed with about 1,400 kilometers of cost lines and this give access to the sea and channels of export to Western markets.

So it actually creates a very good environment for export processing.

Tanzania needs to look at those opportunities to create export processes in partnership with China or other Asian countries.

We have a lot of arable land, water sources and yet we don’t have commercial farming.

That is one way to ensure that Tanzania doesn’t become a consumption economy; rather you also add value to the country and generate trading employment.

For this, adequate infrastructure and energy are key and hence they represent among the most interesting investment opportunities in Tanzania.

TI: What would be your piece of adviser to investors looking at Africa and at Tanzania?

JS: Our Africa Attractiveness Report identified a negative perception with regards to Africa and Tanzania in terms of corruption and poor infrastructure.

So, people who are outside of Africa are kind of scared to come and invest in Africa.

But when you look at investors who have eventually invested in here, they are pretty upbeat and they see a lot of opportunities.

Western companies who are investing in Africa are saying “we are here to stay, and it’s the right place to be.”

So there’s a disconnect; it’s an issue about the branding of Africa.

Yet, Africa is not one country: It’s over fifty countries and each country has got different regimes.

Each country in Africa is unique, so you have to really understand each country’s uniqueness, laws and regulations.

Secondly, Africa wants participation.

One of the challenges of the investor is the pre-conceived idea that you fly in, invest money and fly out.

Africa required investors who are willing to invest long-term, as short-term can be pretty challenging.

Investors could really build a profitable business by using those local talents and build capacity: they have to spend a little bit more in terms of developing people, as they won’t get ready-made people especially in skilled positions.

But otherwise, the rate of returns on investment tends to be much higher than anywhere else.

TanzaniaInvest had the pleasure on interviewing Fred Msemwa, Chief Executive Officer of the Watumishi Housing Company (WHC), a government-owned property developer and a licensed fund manager established in 2013, responsible for management of the WHC Real Estate Investment Trust (WHC-REIT).

WHC-REIT was licensed by the Capital Market and Security Authority (CMSA) in 2015 and became the first fully-fledged REIT to be established in Tanzania and East Africa.

As a property developer, WHC-REIT is the main implementer of the Tanzania Public Servant Housing Scheme tasked with building of 50,000 housing units in five phases commencing from FY 2014/2015.

Unit holders of WHC-REIT include seven public institutions namely; PPF Pensions Funds, National Social Security Fund (NSSF), Public Service Pension Fund (PSPF), LAPF Pensions Fund and GEPF Pension Fund, the National Health Insurance Fund (NHIF) and National Housing Corporation (NHC).

Msemwa and TanzaniaInvest discuss WHC’s ambitions, the current state of the mortgage markets in Tanzania and the upcoming real estate projects open for investments.

TanzaniaInvest: Watumishi Housing Company (WHC) was established by the government of Tanzania in 2013 as a real estate developer. Why such need when there are already other government-owned property developers like the National Housing Corporation (NHC) and the Tanzania Building Agency (TBA)?

Fred Msemwa: Watumishi Housing Company is a public entity which was established in 2013 to perform three key functions: provide affordable homes for the general public, to be a real estate fund management company and provide education to the general public, on how to access funds using mortgages.

Affordability and the market segment we address are what differentiate Watumishi Housing Company from the rest of Tanzanian real estate developers.

In the context of the income levels of the people of this country, particularly the working class, and if you go further, the public servants, affordability in this context would mean houses with prices ranging from USD 10,000 to USD 40,000, with the majority of the prospective buyers fitting in USD 20,000.

Clearly, WHC differentiates itself from the rest of developers because we are focusing on that lower segment which, in terms of units needed, is the biggest segment.

Specifically, WHC was tasked to implement the Public Servant Housing Scheme first, because it was not easy to start with the entire market, given the fact that the mortgage Industry is in its infancy in Tanzania.

The lessons that we pick from what we are doing now for public servant can be replicated by other developers who can take our model and apply it in the rest of the market.

Our second function is to be a Fund Management Company.
Developing properties requires a lot of money; and sometimes, you have to have the capacity to raise money in other to finance your projects.

WHC fund was established as a special purpose vehicle that operates as a Real Estate Investment Trust.

That legal arrangement allows it to raise money from small investors who can pull up their resources.

Such resources can be then used to build homes, homes can be sold, and then we reinvest revenues to building new homes.

WHC’s third function is relating to the other two functions, as we are also tasked to undertake public awareness – providing education to the general public, particularly public servants, in terms of how they can acquire or access funds using mortgages.

This is a new concept in Tanzania and the people need to be taught on how they can acquire homes through mortgage and not build on their own.

The practice now is that more than 95% of the people are building houses on their own, on incremental basis from their personal savings.

They build slowly and it can take 3-15 years to do so, and that is more costly to the economy and to the people themselves.

So, if they are able to get mortgage, they can shorten the time at which they can live in decent houses.

At the same time, that can formalize the sector in a manner than can increase the contribution of real estate in the national economy.

So it’s a matter of using a language that people can understand, and that’s what we are doing.

We have started a public awareness campaign and the initiative that we are doing is to impart people with basic financial skills to understand basic terms as far as mortgage is concerned.

TI: What is the current mortgage market like in Tanzania? Is it easy to access loans to buy houses?

FM: Mortgage finance are expensive in Tanzania. The biggest challenge that faces prospective homebuyers is the cost of finance or the rate at which they can borrow.

If you look at the market, the average mortgage’s interest rate in Tanzania is 16% to 20%+.

If you get a mortgage at a rate which is above 10%, it’s not the best in terms of the cost that you have to pay, given the salary levels of the people who are borrowing the homes and the duration that you have to service the loan.

So, we think that loan’s high interest rate is the single most hindrance to expanding the mortgage market.

If this issue is addressed, there will be no limit because homes can be bought easily.

The demand for homes in Tanzania is more than 3 million units.

TI: What is WHC doing to address the high interest rate of mortgages in Tanzania?

FM: We are focusing on how to put an affordable home loan arrangement, where people can be able to buy or borrow at interest rates that do not pose any financial burden to them.

Currently, unit holders of Watumishi Housing Company enjoy better mortgage rates with banks, lower than the market average, because WHC guarantees for them. In case of anything bad happening, we would take care of the loss.

Unfortunately, even the negotiated interest rate is not low enough to attain the level of affordability that we need: we have managed to secure mortgages at 14%-16% but we aim at 10%.

TI: How many affordable units you have developed so far and how many you do you aim at in the nearby future?

FM: This is WHC’s first year of operations. We started in 2014-15.

Most of the work that we had to do was to acquire land to start to construct homes.

So, most of the work that we did for the first 8 months was preparatory work.

This is the actual year [2016] that we have rolled out the first projects, with a plan to build 1,000 houses.

As we speak, we have 800 units under construction but we have received more than 1,500 applications.

In terms of future plans, we have a 5-phase plan which requires us to deliver 50,000 units.

TI: What are WHC current housing projects open for investment?

FM: We have a satellite city coming up at Kibaha, just 30 kilometres from Dar Es Salaam. With 1,000 homes, which is a customer base of 5,000 people.

Another planned city will be developed in USA-River in Arusha where we will undertake mix-used development comprising of homes for the low end income earner as well as other social amenities.

These represent opportunities for investors who can put up commercial and retail space or banks.

TI: WHC has its own Real Estate Investment Trust (REIT). Who can invest in it?

FM: Because the REIT concept is new in Eastern and Central Africa, we had to have a base on which people can then learn that this can work before we open it to investors.

Initially, we started with WHC shareholders [Tanzania’s government pension funds], who bought units for the first time.

That means WHC-REIT is a closed fund, in a manner that the general public cannot access these units.

But the closure will last for only 3 years, and we are now in the second year.

So in one year from now WHC-REIT units will be offloaded at the Dar Es Salaam Stock Exchange (DSE), when the general public will be able to buy and sell units.

From that point on, it would be easier to expand the capital base and even foreign investors will be able to take part in this lucrative business.

TI: What would you say to foreign investors that are interested in real estate in Tanzania but still have a perception of Africa being a risky region?

FM: Investors should know that Africa is not one country. Africa has more than 50 countries and each country has got its aspects that you may wish to understand in terms of political and economic risk, which is different from one country to another.

There are countries in Africa that are stable, where people prefer to invest.

Tanzania is one of the countries which has registered political stability for over fifty years, and a number of indicators show that we are on the right track in terms of economic growth.

If you look at Tanzania’s demographic, it shows a promising future with a demand for homes which is close to 3 million.

That demand cannot be satisfied by public entities alone like WHC. This is the job of everybody.

So, the doors are open for other developers to come, and the rewards are guaranteed because of the political stability Tanzania enjoys.

