People's Bank of Zanzibar targets Dar, Mtwara

By Beatrice Philemon

People's Bank of Zanzibar (PBZ) plans to open two branches in Mtwara and Dar es Salaam to bring its services closer to the people together with small, medium and large entrepreneurs looking for financial solutions that will best serve their growing needs for now and the future. PBZ’s Managing Director Juma A. Mohamed,  explains to Our Correspondent Beatrice Philemon.

QUESTION: PBZ plans to expand its services in Tanzania Mainland over the next three or five years. Could you elaborate on this new venture by the bank? 

ANSWER: Within our expansion plans, People’s Bank of Zanzibar plans to expand its network to as many regions as possible in Tanzania Mainland. 

We  will be opening two additional branches over the next  two or three months, one in Dar es Salaam and the other in Mtwara while other plans are also underway to open branches in other parts of the country.  

By opening new branches in Tanzania mainland, we aim to increase our presence within the country and also increase the reach to our customers thus providing convenience for their daily transactions.

We have a fundamental role in society- helping to create responsible growth and contributing to communities where they operate and where their staff and customers live in. 

“We are an important employer in Zanzibar, having 12 branches spread across Unguja and Pemba.  To us a more sustainable PBZ means having solid trust, serving our customers well, being a responsible employer, delivering on our operational goals and contributing towards sustainable growth.

Q:   Compared to other banks, how competitive are PBZ’s products and services?

A: PBZ’s products and services are affordable and accessible to our customers and based on our target market, we believe PBZ’s products and services offer customers the best value.

Our  customer approach is holistic, targeting customers across a broad range of their banking needs, from start up entrepreneurs to established businesses, individuals to institutions, offering innovative products with unmatched service delivery. 

Q: For several years up to 2005, the performance,  state of affairs and governance of the PBZ were unsatisfactory coupled with serious undercapitalisation problem. What was the reason behind this?

A: Every market has its challenges. PBZ went through a series of challenges that almost brought it down to its knees. The biggest challenges we had among other were, large percentage of non-performing loans, overstaffing, trail behind in Information Technology, shortage of skilled manpower,  Lack of commitment from different stakeholders and  non-alignment of strategic business segments and non- customer focus.

Q: In reference to the above, what measures were put in place to turn around the bank? 

A: First, we had to make sure that the bank was not privatised. Personally, I thought that the value of TZS. 1.4billion put forward by privatisation advisor was too low. In addition, we had seen other similar experience in the industry.

We were optimistic that the bank could be saved, but not through privatisation.When shareholders approved our plan to stop privatisation, the following restructuring initiatives were done internally:

One of the things we did was rightsising workforce and hire a new team of competent senior staff. 

We also invested in a new core banking system complemented by a robust IT platform, introduced prudent risk management guidelines, strengthened operational policies, manuals and systems, all within an environment fastidiously anchored around strong controls. 

We are now safer and stronger, we have instilled a much clearer set of values and built much stronger governance mechanisms. We have well established board level oversight which gives us a strong platform for the next level.  

Since then, the bank has been growing.  All this gives us a platform for the next level we want to take the bank, which is to become a great bank for our customers, communities and stakeholders.

Q: Your bank  had a record growth in profitability, balance sheet size and deposit mobilisation.  What are some of the reasons behind the above-mentioned growth?

A: Our growth in profitability is attributed to the fact that we believe strongly in innovation and customer satisfaction and these two competitive edges go hand-in-hand to achieve maximum results.

Apart from that over  the years,  the bank has introduced products and services that directly affect  their customers positively, as well as pull more customers. 

This includes the whole spectrum of business segments from retail to corporate, non-corporate and institutional. Some of the products and services include online services (mobile and internet banking) cash management, treasury products, trade finance, term loans and Islamic banking products.  

In addition to the above, we have entrenched a strong and prudent risk management based platform to drive business growth, especially with respect to credit where by non-performing loans is about  two percent which is below industrial average.

 Through complementing a targeted boutique of efficiently delivered, competitively priced products and services, we successfully increased our numbers (in terms of customers and profitability).

Annual Deposit growth rate in recent years reached 28-40 percent, while profitability for the year ended December 2013 tripled to 7bn/- compared to 2.4bn/- recorded in the year 2012. 

Our success therefore is essentially attributed to our strategy to focus on our core competences and differentiate ourselves through service excellence.

