Wednesday 2nd May 2018
GBA recently welcomed NMB Bank as our first member in Tanzania. In this interview Ineke Bussemaker, Managing Director and CEO, spoke with the Global Banking Alliance for Women about the Tanzanian banking market, the bank’s decision to join the Alliance, its hopes for its Women’s Market program and the role the bank plays in supporting women.
GBA: For our global readership, can you share NMB’s market position in Tanzania and how the bank has been differentiating itself in a crowded banking market with a highly under-served and un-served population?
Ineke: There are 59 different banks in Tanzania, and NMB is one of the top two. Our asset base is US$2.44 billion. For years we have been the most profitable bank in Tanzania. We were privatized in 2005 as a retail institution and have grown from there to be the No. 1 retail bank in the country.
I think it’s important to note that GDP per capita in Tanzania is around US$950 – so overall it is not a very wealthy population. We are really a developing country. I would say about 70 percent of the population is working in the agriculture sector, and a lot of that is subsistence farming.
It is also worth noting that Tanzania is a very large country, so it can be difficult to reach some customers who live at a distance from bank branches. Over the last 6 to 10 years, the arrival of mobile network operators in the country has helped reach more of these individuals. So while it’s true that only about 17 percent of the adult population has a bank account, if you consider both banking and mobile wallets, about 70 percent of the population has access to banking services – at least in terms of being able to receive and make payments digitally. Banks have a lot they can gain from the level of access mobile wallets provide – we think in the future banks and mobile network operators will work together to be able to offer more services to remote populations.
We also think that there will be an opportunity for exponential growth for banks that can leverage mobile services. It’s not just mobile network operators that can provide mobile services; banks can also provide mobile services to customers, including access to bank accounts. What mobile network operators are providing is just access to a mobile wallet – the ability to make payments. We have a substantial growth strategy to more than double our customer base over the next 4 years with digital and mobile services.
GBA: As East Africa is the hub of innovation around digital financial services, can you share your vision for how digital will transform both access to financial services and the added value of those financial services to the people of Tanzania?
Ineke: NMB today has 217 branches and about 800 ATMs, but although that sounds like a significant number, there’s no way we can reach all Tanzanians with those outlets alone. We feel strongly that the only way we can reach everyone in the country in a scalable, efficient way is by using digital resources. This means mobile banking services, but also what we call Agency Services. Throughout the country we have close to 6,000 Agents – shop owners with POS terminals – where anyone can go and either make deposits or withdrawals from their bank account using an ATM card. Lately we’ve also developed a cardless withdrawal option. For the bank, this is a very cost-effective option. The Agents are not bank employees, and so the only investment is in the POS terminal. The Agents do get a transaction fee for each transaction, but the cost is minimal and we are able to provide 6,000 additional service points throughout the country.
Going forward, every one of our products will be moving to a digital platform: loans, micro loans, insurance propositions – everything. Capital markets are also at an early stage of development in Tanzania, but we foresee a day when the retail market will be able to buy shares and bonds through mobile phones. This will enable a large number of consumers in Tanzania to access capital markets in a way that would not be possible without digital financial services.
GBA: Moving on to women specifically, how are you segmenting the Women’s Market?
Ineke: We keep track of our women customer base and how many women we serve. When we talk about segments, they are in the SME and Micro sectors. In Tanzania, we have a number of women’s groups. These are formal and informal cooperative groups – groups of farmers, small business owners, etc. – who save money among themselves, and whenever a member needs it they can get a loan from the group. Since 2016 we’ve worked with Care International and Women’s World Banking to develop a product for these groups, knowing that about 90 percent of the members are women. The loan amount depends on savings and behavior, so we are using historical data and credit history to determine that. The group members are jointly responsible for the loan. We’re working to digitize that product, and we plan to roll it out to many more of the thousands of women’s groups that exist in Tanzania. We plan on rolling this out with financial literacy training by the middle of this year.
GBA: Looking at women business owners first, we know that in Sub-Saharan Africa there are many women entrepreneurs positioned in between traditional commercial banks’ lending to SMEs—which is highly collateralized—and microfinance providers whose upper limits on loans are relatively small given the nature of their underwriting process, including character based lending. How is NMB innovating to provide solutions to the Very Small Enterprise segment, which women dominate?
Ineke: Our official name is NMB Bank, but until last year we were called National Microfinance Bank. Our smallest loan is about US$250, and our largest loan is about US$22,000. Micro customers are our standard customers, in a way. The average business in Tanzania doesn’t require much more than a micro loan.