TanzaniaInvest had the pleasure of interviewing Israel Kamuzora, Commissioner General of the Tanzania Insurance Regulatory Authority (TIRA), in charge with coordinating policy and other matters relating to insurance in Tanzania.

Kamuzora explains TIRAs current performances and the investment opportunities available in Tanzania’s insurance sector.

TanzaniaInvest: The Tanzanian insurance market grew by 17% in gross premium returns in 2015, reaching more than TZS 650 billion. What are the projections for 2016? How consistent is such growth?

Israel Kamuzora: We have maintained a growth of between 18% and 20% in the last few years and for 2016 we are expecting a growth of 18%.

The one thing that actually makes our industry to grow is GDP growth, which has been on an average 7% annually in Tanzania.

These growing economic activities attract a demand for insurance, and that is why our industry has been growing so strongly.

As companies have opened up offices upcountry, more brokers have been coming in the market, and more agents.

Combining all those factors, that’s why we have maintained a growth of around 20% each year.

TI: It seems however that insurance penetration remains very limited at around 0.7% of the GDP. What is hindering the penetration of insurance in Tanzania?

IK: Yes, insurance penetration has remained more or less at the same level since the Gross Domestic Product (GDP) which is the base upon which you divide your gross premiums, has been expanding.

In 2016 however insurance penetration it is projected to be 0.9%.

What is hindering the penetration of insurance in Tanzania is mainly, the uptake of insurance hasn’t been something that people are rushing to.

And for insurance to be bought, insurance has to be sold. So, our sales force is something that we are looking at.

Also, the draft National Insurance Policy includes the introduction of the so-called bancassurance model.

So, when banks will be able to sell insurance, this will increase the penetration ratio, because banks access people that have already made use of financial services as they are using the bank system to be able to transact businesses.

So, once the policy is adopted, which I am sure will be this year [2016], the banks would sell insurance in Tanzania.

Another thing that we think will increase the penetration ratio, are the gas exploration activities in the next one or two years.

More companies are currently going into upstream, downstream and midstream activities.

This will also attract insurance coverage and all give us more premiums.

For this we are insisting that local companies will be insuring the risks and reinsuring at the same time.

The national insurance policy also contains quite a number of compulsory coverages.

Also, the policy will make the government to insure. The government has assets, and some are highly valuable but are not insured.

So, the policy will make these assets to be insured, and that will give us premiums.

Once it is adopted, the Policy is going to change the way that we have been doing insurance in this country and it will increase the demand.

TI: Do you also expect even more players to enter the market, with 30 insurance companies and 112 insurance brokers currently operating in Tanzania?

IK: Yes. From the fact that our economy is growing at that higher rate compared to other sub-Saharan economies, and yet the penetration ratio is less than 1%, that tells you that there is still potential of insurance business in this country.

So, we are very optimistic about the market seeing more companies wanting to come and do business.

As we are talking, we have companies who are having their licenses being finalized. So, definitely more companies are coming.

TI: How do you ensure that there is also uplift on local insurance companies?

IK: We are going to raise the required paid-up capital for insurance companies, from the minimum threshold of 3 million dollars. The aim is to double that.

Some companies have complied, some not yet. So, we can expect some mergers and takeovers in the next one or two years.

TI: Apart from life insurance that represents about 20% of the overall gross premium, which other niche segments hold the greater potential for growth?

IK: Medical insurance, which was not common in this country, has now become one of the major areas where we are making new business.

People have now learnt to insure against their health risks and they have taken policies.

This tells you that medical insurance is now becoming a new market area where insurers wish to venture into.

Micro insurance is another area that we are looking at.

We have about 2 million people who are already buying micro insurance products and the good news is that the micro insurance players have teamed up with mobile network operators.

So, people can now buy their policies online by using their mobile phones, and claims are paid using mobile phones.

TI: Other sub-Saharan markets offer opportunities in growing insurance sectors. Why invest in Tanzania?

IK: Tanzania, in terms of demographics, has volume.

If you are a life insurance investor, Tanzania makes a lot of sense because we are 50 million people as compared to our neighbours some with only 20 million people.

Secondly, if you look at the developments in Tanzania with agriculture, energy, infrastructure, the extractive industry, all these are projects that are here to stay for a while.

If you are a general insurance company or broker, you are assured of business as long as you have experience, that brand name and the right Underwriters who can come in, look around and get the business for you.

Thirdly, it is the East African community factor whereby you can make Tanzania your platform and reach out to Kenya, Uganda, Burundi, and Rwanda.

VThe East African community is becoming a single economic zone, and a single market to do business, and we are about to finalize the regulations to harmonize insurance across the region.

I think, all these are factors that can attract anyone who wants to come and do insurance business in Tanzania.

To learn more about insurance in Tanzania, read our FREE Insurance Sector Report.

TanzaniaInvest had the pleasure of interviewing Tusekile Kibonde, Resident Underwriter for Tanzania at the African Trade Insurance Agency (ATI). Ms Kibonde discusses ATI’s current performance and development strategies, as well as the investment opportunities available in Tanzania.

The African Trade Insurance Agency (ATI) is Africa’s export credit agency, providing political risk and trade credit risk insurance products with the objective of reducing the business risk and cost of doing business in Africa.

The company’s main goal is to help increase investments into its African member countries and two-way trade flows between Africa and the world.

ATI was formed in 2001. It is owned by African countries; this makes ATI a multilateral institution.

ATI currently operate in Benin, Burundi, Democratic Republic of Congo, Kenya, Madagascar, Malawi, Rwanda, Tanzania, Uganda and Zambia. Ethiopia, Ivory Coast and Zimbabwe are at an advanced stage of completing their membership into ATI.

TanzaniaInvest: What is the rationale behind establishing ATI? Why do you cover the countries you cover?

Tusekile Kibonde (TK): In 2001, the World Bank with the support of COMESA conducted a study, which indicated that foreign investors perceived Africa to be a risky continent.

ATI was then established to cover the risks to investors. Here we help our member countries, such as Tanzania, to attract investors.

We protect their investments against any unfair action by any of our African member governments.

The other objective is to boost trade between countries.

Developed countries have national institutions that serve the same function as ATI.

The size of most African economies however, was seen as too small to justify the formation of individual companies. So, ATI was created to fill this role for all African countries.

At the time of inception, there were 7 founding member countries in ATI, including Tanzania.

More countries eventually joined including the latest newcomers that are in the process of joining by the end of this year [2016].

ATI will potentially be able to operate in 13 African countries.

TI: What have been ATI’s achievements so far at group level and in Tanzania?

TK: ATI has been growing over the past years in both business volumes and reputation.

Since 2008, we have been an A-rated institution by Standard and Poor’s (S&P).

This is significant because our investment-grade rating is higher than that of our member countries, which enables us to step in and provide security on their transactions in place of their government guarantees.

In the past 5 years we went from a loss making to a profitable position.

In 2014 we posted US$ 3.5 million in profits representing a 120% increase over 2013.

For 2015, we are expecting to post a 27% increase in profits.

This growth signals that our products are becoming better understood and known in the market, where the uptake is coming from local and international companies and investors.

Our products are in demand. Prospective member countries are seeing the value of our presence which is reflected in the increased level of interest from new countries.

Our visibility is also picking up across Africa and internationally. We have developed a reputation with international markets as a trusted partner.

This has helped to bring financial support to many projects.

In Tanzania, ATI has been an instrumental partner in helping to unlock the flow of financing for private companies and for state-run agencies in some key sectors. These include energy, telecommunication, financial services etc.

We help financial institutions lend safely to more customers by protecting them against payment default risks from their borrowers.

This same cover has also been applied to companies that wish to expand their business into new markets or wish to purchase goods or services for their companies.

In Tanzania, we have facilitated more than US$2 billion worth of investment and trading activities into the country in the past 5 years.

We continued to support our Governments by offering an alternative solution to guarantees.

This support has helped member Governments relieve the state debt burden, freeing up financing for infrastructure and power projects within ATI’s markets.

TI: Whom do you compete with?

TK: It’s important to understand that this business is not really about competition.

It’s really based on partnerships because typically it helps to spread the risk, particularly on large transactions.

In the case of ATI, we add value to our partners due to our existing relationships with member governments. This helps in case any claims arise.

We can often fall back on this relationship to find an amicable solution. For our partners this is an invaluable asset.

TI: What is your relation with banks that provide trade credit and trade finance?

TK: Banks represent over 70% of our client base. They come to us for backup so they can lend safely to more customers.

ATI does this by offering banks protection against payment default risks from their borrowers.

Small companies have benefited from this cover. They often find it difficult to access bank financing because they are seen as a high risk.

ATI has developed a number of products to make it easier for banks to finance these prospective clients.

We work a lot with financial institutions because they provide an effective channel for us to reach more companies with our products.

In order for us to issue cover, we need to analyse the entire transaction as well as the client we want to take a risk on and be comfortable with the risk we want to take.