Q: What do you think are PBZ’s key strengths and what differentiates the bank? 

A: In 2011, PBZ introduced Islamic banking. This has so far been an important pillar and a key differentiating factor. 

A lot of people, especially in the market we operate in, were at the time not using banks because of faith based considerations. Since then, our Islamic banking business has grown by more than 100 percent year on year. 

 Furthermore, PBZ has the largest branch network in Zanzibar and has the opportunity to expand from this base to the mainland to service its trade client base. Also is the only bank Headquartered in Zanzibar this give more advantage to our bank in providing fastest   money transfer services to our customers.

Q: What are some of the key products and services offered by PBZ?

A: As mentioned earlier, we have the full range of retail, corporate and institutional products covering current, business and savings accounts, corporate and institutional banking, treasury products, mobile and Inernet banking, working capital and term loans, cash management and of course Islamic banking. 

Islamic banking products includes current accounts deposits, Mudharaba savings and time deposits, Murabaha financing, Baimuajal financing, sharia compliant, Mortgage financing, Ikhlas Education financing and Lease financing. 

In Islamic banking as well PBZ offers all other banking services like Telegraphic transfers, Trade finance, Automatic teller machines (ATM) services which are available at our Islamic banking branches.

Q: What are some of PBZ’s online banking services?

A: Our main online banking services are mobile and internet banking, electronic banking, world remit money transfer service and electronic shilling.  Our Mobile Banking can be assessed through   *150*40#

Q: We understand PBZ  offers Islamic products and services. What types of Islamic financial products are currently offered by PBZ?

A: PBZ’s Islamic banking products include  current accounts deposits, Al- mudharaba savings and time deposits, Al-murabaha financing, Baimuajal financing, Sharia compliant Mortgage financing, Ikhlas Education financing and Lease financing.  

Q: What specific Islamic products does PBZ have targeted at SME’s? 

A: The SME sector forms a critical pillar not only for the economy but also for PBZ's growth strategy. Hence this will involve an important allocation of our overall product development focus and expertise. 

This sector will remain the backbone of the economy, and as a leading bank in offering sharia compliant products, we view the development and growth of small businessmen, women and entrepreneurs as our responsibility. 

We have therefore invested in developing a unique bouquet of products and services tailored at meeting the financial needs of this important segment. 

Our sharia compliant suite of products and services has been specific developed to support the growth of these enterprises, offering business owners a broad range of customized solutions, ranging  from the establishment of business accounts and cash management tools to trade and treasury services.

By providing a unique value proposition, PBZ expects to reshape the SME banking space, providing a sustainable opportunity to unlock the potential of thousands of small and medium enterprises across Tanzania.

Q: Does Islamic banking have a future in Tanzania? If yes, what new products and services do you intend to offer going forward?

A: You will recall that while a large number of corporates and conventional banks were severely impacted by the economic downturn, the Islamic banking sector stood solid and has continued to perform well throughout the financial crisis. This sector is growing at a rate of 15 to 20 percent year by year. 

Moving forward, it appears that this sector is well poised to continue growing at a steady pace within the global financial landscape, while outpacing the growth of the rest of the banking sector.

As our approach to developing new products is rooted in responsible and ethical business practices, we are able to launch services that are strictly sharia compliant and this involves a robust set of guidelines.  

In essence, Islamic banking and finance is perhaps more appropriate for SME's and startups given the available variety of products and options allowing the bank to support the business in its initial stages.

As the local Islamic banking sector evolves, there will be numerous opportunities in the short, medium and long term.

Going forward PBZ Ltd intends to introduce new products in the market such as Istisna, Salam and Murabaha line of credit. Murabaha line of credit is a revolving fund extended to a customer for particular period with agreed limit which is to be paid within the agreed period.

The customer is allowed to finance a number of purchases during the facility period but should not exceed the agreed limit in any point of time. 

Q: What systems and processes exist to promote ongoing customer service improvement across the Bank?

A: PBZ has a dedicated customer service team that is always available to offer support to our customers. Our dedicated customer service teams are in every of our bank branches. Customers can either call for assistance or walk in to any of our branches for assistance.

Customer complaints registers are maintained at every branch in order to attend customers queries on regular basis.

We are also putting in place online platforms to enable our customers interact with us without necessarily making a phone call or physically visiting any of our branches.