Business lending and consumer lending alike are served by our branch network. If you look at our balance sheet, about half of our loan portfolio is consumer lending, which we base on salary. But because we see where their salary is coming from, we know that most of those customers actually also have a small business on the side. So this is an indirect way of actually supporting small business growth.
About 25 percent of our portfolio is micro and SME business, 5 percent is agrifinance, and 20 percent is the larger corporates and government of Tanzania. Most of our lending is collateral based, partially because banking rules in Tanzania require this. But banking rules also require us to take cashflow, so it’s a little bit fluid in that sense. New methodologies to assess creditworthiness – algorithms and profiling and data analytics – will improve our ability to extend loans. We already have a pretty strong analytical tool that we use for small loans, and we are incorporating new ways of accessing and using data analytics to credit score our customers.
GBA: What do you offer or do you intend to offer women business owners in terms of non-financial services?
Ineke: We don’t currently have anything specifically for women customers, but for all small and micro business customers we have what we call business clubs in 34 locations around the country. We organize networking events and trainings on topics relevant to our customers like the latest changes in technology, corporate governance, marketing, import/export, financial capabilities. I’ve been to quite a few of those business club meetings, and I find it very encouraging. We have large numbers of women customers at those meetings because many women in Tanzania have their own small businesses.
GBA: Do you provide financial education?
Ineke: We do financial education in a number of pockets. We developed a youth savings program when we realized through some market research that women were looking for opportunities to save for their children’s future. That comes combined with financial capability training at schools. Branch staff actually go to schools in particular areas and do trainings for parents at primary schools and trainings for parents and students at secondary schools. We also do training for the agriculture sector. Separate from the bank we have the NMB foundation, which offers training to farmers across the country in corporate governance, financial literacy, agricultural economics.
GBA: Given that the majority of Tanzanian households are involved in agriculture, and knowing that African women do the bulk of the farm work, what is NMB doing to support women in the agricultural sector?
Ineke: Because of one of our strong shareholders in NBM bank is Rabobank from the Netherlands – a large food and agriculture focused bank with a focus on what they call banking for food – we’ve been quite privileged to have inside NMB a strong focus on agriculture. We focus on understanding the particular needs of each specific group, approving loans to farmers in a particular sector at a particular time of year when they need to buy inputs, fertilizer, then providing them with a warehouse system where they have the crop under a collateral manager, and setting them up to be able to repay their loan through sales. This scheme is particularly designed for farmers and works for everyone – down to very small farmers. Additionally, because farmers usually work in cooperatives, we can lend to the co-op and farmers can get financing from there.
GBA: For women, other than small business owners and producers, what do you/will you offer?
Ineke: There is a lot to be done for women with very small businesses who have no access to finance. A lot has to be done in financial and business education, as well. There are millions and millions of women in small business, and more do not have access to finance and education services like that than do.
A lot of times we see things like informal financing at excessive rates. It really hurts when you see people taking loans at 10 percent per month because that’s what they can get easily. There’s a lot that needs to be done in this area.
GBA: Alongside your external proposition for the Women’s Market, you have an internal Diversity & Inclusion strategy including the Women Forum that aims to get more women to the top of the organization. Can you explain the work of the Forum and other initiatives to build a gender inclusive organization?
Ineke: We have a women’s forum called Women Arise, which was established in 2016. It is a networking forum, so it ensures that women are able to find each other, discuss their goals and objectives, exchange experiences. We bring in external speakers. And it’s not just for women – we always invite men and women because we also strongly believe that men in the organization need to believe in the value and in the business case for reaching gender parity in the organization. We’re actually making quite a bit of progress: Our workforce is almost 50/50 women. There are more women at entry levels and less at senior levels, but it does help that the bank has a woman CEO. We also have quite a few women at just below the executive level, and our objective is to increase those percentages year on year, and we actually have targets, a mentorship program, leadership training for high-potential women. We have some regions where 50 percent of branch mangers are women, but in other regions it is more challenging to get women into branch manager roles. But we have made great progress in the last 2 years. It’s like with anything – if you pay attention to it and measure it, you can put in place policies and get positive results.
GBA: How did you first hear about the GBA and what benefits do you get frommembership?
Ineke: I think GBA found us, actually. Last year two of our senior women – the Chair and Vice Chair of our women’s network – attended the GBA Summit in London. Based on that we realized there was a benefit in the bank being able to exchange knowledge and ideas with other banks that have a women’s program, which is when we decided to join the network. And that is exactly what we would like to get out of it – hearing experiences from other banks, examples of what works and what doesn’t work, learning from each other.