Cooperative Bank of Tanzania is slowly becoming of age

By Business Insider Reporter

THE Cooperative Bank of Tanzania (CBT) held its inaugural Annual General Meeting (AGM) recently, which was a momentous occasion for the nation’s cooperative banking sector.

CBT officially entered the banking landscape following the successful merger of Kilimanjaro Cooperative Bank (KCBL) and Tandahimba Community Bank (TCBL), a process which was finalised in May when the two banks signaled a strategic consolidation aimed at strengthening cooperative financial services in the country.

The creation of CBT embodies the vision and determination of Dr. Abdulmajid Nsekela, Chairman of the Tanzania Commission for Development of Cooperatives (TCDC).

Upon his appointment, Mr Nsekela set out with a clear goal aimed at expediting the creation of a national cooperative bank that would better serve the financial needs of Tanzanians and bolster the growth of local enterprises.

His leadership has been instrumental in steering the intricacies of the bond and ensuring that the new bank is well-positioned to prosper.

“I antedate steady growth for CBT in its first year of operations, with the potential to benefit significantly from over Sh2.0 trillion in transactions projected within the cooperative sector starting in the 2025/26,” Minister for Agriculture, Mr Hussein Bashe, said at the AGM.

The Minister said in this fiscal year, projected payments for cashew nuts to the farmers alone are expected to exceed Sh1.2 trillion.

The combined input expenditures for key cash crops -tobacco, cashew nuts and cotton – are anticipated to surpass Sh620 billion while crop exports are expected to generate between Sh800 billion and Sh900 billion.

“The projected trade transactions will stem from crop payments to farmers, input expenditures and export revenues, totalling over Sh2.0 trillion,” Mr Bashe said, vowing to ensure that all funds flow through CBT.

These staggering figures will be generated in transactions to be made within and around the co-operative sector. The figures alone prove CBT has a strong business trade platform.

The AGM marks not just a beginning for CBT, but also a hopeful step toward a more inclusive financial future for the nation.

The bank is poised to play a crucial role in the economic landscape, providing vital services to small businesses and fostering a culture of savings and investment.

The AGM was told that the newly established CBT posted a net profit of Sh646 million year-to-September, attributed to growing business with its customers.

According to the bank’s consolidated financial statement to September, its loan portfolio grew to Sh14.4 billion, customer deposits rose to Sh11.4 billion with shareholders’ equity hitting Sh52 billion.

“CBT is a game-changer for the country’s cooperative movement and I thank the government for allocating Sh5 billion for the bank’s establishment, allowing the government to hold a minority stake,” he said.

The bank has a strategic partnership with CRDB Bank, which holds a 20 per cent stake, allowing CBT customers access to CRDB’s network of ATMs and agents.

Additionally, CBT is expanding its reach, with branches currently in Moshi, Kilimanjaro, Tandahimba, Mtwara and new branches scheduled to be opened in Dodoma next month and Tabora in December.

Mr Nsekela reaffirmed his commitment to transforming the country’s cooperative systems to make them competitive, credible and beneficial for its members.

Mr Nsekela, who is also the Group CEO of CRDB, outlined seven policy priorities aimed at modernising and strengthening the cooperative sector, with a key focus on digital systems and cementing the establishment of CBT.

The CBT Chairman, Dr Gervas Machimu, stated that the bank would continue to operate on the principle of mass banking, providing affordable services designed to enhance financial inclusivity for farmers and cooperatives.

The CBT Managing Director, Godfrey Ng’urah, emphasised CBT’s mission to provide innovative financial solutions tailored to cooperatives’ needs.

He highlighted the role of technology in CBT’s strategy, aiming to enhance financial inclusion for over 10 million Tanzanians within the next five years and serve more than 6,000 cooperative societies.

Unlike other state-owned financial institutions, CBT is primarily owned by cooperatives and their members by 51 per cent, while the government holds a 10 per cent stake and the remaining 39 per cent is owned by individuals and companies.

Cooperative shares are ring-fenced, ensuring they can only be bought and sold among cooperative members.

CBT is strategically positioned to serve the entire value chain of cooperative businesses, offering competitive banking services aimed at empowering cooperatives and promoting financial independence.