In this area, we have seen our visibility rapidly expand in Tanzania.

At this point, even some of the banks’ clients will introduce our products to the banks themselves.

We have seen a number of deals brought to us due to reference by others who have used our products before.

TI: What makes you stand apart from other insurance companies?

TK: We do not fall in the same category as other insurance companies. Our mandate is much broader.

We are here to partner with investors, companies and the government themselves to help bring in more investments and improve the business environment.

Tanzania is a founding member precisely for this reason.

For local insurers, we provide added capacity and help them diversify their business.

We are a trusted partner for many, including insurers.

In many of our member countries we have increased the insurance industry’s ability to adequately insure against political violence, terrorism & sabotage, and also for bond products.

So, I suppose, we are unique in this aspect because we do not compete with domestic insurance companies.

TI: Brokers have a leading role in generating business for insurances companies in Tanzania. What is your relation with brokers?

TK: Historically, brokers have found it difficult to understand and to refer our products successfully, mainly because our products are specialised.

This is changing. We are now seeing more business generated from brokers, particularly international brokers.

We have a program to encourage brokers to partner with us. They can become registered brokers for ATI so that they are better remunerated for bringing business to us.

To become a registered broker for ATI, they must provide details including a copy of their business registration, a company profile and their audited financial statements for at least the past 3 years.

We can also register newly set-up brokerage companies. Once submitted, we assess the documents and if approved, we issue a letter confirming the broker’s registration status.

All ATI registered brokers appear on our website. This visibility acts as a marketing tool for brokers because inclusion as an ATI broker means they have been vetted by an A rated international company.

Brokers also benefit by receiving a fee for referring business that is translated into an actual policy.

As an ATI registered broker, you can go out in the market and educate your client about our products. I’m willing to support them in providing information to their clients.

So, whenever there is a potential client, brokers in Tanzania are free to set up a meeting with me to help them understand our products.

In Tanzania, we have a number of brokers who are very active in introducing our products to their portfolio of clients.

As a result of bringing business to us, they have benefitted from this programme.

TI: And which relation do you have with insurance companies?

TK: ATI enhances the capacity of local insurance companies. Specifically, we help insurers issue to their clients, political violence, terrorism & sabotage cover and also bond products.

Typically, most local insurers do not have the capacity to be able to provide this cover.

An agreement with ATI, allows insurers to enhance their capacity and, as a result, their ability to issue a facility to their client.

For example, a local insurance company may have capacity to issue a bond facility of up to say US$2 million.

If they receive an enquiry for say US$7 million, this becomes a challenge.

Their option will be to team up with a number of other insurance companies and come up with the total facility of US$7 million.

This may take longer or may force their client to source other options such as banks.

Partnering with ATI means, upon a successful review of the proposed transaction, we are able to offer a facility for the entire balance.

ATI helps insurers reduce documentation, retain clients on their books and to offer a facility without the client ever knowing that ATI has provided the extra support.

TI: To conclude, if there was one thing you would like the prospective clients to understand about ATI, what would that be?

TK: ATI’s products cover key sectors such as energy, manufacturing, telecommunications, financial services, construction and transportation, just to mention a few.

Our products are here to serve both corporates and SMEs. And we are also here to serve the government’s needs.

In fact, for some projects such as infrastructure and power, our products are used as an alternative to sovereign guarantees.

To access our services and products, one leg of a transaction should be within a member state.

For example, let’s take a Tanzanian tea exporter that wants to explore a new international market. The Tanzanian tea exporter may hesitate to explore this new market because the credibility of their international buyer is unknown to them.

ATI’s credit insurance cover will help the Tanzanian exporter explore this new market with ease because the exporter can then pass on the credit risk to ATI.

These products are known in the developed world, where most payment terms are on credit.

We are here to help businesses grow and to explore international markets. In this way, we also help companies to compete on an equal footing with companies outside of Tanzania.

We are not here to change the viability of projects but we are here to strengthen the viability of projects.

TanzaniaInvest had the pleasure to interview Thomas Samkyi, Managing Director of the recently established Tanzania Agricultural Development Bank (TaDB), a state-owned development finance institution (DFI) established to delivery short, medium and long- term credit facilities for development of agriculture in Tanzania.

Mr. Samkyi discusses Tanzania’s agriculture potential and its socio-economic impact, and the opportunities available to partner with TADB.

TanzaniaInvest: What was the rational behind the establishment of Tanzania Agriculture Development Bank (TADB)?

Thomas Samkyi: The Tanzania Agricultural Development Bank (TADB) was established by the government of Tanzania, specifically to assist the government in implementing its policies and strategies relating to the agricultural sector.

In that regards, the bank has two main goals: to facilitate the attainment of food security and food self-sufficient in the country and to facilitate the transformation of Tanzania’s agriculture from smallholder’s subsistence production to commercial production.

Smallholder farmers are poor because they don’t have access to finance and knowledge to produce commercial goods.

TADB, as the farmer’s bank, aims to resolve the financing needs of rural poor agriculture producers, processors and marketers.

But as a development bank, we are meant to facilitate farmers not only through finance, but also through knowledge, so we are expected to play that catalyst role.

We also catalyse other players to bring effort together. At the moment, there are so many players in the agriculture sectors, everyone doing their things separately. Our approach is to partner with other entities that are assisting farmers.

We have found out that most of these entities do not have the skills to lend money to those farmers and to manage credit. So we have experts in financing but need their backing to understand the farmer’s situation and the market structure.

The idea is to combine efforts and re-forecast them, so that farmers can benefit from the intervention. We are going to coordinate these efforts, to get information from the players, identify their priorities, identify markets, identify financial needs and if there is any other shortfall, we finds out the best steps to address them.

So we are in partnership with the likes of Southern Agricultural Growth Corridor of Tanzania (SAGCOT) and the Big Results Now (BRN) initiative with whom we will work together to assists smallholder farmers.

But without a reliable market with a remunerate price, there cannot be a commercial production.

So the approach is to study the interval change of a particular commodity, the cost of production, the added value needed.

TI: Why is financing to farmers not commercially viable for private banks?

TS: Tanzanian farmers are scattered in different locations of the country, therefore, lending transactions are costly. But agriculture is a key industry because it involves around 80% of Tanzania’s working population.

We want the farmers to grow themselves without the intermediaries. We are looking for groups of farmers first, who own their own, individually, may not be able to access fund.

On the basis of that, we need substantial amount of capital, so the target is that the government has to commit itself to provide capital up to 800 million shillings.

TI: What kind of farming is the one that has the biggest potential to make commercial farming work?

TS: At the moment, it varies from one area of the country to another, depending on the climate, logistics (like transport and marketing logistics) and also the markets themselves.

But from the look of things, horticulture has a lot of potential: it is everywhere, it is high value production, but it requires knowledge, technology irrigation, and also most of the production is perishable, so we also make some suitable arrangements to manage the change.

In the first five years, we target to have worked with farmers involved with maize, cashew, sugarcane, sunflower, fish farming, vegetables, spices and the likes, those are the priorities at the moment.

TI: Do you think there is a way to make lending to agriculture commercial viable for private banks?

TS: Definitely yes. We have looked at countries like India and Thailand and their agriculture financing and they have been doing well.

For instance, India has a policy for lending to the agricultural sector, by which every commercial bank in the country is required to lend a certain percentage of funds to the agriculture sector. Today the largest lender to the agricultural sector in India is a privately owned bank.

TI: How can organizations involved in agriculture in Tanzania partner with TADB?

TS: There are two ways to partner with us. One way is to inject equity, because the establishment of TADB provides for minimum capital equity of 60%, so 40% of our share capital can be taken over by any entity that is development oriented.

The other way is to lend to us on soft terms, because we cannot lend and borrow on commercial basis while being able to lend to smallholder farmers.

TanzaniaInvest had the pleasure to interview Tonia Kandiero, Resident Representative in Tanzania of the African Development Bank (AfDB). Kandiero discusses AfDB’s past, present and future in Tanzania and the USD1.1 bn assistance package for Tanzania approved in 2016. 

ACHIEVEMENTS

AfDB CSP 2011-15 for Tanzania was articulated around two strategic pillars: (1) infrastructure development focusing on transport, agriculture, water and energy, and (2) governance with emphasis on the enabling institutional and business environment.

However the recently approved AfDB Country Strategy 2016-10 for Tanzania, indicate that despite the country sustained economic growth, it is still struggling in translating this into economic transformation, faster poverty reduction and improvement in the livelihoods of its population.

TanzaniaInvest: How would you describe the overall achievement in Tanzania of the AfDB CSP 2011-15?

