The Tanzania government’s decision to merge Tanzania Postal Bank Plc (TPB) and Twiga Bancorp has been described as a good move in achieving robust banking services customers as well as withstand market rivalry.
In an interview with the local newspaper on the move recently, Professor Humphrey Moshi of the University of Dar es Salaam said the steps taken by the government was appropriate for making a competitive edge and enable a significant contribution to the country’s economy.
Prof Moshi added that the stability of the banks will support improvements in the agriculture sector meant to boost industrial growth, which is essential for jobs creation.
“I would say it is a good opportunity for management and other staff of unstable banks. Unifying banks has many benefits as it will enable them to achieve banking sector stability,” he added.
The don mentioned major factors towards bank’s instability in the country, including expenditures that are not compatible with the institutional ability and non-performing loans due to low expertise in operations, which does not conform to banking culture.
“It is the task of the government to ensure the strong and sustainable performance of financial institutions. The robust health of these financial institutions will stimulate better service to enable economic growth and stability of the banks themselves,” Prof Moshi added.
He said that the government should take further steps to ensure the existence of stable public banks as was the case of NBC during the first post-independence government under the leadership of Mwalimu Julius Nyerere or the presently named Kenyan bank (KCB Bank).
Recently the Bank of Tanzania (BOT) Deputy Governor responsible for financial stability, Dr. Bernard Kibesse, confirmed the approval of a merger between TPB Bank Plc and Twiga Bancorp, which had been under central bank supervision since October 2016.
Dr. Kibesse noted that the merger had been made possible in accordance with the mandate given to BoT through Section 30 (a) of the Banking and Financial Institutions Act 2006.
He said the government’s positions is to remain with a few banks, even possibly, one government-owned bank, which is stable and efficient.
“The government’s direction is mainly that our president has urged the need for a smaller number of banks that would have a major impact on the economy,” Dr. Kibesse stated.
Under the new arrangement, customer deposits, employees, assets, and debts of Twiga Bancorp have been consolidated to TPB Bank Plc.
Dr. Kibesse confided with the local newspaper that it is Fifth Phase Government’s wish to see banks merging or consolidated to ensure efficiency in the provision of services to clients.