|
Big nod to proposed development bank
2006-07-12 09:12:41
By Mireny john
Since independence, and even after the launch of financial sector reforms in 1991, the economy has been running without a key pecuniary link: The lack of a truly investment bank with a national character.
At some stage we tried to establish the Tanzania Investment Bank (TIB) with conviction that it might one day act as a development bank.
However, since its establishment, TIB stumbled along with liquidity, managerial and technology constraints to the effect that its ability to offer term financing for production has been extremely limited.
Although TIB vision is to provide medium-to-long term loans to key sector like manufacturing, agriculture and tourism, its current Tsh.24.9bn level of capitalization (including government’s funds) can hardly meet its noble goals.
In order to transform TIB into ’development bank’, some cash injection to the order of Tsh.50bn is a must.
The recapitalization of TIB has been taken care of in this fiscal year, a big plus for the incumbent administration.
The challenge lying ahead is how to transform TIB into an ipso facto development bank. Elsewhere, it is common to find top executives of a typical development bank filing into conference rooms daily to run through risks, relives about past financial crises, and worry about new ones.
They analyse, for example, how much money might the bank lose if the markets were buffeted like they were after the terrorist attacks of 2001.
They pore over complicated risk models showing how tens of thousands of new loans with clients would fare in the event of say prolonged drought and Avian flu epidemic.
Term financing is the business of risk management 365 days a year.
A comprehensive institutional transformation is a fundamental strategy; one that seeks to re-engineer managers and shop-floor work persons towards managing and operating term lending.
For instance, it sounds funny for one to learn that TIB does not operate checkable accounts while its lending activities involve huge amounts of cash.
Investment in technology (ICT) should be seen as part of an indispensable sinking fund, yet whose returns are quickly realized.
Occasionally, the European Investment Bank (EIB) complains about its lack of stakes in Tanzania because the country is said to lacking a corresponding development bank to forge partnerships with.
Thus, from the word go the initiative to transform TIB into a development bank is positive. We should consolidate on it.
|