Tonia Kandiero: The Bank recorded significant achievements in Tanzania during the CSP 2011-15 period, including: the upgrading of more than 777 km of road to bitumen standard and rehabilitation of more than 31,000 water points serving about 8.8 million people in rural areas; construction and rehabilitation of more than 50 market facilities; and the training of hundreds of microfinance borrowers, health workers, farmers’ facilitators and 11,000 farmer groups.

Other achievements consist of the construction of 2,500 micro infrastructure facilities such as grain milling stations and cattle dips and over 100 Vocational Education Training Authority (VETA) and health facilities.

Also, the Bank’s operations facilitated the connection of 612,890 new customers to the national grid and more than 100,000 people gained access to micro-credit, 50 percent being women borrowers.

TI: Which lessons has AfDB learned on how to maximise AfDB’s impact in Tanzania? 

TK: The key lessons and experiences that were drawn from the previous CSP to maximize AfDB’s impact in Tanzania include the following: (a) an impartial approach to country dialogue enhances the Bank’s role as a trusted and honest broker; (b) complementarity of lending and non-lending activities (which include analytical work, advisory services and technical assistance) is key for subsequent effectiveness of operations, (c) coherence and synergy of the Bank’s assistance program with Government led initiatives, increases visibility and fast-tracks implementation progress; (d) high project quality-at-entry expedites implementation progress and delivery of development results for Bank operations, and; (e) selectivity with a focus on fewer but big and catalytic transformative interventions will increase the alignment of the Bank’s assistance program, and maximize the overall development impact.

TRANSPORT AND ENERGY

TI: Transport and energy have been identified by the Government of Tanzania as the key growth binding constraints. On line with that, transport and energy currently for 49% of AfDB’s on-going portfolio for Tanzania. What are the priority projects?

TK: The projects include: Road Sector Support Project (Phases I and II); Dar es Salaam Bus Rapid Transit Project; Arusha-Holili/Taveta-Voi Road Project; Electricity V project; Kenya- Tanzania Interconnection; and Rusumo Hydropower Project.

INFRASTRUCTURE

TI: According to AfDB, given the size of the Tanzanian economy, more investment in infrastructure is needed to achieve sustainable economic transformation. How such additional investment is to be achieved? 

TK: Financing of infrastructure investment in Tanzania has, in the past, been largely through concessional resources both from Multilateral and Bilateral Development Partners.

However, following the recent revision of Bank’s credit policy, Tanzania can now access semi-concessional resources from the African Development Bank (ADB window).

This will significantly help to reduce the infrastructure financing gap.

Also, the Government of Tanzania is in the process of securing credit rating, which will enable the authorities to borrow on commercial terms from the international financial markets (Eurobond).

TI: How is the remaining 51% of AfDB budget for Tanzania being used? 

TK: The remaining 51% of the Bank’s commitment for Tanzania is in: Public Financial Management Reforms (through General Budget Support operation, and Institutional Support Project for good governance); Marketing infrastructure to support agriculture sector; Rural and Urban water supply infrastructure – both in Tanzania Mainland and Zanzibar; Skills development – (involving: alternative learning and skills development; support to technical and vocational training and teacher education; as well as specialized centre of excellence for skills and tertiary education)

TI: Which role is the private sector expected to play?

TK: Tanzania’s private sector is expected to play a major role as an engine of growth, since it employs an estimated 95% of the workforce and accounts for about 75% of gross fixed capital formation.

Also, going forward the private sector is expected to play an important role in infrastructure financing.

In 2016, the Bank has planned two private sector operations – a partial risk guarantee for Mortgage refinancing (approved), and Line of credit operation to support private sector participation in infrastructure investment.

AfDB TANZANIA STRATEGY CPS 2016-20: INFRASTRUCTURE, GOVERNANCE AND ACCOUNTABILITY

TI: This CSP is articulated around the Infrastructure development, and strengthening governance and accountability. What need to be achieved in terms of governance and accountability in Tanzania? 

TK: Under the governance pillar the expectation is to achieve improvements in public sector accountability, transparency and institutional capacity to efficiently and effectively manage public resources.

In this respect, the Bank will support the key oversight institutions, including Audit, Procurement and Anticorruption bodies.

TI: What is AfDB view of Magufuli’ government austerity measures and its current impact on the local economic activity?

TK: Our view is that, to a large extent, what the Government has done is ‘reallocation of spending’ rather than ‘squeezing of spending’.

Resources that would have otherwise been spent on travel abroad, hotel expenses for workshops, seminars, etc., have been re-directed to other uses, including construction of roads and delivery of services in health and education.

The biggest reallocation has involved shifting resources from ‘non-priority recurrent spending’ to development spending (including road construction).

Despite the observed temporary shock (most likely for some businesses like big hotels, overseas travel companies, etc.) this measure will have a long-term positive impact on local economic activity.

TI: What are the main projects you will finance? 

TK: The main projects include:

Transport:

Transport sector support project

Burundi/Tanzania: Manyovu Kasulu Kigoma Road Project

Malindi-Mombasa-Lunga-Lunga/Tanga-Bagamoyo Road Project

Energy:

Malagarasi Hydro Power Project

Kakono Hydropower Project

Urban Power Distribtion

North-West Transmission Grid

Governance/Reforms

Energy Sector Reform Program

Governance and Private Sector Development Program

Institutional Support Program – focusing on Domestic Resources Mobilization and Natural Resources Governance

GENDER EQUALITY AND EMPOWERMENT 

TI: AfDB CSP 2016-20 for Tanzania has introduced several innovations. For instance, key priorities such as green and inclusive growth as well as gender equality and empowerment. Why these new priorities?

TK: These priorities are in line with both, the Government of Tanzania’s focus and the Bank’s Ten Year Strategy  through five key operational priorities (High 5’s): Light up and Power Africa, Feed Africa, Industrialize Africa, Integrate Africa, and Improve the Quality of Life for the People of Africa.

Tanzania’s economy has grown robustly over the past decade, with annual average real GDP growth exceeding 6%.

However, this high growth has not sufficiently translated into faster poverty reduction outcomes, and about 28% of Tanzanians continue to live in poverty.

This reality calls for new approaches in development programming to ensure more inclusive growth.

More importantly, the growth of Tanzania’s economy continues to depend heavily on primary resources and climate sensitive sectors, which makes it inevitable to focus on transition to green growth.

And, closely linked to the above issues, continued focus on gender equality is important for sustainable development outcomes.

AfDB & TANZANIA: FUTURE

TI: AfDB commenced operations in Tanzania in 1971. Tanzania is the second largest beneficiary of the concessionary funding window of the Bank, the African Development Fund (ADF). Why is Tanzania so important to AfDB?

TK: It goes both ways – Tanzania is important to AfDB just like AfDB is important to Tanzania.

The Partnership started since 1971, and Tanzania has remained committed as a key Regional Member country since then, while the Bank has also been with the Country all the way as a trusted partner.

Also, Tanzania is one of the key champions of regional integration which the Bank continues to support strongly.

TI: What is you view on the future of Tanzania and its role in the African continent? 

TK: With all the opportunities available in the country, Tanzania has a great future in African continent.

The country has the potential to sustain the current growth momentum, attract more investment and transform into middle income country before 2030s.

With its geographical location, peace, and political stability, the commitment of Tanzania to regional integration will position the country as a very important player in the economy of African in the near future.

TanzaniaInvest had the pleasure of interviewing Jay Bhattacherjee, CEO of Aminex plc (LON:AEX), and Neil Ritson, Chairman of Solo Oil Plc (LON:SOLO). Aminex is an Africa-focused oil and gas exploration and production company with two operated discoveries in Tanzania.

Solo Oil is an oil and gas investment company with a diverse global portfolio of oil and gas assets in Tanzania, West Africa, the UK, and Canada.

Jay and Neil share with TanzaniaInvest their experience in investing in Tanzania, their current projects and operations, and their expectations and strategy for this emerging oil and gas market.

TanzaniaInvest: Tanzania shares with Mozambique vast offshore natural gas reserves. Why did you decide to invest in Tanzania?

Jay Bhattacherjee (JB): Aminex has been in Tanzania for 14 years.

We were the first license holders to go through the entire exploration process in Tanzania: Production Sharing Agreement (PSA), appraisal, development, and now production.

Tanzania’s oil & gas sector presents plenty of growth potential and opportunities.

But the biggest and simplest reason for our decision to invest in Tanzania over Mozambique is that in Tanzania there is infrastructure in place for gas.

The new 532m gas pipeline connects Mtwara in Tanzania’s southern region to the commercial capital Dar es Salaam, and it is combined with two processing plants that are already in operation.

That’s pretty trailblazing for sub-Saharan Africa. What is needed now is to distribute the gas to the end users.

Only 36% of Tanzanians have electricity [Tanzania Ministry of Energy 2014 data] and oil and gas companies operating in Tanzania like Aminex, are going to play a big part in the country’s future energy growth.

