Agency banking starts gathering speed

Dr Charles Kimei, the managing director of CRDB Bank makes an address during the launch of the agency banking in Dar es Salaam yesterday. PHOTO | THE CITIZEN CORRESPONDENT 

By The Citizen Reporter 

In Summary

• A 2009 survey by FinScope Tanzania on demand for and barriers to accessing financial services in Tanzania, showed that only  about 11 per cent of Tanzanians held bank accounts then.

Dar es Salaam. CRDB Bank has launched agency banking services as it aims at expanding its reach in a country that has one of the highest unbanked populations in East Africa.

The bank becomes one of the first banks in Tanzania to introduce banking services through third-party since it was formalised at the beginning of the year.

A 2009 survey by FinScope Tanzania on demand for and barriers to accessing financial services in Tanzania, showed that only  about 11 per cent of Tanzanians held bank accounts then.

With a total population of 45 million people, 11 per cent translates into a banked population of just about 5.6 million people. This, according to the bank’s managing director, Dr Charles Kimei, compares poorly with Uganda and Kenya. The two countries have banked populations of 23 and 19 per cent respectively.

“With this service, we seek to reach over 30 million Tanzanians who cannot access banking services or are otherwise excluded from formal financial systems,” Dr Kimei said in Dar es Salaam yesterday, blaming Tanzania’s large unbanked population on at least five factors.

Top on the list is the poor bank network. According to Dr Kimei, Tanzania is now home to about 50 banks (community banks inclusive) but they all have a combined network of 525 branches.

Most of these banks are located in urban centres. Then there is also the problem of poor infrastructure which makes it expensive to open a branch.

“For example, to open a branch, one needs not less than Sh700 million,” he said. The challenges include a sparse population on large tracts of land and heavy government bureaucracy.

With the new service however, which has been duly named as “FAHARIHUDUMA”, CRDB hopes to beat the odds and make its services available to everyone that admires such services.

Banking agents will conduct various banking transactions on behalf of the bank including helping clients to deposit and withdraw their money with the bank. They will also be able to send and receive money via mobile phone money transfer platforms as well as paying their utility bills as well as taxes.

The Bank of Tanzania issued guidelines on the agent banking with effect from February 1, this year, allowing banks to subcontract agents to offer services like account opening, deposits, withdrawals and loan applications on their behalf.

Banking agents would combine bank transactions and mobile payment facilities for ‘cash-in and out’ and will also be given Point-of-Sales (PoS) gadgets. Tanzania Postal Bank (TPB) was the first bank to introduce agents in February.