The following piece is an interview with Sabasaba Moshinghi, Chief Executive Officer of WSBI member bank TPB Bank based in Dar es Salaam, Tanzania. He is a WSBI board member and President's Committee member. He also serves as chair of the WSBI Africa Regional Group.
This article will appear in the upcoming edition of WSBI-ESBG News & Views magazine.
Tell us about the evolution of TPB Bank since you joined the bank?
When I joined TPB Bank (TPB) in 2011, there were several critical challenges facing TPB. It was highly inefficient with a cost income ratio of 96%, return on asset of 0.3%, return on equity at 6%, low profit before tax that averaged TZS 400 million (170,000 USD) – TZS 900 million (385,000 USD). Staff salaries were the lowest in the market, while staff morale low and a poor corporate culture. The bank was also poorly capitalized, breaching regulatory requirements. Branches were extremely dilapidated and the head office had a serious shortage of working tools. The brand was extremely weak – in fact, it was considered a dying bank.
TPB conducted a 'deep dive' assessment of itself and developed a four-year strategy that covered the period 2012 to 2015. Some measures we took involved bringing on board new members of staff in strategic units from the private sector. New revenue streams and new products were introduced as well as aggressive cost cutting measures. The bank renovated dilapidated branches all over the country while doubling the branch network. Ultimately revenue generation and profitability greatly improved. Staff salaries were improved and a performance culture was introduced. The bank in 2016 registered under the Companies Act, the decision that also allowed the bank to improve its brand identity, rebranded it from Tanzania Postal Bank to TPB Bank PLC. We have consistently posted impressive financial results year on year with compounded average annual growth rate of around 20%, making us in the last six years among top 10 profitable banks in Tanzania. We have paid a cash dividend to shareholders since 2016 for two consecutive years.
The following charts capture the phenomenal transformation over the last few years.
We are still engaging with shareholders on the best method to recapitalize the bank so we can continue with the transformation journey.
What are the aims of TPB bank? What ambitions does the bank have in the next five years?
As previously mentioned, recapitalisation is key. We plan to continue to reach the unbanked and under-banked, as this is something greatly important among TPB Bank's board of directors and management. I believe that in the next five years, by diligently focusing on the bottom of the pyramid, TPB will be one of the 10 largest banks in Tanzania.
I know financial inclusion is important for you. Tell us how TPB bank engages in financial inclusion efforts?
TPB at inception was billed as a savings bank for the indigenous population with a focus of instilling a savings culture. The bank now focuses on financial inclusion. The bank has been able to bring on board 500,000 previously financially excluded customers in the last five years with deposits of TZS 12 billion (5.1 million USD). Our focus in the pro-poor space is village savings and loan associations (VSLA's) and village community banks (VICOBA's) that target women, informal groups that target both men and women, and sports account for men and the youth. This allows us to have a focused to how we approach our customer base.
TPB was also the first bank in Tanzania to launch mobile banking and agency banking through our dual product – TPB POPOTE – that means 'TPB everywhere.' We have 284,000 mobile banking customers. The mobile banking product is integrated to all mobile money operators. We have extended this product to groups too. They now have a special menu where they can transact and mimic their normal transactions like taking a loan or contributing to a social fund. All this at their fingertips.
We now have 884 agents across the country on both mobile and point-of-sale and should have 2,000 by the end of 2019. We have opted to scale up or agent network by working with a third party aggregator that allows us to have sustained growth.
How does WSBI help with efforts on the financial inclusion front?
WSBI is a true partner in TPB's financial inclusion journey. Instrumental in helping TPB on the financial inclusion front, WSBI provides technical support and helps TPB access financial support too. For example, they have helped us better connect with organisations like Mastercard Foundation and the Bill and Melinda Gates Foundation to help find ways to address financial exclusion in the country. We truly appreciate their support and look forward to ongoing support and cooperation.
Where do you see innovation and digitisation to widen financial inclusion in Tanzania?
Innovation and digitisation both drive financial inclusion growth in Tanzania. These two aspects will drive any future financial inclusion growth as well. The data around this trend are highlighted in Finscope, Tanzania's nationally representative survey that provides an overview of financial behaviour of Tanzanian adults (i.e. individuals 16 years or older). Data from the 2017 Finscope shows that 13% of the adult population use banks while 60% depend on mobile money. I think the issue is how innovation and digitisation will evolve and work in various eco-systems, which at this point is somehow hard to tell but looking at the present trends. Innovation will be key to addressing financial inclusion challenges not only in Tanzania, but also throughout Africa.
Sabasaba Moshinghi is Chief Executive Officer of TPB Bank based in Dar es Salaam, Tanzania. He is a WSBI board member and President's Committee member. He also serves as chair of the WSBI Africa Regional Group.