The situation has become worse following reports that non-performing loans (NPLs) have affected many financial institutions in the country in recent times. Bank profitability margins have taken a hit after many of them fell victims of these NPLs.
This has made many banks apprehensive when it comes to loans. Scrutiny has been increased and banks can be forgiven even if they reach the point of treating everyone who seeks a loan from them as a potential loan defaulter.
Unfortunately, all this is happening at a time when more and more Tanzanians are trying to venture out on their own, business-wise. In recent years we have witnessed more and more import business, notably from China. And therefore, the coming of the China Dasheng Bank to Tanzania could not have come at a more optimal time.
This fully-fledged commercial bank opened its doors to individual as well as corporate customers last Monday, promising to bridge the remaining trade gaps between Tanzania and Asian countries. With a $40 million startup capital, plus a commitment to increase this amount when the need arises, the bank says it is committed to deliver superior, efficient, and genuinely personalized banking services through the utilization of up-to-date technology, by being customer focused, and by having well-trained and committed staff.
While China Dasheng Bank will provide all the normal banking services such as demand, call and time deposit accounts, overdraft and loans, it also offers additional services including trade finance for both imports and exports, letters of credit, bills for collection, foreign exchange dealings, bank guarantees, asset finance, treasury products, insurance premiums financing, construction financing, and syndicated loans.
The bank says it is focused on providing financial solutions based on the real economic challenges facing both Chinese and Tanzanian enterprises.
We trust that Tanzanian businessmen and traders will make full use of this new bank’s services at its head office in Dar es Salaam. With their business acumen, Chinese firms and individuals with trade and business ties linking their country and Tanzania will waste no time in exploiting the advantages offered by this bank, and it will therefore be dismaying if local entrepreneurs fail to equally exploit the opportunity as well.
But locals should be aware that they can only benefit from this bank if they adhere to doing-business principles and conditions set by the financial institutions. Cutting corners in business will not work with China Dasheng Bank; honouring agreements should be the norm.
Loan defaulting, or using their businesses to get loans and then putting the money gained to a different use, will not augur well with the intentions of China Dasheng Bank to make business prosperous.
But this is two-way traffic. China Dasheng Bank is also supposed to stick to its promises and ensure that it delivers based on those promises. Anything short of that would mean the bank has failed not only itself, but Tanzania’s business community as well.
Both parties should understand that commercial banking is a very important component of the country’s economic development. Good financial services stimulate more economic opportunities. The banking industry is highly competitive right now, with banks competing not only with fellow banks, but other financial institutions and mobile phone service providers as well – what with the emergence and strengthening of mobile banking services.
Since customers now have more choices and therefore more control, the China Dasheng Bank should bear in mind that strong and long-lasting relationships with customers can be forged from the outset provided it maintains commitment and dedication to deliver its services professionally.
The bank might have a competitive edge in the Asia-Tanzania trade area that it has picked as its platform. But banking services can easily be duplicated these days, and if China Dasheng Bank fails to deliver what it has promised, other financial institutions might grab the opportunity and end up pushing them out of business.
If it offers good services, China Dasheng Bank can be a very important vehicle in promoting bilateral trade ties between China and Tanzania. China presently has $70 billion worth of investments in Tanzania, with the trading volume between the two countries measured at $3.4 billion in 2017.
If the bank works well together with local entrepreneurs, there is a real possibility of these numbers getting bigger and healthier. Dasheng is a Chinese word meaning ‘prosperity’. It is our hope that Tanzania’s small and big business community will ensure that they also prosper through their undertakings with this new bank.