Three community banks working to list on Dar bourse

Three community banks are in the process of listing their shares in the Dar es Salaam Stock Exchange (DSE) as a way of topping up their capital and upgrade clients to become shareholders.
 
They are Mbinga Community Bank, Mufindi Community Bank and Kilimanjaro Cooperative Bank. They will join Dar es Salaam Community Bank which is already listed in the bourse.
 
Speaking at the weekend Community Banks Association of Tanzania (COBAT) Chief Executive Officer Fuhanael Kihunrwa said the three are seeking shares to the tune of 2bn/- to beef up their capital.
 
He said this shortly after opening the meeting that brought together 80 community bank stakeholders from eleven regions in the country aimed at discussing the new approach to increase capital.
 
“These banks wish to join the DSE so that they can increase their capital, but they cannot do so at the moment because they lack capital and other requirements including having the required number of shareholders in rural areas, knowledge of investing in banks by purchasing shares,' he said.
 
Further, he said COBAT has eleven banks with total assets of 200bn/-, and 500,000 customers, adding that out of these only one bank has 2bn/- in capital, adding that the meeting came at the right time.
 
In another development three regions including Mwanza, Simiyu and Mbeya are in the process of opening a community bank after they had already submitted their requests to the Bank of Tanzania (BoT) for other procedures.
 
So far it’s only DCB which has listed in the stock market as the rest are facing the challenge topping up capital. He said the association is planning to conduct intensive public financial literacy campaigns so as to encourage communities to build matching funds in all the remaining regions in the 2016/2017 year.
 
“By considering this challenge we decided to meet here so that we can come up with new techniques on how these bank can increase their capital for the benefit of the people living in rural areas,’’ he added.
 
However he said despite the efforts made by the government to encourage members of the public to form financial groups still a big number continue save their money through traditional means.
 
He called upon them to join financial groups like Saving and Credit Cooperative Societies (Sacoss) and Village Community Banks (Vicoba) so that they can be able to secure loans.
 
For his part, a financial expert in rural areas, Thomas Mgimba, said the government will continue to educate the people on how to use CBs for the development of their incomes.
 
As for Mwanza, advisers and the management of the Mwanza Community Bank are still taking measures to collect money from district authorities that would enable it to list shares at the alternative market of the Dar es Salaam Stock Exchange (DSE).
 
Already the bank has agreed with the nominated advisor – Arch Financials and Investment Advisory Services licensed by the Capital Markets and Securities Authority (CMSA) to make sure that it completes the work before September 30, this year.
 
Speaking to this paper in an interview, the CMSA Chief Public Relations Manager, Charles Shirima, said the bank is taking various efforts to collect money as agreed with some district councils within the region, as well as looking for private equity funds to top up the bank’s capital.
 
“They have agreed that come September 30, this year, the bank has to finalise the whole process and announce the results to the prospective shareholders. “ The people who invested money in the bank need and have the right to know the status of their investments.
 
The bank which was established three years ago, and its initial public offer was opened on October 1 and closed on November 31, 2013 and the minimum subscription was 100 shares.
 
It had 5 million shares available for subscription of which, 600,000 shares (12 per cent of the total shares) have already been issued and paid by the founding members.
 
According to the prospectus, the bank projected that its net profit will grow to reach 880m/- by December 2018.
 
The forecasts are in relation with the projected tax which is about 10m/- in 2015 and about 290 m/- in 2018.
 
The bank sought to raise 2.75bn/- shares and was scheduled to list on the Enterprise Growth Market (EGM) segment of the Dar es Salaam Stock Exchange come December 13, 2013.
 
The raised money is expected to be used to acquire the necessary technology and facilities, enhance investor and general public awareness and widen its ownership base.
 
Mwanza Community Bank was registered under the Companies Act CAP 212 of 2002 in March 2012 as a private company, and it was later converted into a public limited liability company.
 
It was established to cater for financial services to the community, particularly the low-income segments of society in Mwanza.
 
The EGM segment is designed to enable startup of small and medium enterprises that cannot meet the requirements of the Main Investment Market Segment (MIMS) of the DSE to access the capital markets for raising capital, diversification and for other corporate reasons.
 
The market will exist in conjunction with, and complement the existing MIMS at the exchange.
 
The establishment of the EGM is a result of recommendations of a study conducted by the CMSA on the appropriate structure for Tanzania in an effort to develop and strengthen the capital markets.
SOURCE: IPPMEDIA

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