[The Tanzanian government is currently implementing a national energy policy, which aims to increase the country’s overall electricity connectivity to 50% by 2025 and to at least 75% by 2033].

TI: Solo Oil has partnered with Aminex in two projects in Tanzania and you currently have no other investments in this market. Why such strong focus on Tanzania and on Aminex?

Neil Ritson (NR): Tanzania is one of the best options we have on the African continent.

Tanzania is full of opportunities, has gas discoveries, has infrastructure, a track record of stable governments, and the country is now sorting out its energy policy in a sensible way.

Tanzania has all the elements in place and this is why Aminex is progressively focused there, and this is why Solo Oil invests in Aminex’s projects.

The philosophy of Solo Oil is to invest in projects which need capital, but also need some expertise that Solo’s management can provide.

We are very active investors. Solo Oil is run by oil people, not by bankers.

We co-invest, we put in the time and effort to help the investment be successful by providing guidance on strategy, technical expertise and other support.

Solo Oil does not invest in companies scattered all over the world. We invest in companies that focus on what they do best and for Aminex that is Tanzania.

Solo Oil shares the same philosophy and ideology as Aminex, with whom we have been working in Tanzania for five years.

As a result, we are a partner with Aminex in Kiliwani North [Aminex 54.575%, RAK Gas 23.75, Bounty Oil & Gas 9.5%, Solo Oil 7.175%, TPDC 5%] and in Ruvuma [Aminex 75%, Solo 25%].

In Tanzania, we have signed the much-awaited Gas Sales Agreement (GSA) with the Tanzania Petroleum Development Corporation (TPDC) for the Kiliwani North gas project.

Gas is now flowing.

In Ruvuma we were technically involved in helping make the gas discovery.

That’s why our track record of drilling successful wells is very high.

Solo Oil has invested elsewhere in Africa, namely in Nigeria [Solo Oil has a 20% stake in Burj Petroleum Africa], but this has proved more challenging than investing in Tanzania.

KILIWANI NORTH

TI: Following the signing of the GSA for Kiliwani North, you started delivery of gas to TPDC on 4^th April 2016. Are you confident that the much-negotiated payments terms and guarantees will sustain your cash flow expectations?

JB: As a result of the GSA, TPDC will pay us at the end of each month.

The first payment is due mid July 2016, the second in August 2016, and thereafter at the end of each month.

On our end, we are ready to deliver as much gas as needed to TPDC [which in turn provides the Tanzania Electric Supply Company (TANESCO) with gas for power production].

NR: Commissioning of gas isn’t covered by the same payment guarantees included in the GSA, but we have submitted invoices and we certainly expect that they will be paid.

TPDC has indicated that they will pay, and we see absolutely no reason why they won’t.

RUVUMA

TI: Aminex made onshore gas discoveries in Ruvuma at Ntorya-1 in 2012. How far are we from the actual commercialisation of the gas?

JB: Ruvuma early stage production can be somewhere as soon as 12 months from the announcement of a commercial discovery.

Ultimately, as we drill and develop that basin, going forward, that gas is going to be utilised in the national pipeline.

NR: At the moment, we have found 100 billion cubic feet (BCF) but we think there could be ten times that.

We’ll get the appraisal wells down, and then we will decide on what kind of development scheme we are going for.

TI: And do you also have the financing needed to develop Ruvuma?

JB: No, we don’t.

NR: And we don’t need it. We need to appraise the discovery first.

After we have the gas volume approved, we’ll decide what to do: dive into the project with financing investors, or raise the bank finance necessary to continue.

But first we need to complete the appraisal and this is our job for the rest of this year [2016].

TI: Will there be a similar GSA in place with TPDC for Ntorya-1?

JB: The structure of the GSA will be the same, but the pricing mechanisms will depend on where the delivery point is.

One of the biggest advantages that we have with Kiliwani is that our delivery point is right at the outlet flange of the wellhead, thanks to the fact that TPDC, through government initiative, built that infrastructure right to us.

In the case of Ruvuma, we will either build a centralised gas gathering facility in Ruvuma and then connect it to a processing plant; or TPDC will build the infrastructure for us.

All of that will be built into the pricing mechanism that we will structure with TPDC.

So it will very much depend on where and how the gas will be delivered, and on who’s building the necessary infrastructure.

NYUNI

TI: What about Aminex’s third license in deep-water Nyuni basin? What is the current situation in terms of exploration?

JB: We are currently focused on production, development and appraisal opportunities.

Nyuni is a valuable piece of acreage, but our priorities are Ruvuma and Kiliwani right now.

The Tanzanian government wants us to develop Ruvuma to deliver its gas in the near-term to fill in the pipeline.

If Kiliwani can provide less than 10% of the energy mix of Tanzania, Ruvuma could easily provide 30% or 40% of that energy mix.

We also want to develop Ruvuma as soon as possible, since it will enhance our cash flow.

TI: Has the support of the Tanzanian government been adequate so far? And have you noticed any change since the new government has been in place?

 JB: We have been in Tanzania for almost 14 years. We and our partners have invested over USD150mbillio.

Since 2002 Aminex has drilled six wells, five as operators, and out of those five, we made two discoveries, one of which is in production.

That is quite a record for onshore exploration and it couldn’t have been achieved without the support of the government.

That being said, we have noticed, in the last three years, an increased focus from the Tanzanian government on business policies and on the commercialisation side of the gas.

As a result, the government has put the infrastructure in place and has been engaging with companies, moving things as fast as possible.

We have seen a bit more initiative of late, but I think it has more to do with the fact that gas is now flowing in the pipeline [from Kiliwani North].

As a result, businesses are coming to Tanzania, fertiliser companies are winning tenders, and power plants are being established.

In a few years from now, the country will be powered with gas, and that’s what we want to be part of.

TI: Do you think Tanzania is on the right path in developing its oil and gas industry?

NR: Definitely. There is a large domestic and regional market and they are taking advice from other countries which have been through the energy revolution.

And they are committed to building infrastructure, which is key in developing the gas market/industry.

TI: And how do you explain Tanzania to your investors? What does it represent in Solo Oil’s portfolio?

NR: Usually, when the projects we invest in reach a value point we move on and reinvest somewhere else; we act as a seed investment fund.

But Tanzania offers such a big prize over the long-term, and that is why we are heavily invested there and continue to do so.

Tanzania is an anchor country for Solo Oil and as such, it’s a country we will stick with.

Other investments will come and go, but Tanzania is part of the fabric of Solo Oil’s investment model.

Tanzania is full of opportunities and has proven to be a lot easier to invest in effectively compared with West Africa, mainly because of the policies and support by the government.

Tanzania has a track record of stable governments, and the country is now sorting out its energy policy in a sensible way.

What Tanzania needs now is gas in its energy mix, and for that, the missing component is distribution; it is not supply, and it’s not transport infrastructure but delivering to customers.

Tanzania is going to be cash-generative for Aminex and Solo Oil for the long-term, and therefore, we are not so likely to look for an exit from that.

As we are planning to be in Tanzania for the long run, we are beginning to think outside the Aminex box.

We have a very good relationship with Aminex, but there are other projects in Tanzania in which we can invest.

There’s more we can do in Tanzania and in the short-term, we’ll look for additional opportunities.

But first, we need to get some milestones behind us.

Getting a GSA was big; getting the first gas moved was important.

Getting our first sales is going to be big; getting long term commercial gas is going to be a big catalyst, together with the appraisal of Ruvuma.

The geology will dictate whether there’s a trillion cubic feet (TCF) of gas in Ntorya or not, but the only way to find out is by drilling wells.

That is why Solo Oil and Aminex are working to drill a new well at Ntorya by the end of 2016.

Tanzania is a genuine long-term investment for Solo Oil.

Tanzania has discoveries, it has the infrastructure, it has a market, and all we are doing is assisting in the process of connecting those elements together in a way that generates money for Tanzania and our shareholders.

This connection between supply and demand and the infrastructure in place is a rare opportunity.

TanzaniaInvest interviewed Thomas Abraham-James, CEO of Helium One, an exploration, development and, ultimately, hopeful producing company of liquid helium from Tanzania.

Helium One recently estimated 54 billion cubic feet (Bcf) of helium resource near the Lake Rukwa area in Southwestern Tanzania.

The company is now looking for investors to finance the exploration program from now until end of 2017.

TanzaniaInvest (TI): Helium One is focused on helium exploration in Tanzania. Why helium, why Tanzania?

Thomas Abraham-James (TAJ): There was a severe shortage of helium between 2011 and 2013, and this has resulted in a sharp increase in helium prices and difficulties in obtaining the gas.

During that period, I was involved in geological surveys for gold explorations in Tanzania, and together with Josh Bluett, [Technical Director of Helium One], I became aware of some Tanzanian helium measurements from reports published in the late 1950s.

These indicate that helium concentrations were very high at multiple locations in Tanzania.

The potential for helium in Tanzania is unique because the country has the perfect geology for helium accumulations, sourced from some of the oldest rocks on the planet.

It is actually the old rocks that produce helium over time, in very small amounts.

In other regions around the world, helium remains trapped in the rocks, but Tanzania is in the East African Rift, and this has let the helium escape to the surface.

Helium is traditionally produced as a by-product of natural gas production but in Tanzania, there are no fossil fuels attached to the helium. It has the potential to be a green project.

We actually looked at other countries in the East African Rift like Malawi, Uganda, Zambia and Kenya, but we realized that these countries don’t have the right geological ingredients for helium exploration as Tanzania does.

The combination of helium shortage and the unique helium potential in Tanzania represented an opportunity that we decided to pursue.

TI: You recently estimated 54 billion cubic feet (Bcf) of unrisked prospective recoverable helium resource next to Lake Rukwa in Southwestern Tanzania. How accurate are these estimates?

TAJ: We know that in the Rukwa area, there are a number of reservoirs that have the potential to hold gas.

This was identified via pre-existing seismic and drill data that was acquired by an oil explorer in the 1980’s. Hot springs within this area of interest have been sampled and contain high helium concentrations.

Therefore, there’s a high chance that those reservoirs contain helium, which we call resources and have been independently verified by consultants in the USA.

These estimated resources are part of a range of which 54 Bcf is the 50% probable helium occurrence.

In the same range, there is 10% probability that the resource is 175.9 Bcf and 90% probability that the resource is 17.7 Bcf.

Now we need to convert these resources into reserves and to do that we must undergo additional exploration by drilling these reservoirs.

If by doing so we reach helium and we convert it into helium reserve, then we can assess how economically viable production will be.

We will be finishing exploration at Rukwa by the end of 2017, when we expect to have reserves.

TI: How are you financing the additional exploration at Rukwa?

TAJ: We are currently in the process of raising capital, on a private equity basis for now.

The capital raised will be used to collect additional seismic data, undergo airborne gravity survey and ground geochemistry.

By March or April 2017, we intend to commence drilling, and by the third or fourth quarter of 2017, we will hopefully have reserves.

This is when the final investment decision as to whether or not to enter production will be taken, but we are already open to investors.

TI: What is the minimum amount of helium reserves needed to make the Rukwa project commercially viable?

TAJ: We consider a minimum of 10 Bcf to be reasonable target to warrant the capital expenditure required for a large scale helium plant.

It is worth mentioning that we are optimistic that our current resource estimate is just the starting point and that we anticipate it to grow as we conduct the additional exploration activities.

As we are still in the process of converting resource to reserve, investing in a project like ours can be compared to investing in an early stage gold mining project: the dynamics and the risk profile are similar.

TI: What is the size of the capital you are looking to raise?

TAJ: Our estimated costs at the Rukwa project from now until the end of 2017 are USD40m.

This will be conducted via private equity finance, however we are keeping an open mind to listing.

TI: In addition to Rukwa, you have other prospective licenses in Tanzania, in Eyasi and Balangida. What is the current status of these projects?

TAJ: Rukwa is the most advanced of our projects. For Eyasi and Balangida we have to collect seismic and drill-hole data.

Our intention is to get those projects up to speed with Rukwa by quarter two of 2017.

TI: Are you pursuing any other helium projects in or outside of Tanzania?

TAJ: No, we are only focused on helium, in Tanzania.

TI: In a nutshell, why invest in helium in Tanzania with Helium One?

TAJ: At the moment, global annual demand for helium is approximately 6 Bcf, but it is growing.

Helium is not comparable to oil or natural gas in regard to revenue, but it is a niche market with plenty of upside potential.

Helium is very much used in high-tech industries and its applications are increasing.

After the helium shortage of 2011–2013, the certainty of its supply has been lacking since then.

We believe that Tanzania has the potential to produce large reserves of helium and the country could greatly add to the helium global supply.

Tanzania shows the perfect geology for helium. This means that we can more easily increase or decrease the helium production to match the demand.

Last but not least, Tanzania has the right legal and investment framework.

TanzaniaInvest had the pleasure of interviewing Clifford Tandari, Chief Executive of the Tanzania Investment Centre (TIC), the primary agency of the Government to coordinate, encourage, promote and facilitate investment in Tanzania.

Mr Tandari highlights the most interesting sectors in which to invest and the benefits of doing so via TIC.

TanzaniaInvest (TI): Many developing countries are competing to attract Foreign Direct Investments (FDI), key to their further development. What makes Tanzania particularly attractive to investors?

Clifford Tandari (CT): Tanzania is a growth pole, one of the few growth poles in the world, and Tanzania has been growing consistently for the last fifteen years, with a GDP of 7% and above.

Natural resources and touristic attractions abound in Tanzania.

Tanzania is also a gateway to the East African Community, with five other member states, and to fifteen other member states within the SADC region.

In addition, Tanzania is very peaceful. We have a democratic government, and we are party to the international treaties.

So, anyone who invests in Tanzania stands to benefit a lot and to recoup their investment very rapidly.

TI: What are most interesting sectors of the Tanzanian economy investment purposes?

CT: We are currently focused on promoting investments in manufacturing, agriculture—where the majority of Tanzanians are involved – real estate, construction, infrastructure, tourism, and hospitality.

TI: And why invest via TIC? What are the incentives in place?

CT: There are several fiscal and non-fiscal incentives available to investors interested in Tanzania.

Fiscal incentives include tax exemptions on capital goods.

When investors bring in capital goods, they are exempted from some taxes since they form an input into the production of the investment undertaken in Tanzania.

Non-fiscal incentives relate to immigration visas and residency permits.

In addition, investments in Tanzania via TIC are guaranteed against nationalisation and expropriation.

Tanzania is a member of both the International Centre for the Settlement of Investment Disputes and Multilateral Investment Guarantee Agency (MIGA).

These incentives are available to investors who apply for a Certificate of Incentives at TIC.

In fact, the TIC acts as a one-stop centre, for investors to streamline the entire investment process through TIC.

For example, investors can also take care of their company registration and business licensing at TIC.

TI: How are you ensuring that foreign investors are aware of the investment opportunities available and of TIC?

CT: One of the measures that we are employing is conducting business-to-business investment forums.

We recently held the Tanzania-India business forum and the Tanzania-Poland business-to-business forum to promote FDI from these countries.

We also have a comprehensive website with regulations, guidelines and procedures, and where we are unable to reach, we advertise using companies like TanzaniaInvest.com.

So, we are promoting, as well as facilitating, and these are the measures that we are currently undertaking.

TI: What would be your piece of advice to investors having decided to come to Tanzania?

CT: I would advise incoming investors to come and register their companies within TIC, so that they are recognized.

In this way, we are able to monitor and build an alliance with them so that if there are any challenges, TIC is there to support and help them.

TIC acts as a bridge between the investors and the government, and so, it’s very beneficial for them to pass through TIC.

TI: You were appointed Executive Director of TIC recently. Under you leadership, what do you want TIC to achieve?

CT: First of all, I would like to see TIC doubling the amount of investment that we are receiving per year.

We are currently receiving about USD2.1bn in FDI per year, and I would see TIC doubling this amount within a short timeframe.

For instance, reaching USD4bn to USD5bn per year would be a vision that I would envisage for.

Then, I would like to see job creation for the youth in this country and I would like to see TIC contributing positively to the industrialization agenda.

Industrial development is at the core of our 2025 Vision to become a middle-income economy, of the National Five Year Development Plan 2016/17-2020/21, and of the National Budget 2016-17.

So, I would like to see TIC being on the forefront of implementing this industrialization agenda.

TI: And where do you see Tanzania within the next ten years?

CT: I would like to see Tanzania being an industrial country and a middle-income economy by 2025.

I would like to see poverty being reduced in Tanzania, and young people getting jobs through the industries coming up.

I would like to see Tanzania as a country where its citizens contribute positively to the growth of the economy.

I would also like to see Tanzania with sufficient and adequate infrastructure for transport to decongest our cities, for rural-urban linkages strengthened so that goods from the rural areas could arrive at urban centers, and then, products from the cities and urban areas would reach the rural areas.

TI: Anything else that you would like to add, Mr Tandari?

CT: I appreciate your coming, and I would like to cooperate very closely with TanzaniaInvest in promoting, across the globe, the opportunities available in Tanzania.

So, we welcome TanzaniaInvest to come and work closely with us so that we can attain the industrialization goals and objectives that have been clearly stated in our blueprints.

TanzaniaInvest interviewed Frank Kanyusi, CEO of Business Registrations and Licensing Agency (BRELA).

BRELA is mandated to issue industrial licenses, register companies, business names and intellectual property rights such as patents of inventions, industrial designs, trade and service marks.

TanzaniaInvest (TI): What is the current level of perception of these issues by the Tanzania public?

Frank Kanyusi (FK): To a large extent the Tanzania public is aware of the initial processes of establishing companies and business names although they lack awareness on the part of post registration activities such as timely filing of annual returns and proper filing of different changes undertaken by the companies in the lifetime of the companies.

On the part of intellectual property, public awareness is still minimal to the creators, inventors and users of Intellectual Property assets.

TI: Most of Tanzanians small/micro business remains unincorporated. Can you explain the advantages of registering as a formal business, with BRELA?

FK: First, it has to be noted that once the company is incorporated it does not start the business on the spot, it has to obtain other clearances from the Tanzania Revenue Authority (TRA), Business Licensing authorities and Regulatory authorities, if required.

Formalization of a business is like a big set with several subsets within it, registration of company/business name being one of them. One of the advantages is to give an identity to your business.

Formal firms have better access to credit and markets, all of which may in turn have a positive impact on the entity’s profit and national economy at large.

It also assists the central government and local government to know entities and firms which are in formal sector especially when planning.

TI: According to the latest Doing Business ranking by WB, Tanzania has improved one position between 2015 and 2016 to rank 139^th. However, in relation to starting a Business it has worsened from 122th to 129^th.

Looking in details, BRELA, the first step, takes only one day. How easy it is registering with BRELA?

FK: It is nowadays easy compared to previous days. Some of the services like name clearance for both Limited companies and Business Names are provided online together with the forms.

Investors can liaise directly with BRELA without requiring assistance of Middle-men or Agents.

And most of the payments now are done online through mobile phones and electronic banking transactions.

Moreover TRA has opened up a window at BRELA offices whereby company TIN numbers can now be obtained at BRELA soon after registration of a company.

It is my belief that automation of processes, online service provision and electronic integration among the key players, particularly Government institutions responsible for starting up business, can further ease and improve the process of setting up business in Tanzania.

TI: Can investors liaise directly with BRELA or do they require the assistance of corporate lawyers or service providers?

FK: Investors can liaise directly with BRELA, however in preparation of documents they either do it themselves if they have the knowledge or require the assistance of professionals.

TI: What needs yet to be streamlined to fasten and further ease the process of setting up a business in Tanzania?

FK: In order to further ease the process of setting up a business in Tanzania, relevant laws and regulations need to be amended to incorporate the requirements for online registration also to facilitate submission of documents for formalization of businesses at one point.

Currently, in order to start a business one is required to visit a number of institutions to obtain necessary documents.

The starting of a Business is a process there is a need for other institution like TRA to be streamed lined and access BRELA service

TI: Large investors are usually catered by Tanzania’s investment authorities, the Tanzania Investment Centre (TIC) and the Export Processing Zones Authority (EPZA).

How do you ensure effective liaison with TIC and EPZA?

FK: First of all the Authorities you have mentioned are both under the same Ministry, which is the Ministry of Industry, Trade and Investment.

Secondly, BRELA has an officer who is stationed as a liaison officer at TIC.

These facts make it very easy when it comes to the issues of communication and coordination.

Moreover, with the introduction of the online registration system all these institutions will be linked hence liaison will be enhanced.

TI: Foreign businesses entering Tanzania have the option to incorporate a subsidiary or register as a branch. Which option is best?

FK: To me both options can work. It depends on the choice and interest of the concerned person after exploiting the pros and cons of each.

TI: Tanzania’s GDP is growing consistently at 7%. What is your strategy to ensure that BRELA becomes synonym of doing business in the country?

FK: Our vision is to be world class customer focused business regulatory and facilitatory Agency; so one of our strategies is to make sure that we apply current and modern ways of serving our customers to make sure that they get quality, quick and timely services.

This can, for example, be achieved by the provision of all our services online, a dream that we have started to work on it.

Another strategy is to propose legal and regulatory framework review to suit the reforms and initiatives that the Agency is undertaking and also to eliminate the current bureaucracy in formalization of a business in the country.

TanzaniaInvest had the pleasure of interviewing Ken Cockerill, Chief Executive Officer (CEO) of Stanbic Bank Tanzania.

Cockerill discusses the goings-on in the banking industry of Tanzania, the bank’s expansion strategy and the current trends in the Tanzanian economic and business climate.

TanzaniaInvest (TI): Standard Bank Group (JSE:SBK) is the largest African bank by assets, and operates in 20 countries across Africa.

The group has been operating in Tanzania under the Stanbic Bank brand since 1995, following the acquisition of Meridien Biao Bank.

What is the importance of the Tanzania market for the group?

Ken Cockerill (KC): We see Tanzania as an important growth opportunity.

If you look across the African continent, countries in East Africa, and in particular Tanzania, have reflected consistently high growth rates over the last decade, and we expect that to continue in the years ahead.

The Tanzanian economy is diversified, and that’s currently an advantage, as opposed to certain other countries that are more reliant on oil and other primary commodities.

TI: What are your main goals in Tanzania?

KC: First and foremost, we need to achieve an acceptable return on equity (ROE), in excess of 20% over the next few years.

We intend to achieve this by consistently delivering exceptional customer experiences, and thereby growing our customer base and market share.

At the same time we recognize that in order to achieve our aspirations, it is imperative that we contribute to the long-term viability and success of the communities in which we operate, by facilitating economic growth and social development.

TI: In which sectors of the Tanzanian economy is Stanbic focusing?

KC: Our focus is on all the key growth sectors: agriculture, telecommunications, oil and gas, power and infrastructure, fast-moving consumer goods etcetera.

But if you look at the opportunities for public-private partnerships, we believe the main ones reside in power and infrastructure in the short term, and probably oil and gas in the years to come.

TI: With more than 50 banks operating in Tanzania, what are your key focus and competitive advantages?

KC: The Tanzanian financial services sector is very congested. The market looks overbanked, but we still see opportunities for us.

There are few banks in Tanzania that can effectively compete with us in the corporate segment, because of the group’s extensive footprint on the continent, our sector and product expertise, and our cross border capabilities.

Our cross-border capabilities allow us to provide multi-country banking solutions, with access to the group’s larger funding and capital bases offshore, together with the international capital markets.

We also have the backing of the Industrial and Commercial Bank of China (ICBC), the largest bank in the world, which has a stake of 20% in Standard Bank Group.

That gives us a major competitive advantage because it affords us the opportunity to partner with the public sector and private corporates on all the large infrastructural deals and other investments.

TI: Talking of the public sector, what is your take on the impact on business of the austerity measures and aggressive reforms being introduced by the current government?

KC: The new country leadership has outlined ambitious plans to tackle corruption, improve public sector efficiency and boost living standards, but fiscal limitations remain an impediment to achieving these aspirations.

Whilst we believe that the reforms underway are well intended, the execution has been problematic, and this has created significant headwind for the business community and a general slowdown in economic activity.

There could be more consultation with the private sector and other stakeholders before implementation. There is thus work to be done to transform the current situation into an environment that’s more conducive to doing business.

Many of our customers are adopting a wait-and-see attitude, postponing investments, because of the uncertainty around changes that are coming very rapidly and are quite difficult to adapt to.

Having said that, we believe that because the intent is good solutions will be found that will be beneficial to the business community in the medium to longer term.

TI: In addition to corporate banking, your core business, which other segments are you looking to expand in Tanzania?

KC: We will be looking to leverage off our existing position within the corporate and commercial segments, in order to capture the associated value chains – personal customers, suppliers, buyers and other stakeholders.

We also intend to grow our retail and SME customer segments, with greater use of smart technology and digital platforms.

The number of active users of mobile banking in Tanzania is growing very rapidly, whereas the growth in traditional bank accounts has been much less impressive.

Technology enhancements and the right partnerships are thus key focus areas for us going forward, to enable us to deliver convenient and affordable financial services.

TI: Tanzania’s rural population is fast migrating to urban centers. This is putting pressure on the housing market, as well as generating opportunities.

However, access to finance is still a challenge. How is Stanbic participating in the real estate sector in Tanzania?

KC: We have been active participants in housing finance in Tanzania for many years, and we will continue to play a significant role going forward.

If you look at the value of mortgage financing, we reside in the top three lenders, and we were one of the first to offer that product.

There are some challenges, such as the judicial system and how easy it is to realize mortgaged assets when something goes wrong, and the domestic currency interest rates are quite high. These will hopefully be addressed over a period of time.

The Tanzania Mortgage Refinance Company (TMRC) has played an active role by creating awareness about mortgage financing, but also in terms of providing long-term funding to the commercial banks to support them in the mortgage lending game.

The rapidly urbanizing population in Tanzania, combined with a rapidly growing middle class, is leading to a greater demand for housing and robust growth in mortgage financing, albeit off a relatively small base.

TI: Nonetheless, some argue that there are signs of slowdown in real estate in Tanzania. What is your take on that?

KC: The Tanzanian property market has been very buoyant for many years, but there’s been a distinct slowdown in recent times.

I think this is partly due to a slowdown in the offshore gas sector, as there was frenetic activity during the exploration days, with strong demand for both retail and commercial real estate.

In addition, the general slowdown in economic activity as a result of the current reforms underway has also had an impact, together with a slowdown in regional trade as a result of certain neighboring countries feeling the effects of a worldwide slump in commodity prices.

TI: Do you think that the two credit bureaus that have been operating in Tanzania in the last two years have eased the lending process and lowered the high cost of borrowing?

KC: It’s taken a while for the banking industry and credit bureaus to build comprehensive and reliable databases, but substantial progress has been made and the industry and the market in general is now starting to reap the benefits.

We believe that the credit bureaus will assist in effectively reducing non-performing loans and credit loss rates, which should in turn reduce the overall cost of borrowing and make it more affordable to borrow for a greater section of the market.

TI: To conclude, what is your view on the role of Stanbic/Standard Bank in Tanzania?

KC: Being part of the Standard Bank Group we see Africa as our home, and our primary purpose as driving its growth.

We are committed to raising education standards in Tanzania, as we strongly believe that investing in education is the cornerstone for future growth and prosperity of the country.

With this in mind we recently handed over TZS50m for the development of Magomeni Primary School in Mtwara, and our intention is to continue to be involved with schools in the years ahead.

TanzaniaInvest had the pleasure of interviewing Col. (Retd.) Joseph Leon Simbakalia, Director General, Export Processing Zones Authority (EPZA).

He talks about the government’s industrialization agenda, the role EPZA in bringing this industrialization agenda into fruition, and the current large industrialization projects available to investors.

TanzaniaInvest (TI): You have recently returned from a road show in China. What are your expectations on China’s role in the industrialization of Tanzania?

Joseph Leon Simbakalia (JLS): We recently went to China to meet with prospective investors, financiers, and government officials, to invite them to develop industries in Tanzania.

The meeting was under the auspices of the Forum for Cooperation between Africa and China (FOCAC) that took place in December 2015, where China pledged USD60bn in grants, concessional and commercial loans.

Tanzania has ambitions for rapid industrialization, while China is looking to establish industries offshore., into low-cost labor areas.

So, we want to capitalize on that and create a platform for world-class trade and logistics hubs that will attract industries.

These will process the raw materials, and then export value-added products to feed distribution centers.

For this to take place, we have to attract more investment, develop further and larger industrial projects.

This is why at EPZA, we are moving away from small Export Processing Zones (EPZs) and Special Economic Zones (SEZs) to the development of larger industrial projects.

TI: What are the largest industrial projects that you are currently developing and which are open to investors?

JLS: We are currently developing the following SEZs:

• The Bagamoyo SEZ, 75 kilometres north of Dar-es-Salaam, which is going to be run by the Tanzanian Government with China Holdings Limited and the State General Reserve Fund of Oman. This satellite town will include Development of Industrial Parks, Trade Parks, Technological Parks, Tourism Industry, Real Estates, Logistics Centers, Financial Institutions as well as the construction of an Airport and Port.
• The Tungi SEZ in Morogoro, in Eastern Tanzania, 170 kilometres west of Dar es Salaam, a 10,000 hectares SEZ Project developed with 100% private financing from Tanzania and Singapore. Tungi is the largest industrial, commercial and Residential development project under SEZ Investment Scheme developer by the private sector.
• The Mtwara Freeport Zone, a 110 hectares area to service companies engaging in oil and gas exploration in the Mtwara region. This project is also developed by private financing.

TI: What are the incentives that EPZA gives to investors coming to the SEZs and EPZs?

JLS: Fiscal incentives are provided to reduce the financial risks. These include tax reliefs and tax allowances for 10 years to allow for recouping of investments.

But we also provide non-fiscal incentives i.e. infrastructural support such as access to water, roads, and electricity.

In addition, the Tanzanian Government can provide ad-hoc fiscal incentives for particular investment with high financial risk to make the project bankable and commercially sustainable.

TI: All in all, why invest in Tanzania?

JLS: Anyone looking to invest in Africa should look first at Tanzania because it has a lot of potential for development, combined with a track record of 50 years of political stability.

Tanzania is also the only country in Africa that integrates the East African Community (EAC) and the Southern African Development Community (SADC).

Tanzania faces the Indian Ocean, which is the only barrier to the Asia markets.

Tanzania is strongly focused on achieving its industrialization and development goals, and I believe the current government is able to mobilize the country’s resources to achieve that.

I strongly recommend investors to look at www.TanzaniaInvest.com to get updates about our country and the numerous investment opportunities available.

TanzaniaInvest had the pleasure of interviewing Deogratius Kilawe, Managing Director of Excel Management and Outsourcing, a company offering a comprehensive range of HR, Investments and Corporate Branding advisory services in Tanzania.

Mr Deogratius Kilawe talks about the state of human capital market in Tanzania and discusses the role of his company in its development.

TanzaniaInvest (TI): Can you brief us about Excel Management and Outsourcing? Why and when did you start in Tanzania?

Deogratius Kilawe (DK): Around 2012, we identified a gap in human capital skills and competence in Africa.

This is why we decided to form Excel Management and Outsourcing.

Till date, we have trained over 140,000 people to be best skilled, in South Africa, Uganda, Kenya and Tanzania.

TI: What is your take about the human capital market of Tanzania?

DK: Tanzania used to be a socialist economy until it opened to capitalism in the mid ‘80s.

In the quest for liberalization, extensive know-how was needed.

Most of the universities used to enroll lecturers lacking experience in the private sector, but nowadays, they outsource part-time lecturers who have worked in the private sector.

This helps in filling the skill gap in Tanzania. Excel Management contributes to skill development by providing coaching, training and mentoring.

Tanzania has big potential, because the government wants to industrialize the country by 2025.

However, in Tanzania, 96% of the CEOs of large companies that are working with us are foreigners and only 4% are local Tanzanians. In Kenya, about 45% are local CEOs and 53% are foreigners.

This is because we don’t have a system of producing the best skilled people, which is an obstacle for local entrepreneurs.

Because we don’t have enough Tanzanian CEOs, we end up owning small businesses in this country.

We need to develop CEOs who can, at least, fill the gap to about a 50-50 balance.

And we want Tanzania to have the best human capital, as this represents a huge advantage.

I would advise the Government of Tanzania to ease working permits for foreigners since they share their experiences with Tanzania.

If foreigners are evicted in Tanzania, the skills gap is going to continually increase.

TI: What is the type of training and coaching that you provide? Which other services do you supply?

DK: Excel Management specializes in recruitment, as well as providing different forms of coaching services like executive coaching and corporate coaching.

In executive coaching, we coach CEOs and top executives on a one-on-one basis, while in corporate coaching we assist a company and coach its CEOs on a regular basis throughout the year.

We also organize workshops, open to everyone looking to improve their skills.

We partner with Mikono Speakers, our sister company, in arranging public conference trainings and in-house training, tailored to the needs of the client.

And we work with some of the best trainers like Brian Tracy mostly for self-development conferences.

Soon next year we expect to work with Robert Kiyosaki, Victor Antonio and John Maxwell.

In addition to all that, we conduct market researches and assist companies in collecting financial data and analysing reports.

Finally, we help business in their establishment, helping them in registering, getting certificates from the Tanzania Investment Centre (TIC), securing intellectual property rights, and creating brands.

TI: In your experience, what do you find that the Tanzanian market demands the most in terms of training?

DK: In Tanzania like other African nations and world we have leadership skills deficit.

Thus why every two years we host world leadership conference with world top trainers like Brian Tracy and also each quarter we conduct leadership training.

Companies in Tanzania are mostly looking for sales and business presentation skills.

Some of them, especially non-profit organizations and large corporates, are also asking for team building activities.

TI: And how do you ensure that you have the capacity to provide the adequate training for that?

DK: Our team is of international standards.

All the trainers that work with Excel Management are qualified and have facilitated big organizations around Africa and other part of the world.

Earlier in 2016, we assisted CRDB Bank Tanzania and other top companies in South Africa with whom we have more trainings coming up, and many more in Kenya, South Africa and Tanzania.

TI: What are your ambitions and development vision?

DK: Our vision is to become the leading consulting firm in Africa in HR, Investment, and Brand Consultation by 2020.

This is why we are targeting the whole Africa and not just Tanzania in the training calendar that we launched.

Last year, we recorded revenue of TZS2.7bn and we are now exploring markets in South Africa, Mauritius, and others to achieve our 2020 vision.

Our goal is to make sure that Africa becomes the best human capital continent in the world.