In a landmark move for Tanzania’s financial sector, the formation of the National Cooperative Bank is underway, marking a significant milestone in the cooperative banking landscape. The Kilimanjaro Cooperative Bank Limited (KCBL) shareholders, in a decisive step, have endorsed crucial changes and a strategic merger during their 26th Annual General Meeting (AGM), paving the way for the establishment of this much-anticipated national entity.
This pivotal development comes as KCBL, a key player in the cooperative banking sector, approved the merger with Mtwara-based Tandahimba Community Bank (TACOBA), signaling a consolidation of efforts and resources towards the creation of the National Cooperative Bank. Dr. Gervas Machimu, Chairman of KCBL, underscored the significance of these steps. “Merging KCBL with TACOBA accelerates our progress in building the required capital base of 15 billion/-, a crucial requirement for the establishment of the National Cooperative Bank,” he emphasized.
Following TACOBA’s recent AGM decision to transition from a community bank to a cooperative bank, the combined capital of KCBL and TACOBA now stands at 6.6 billion/-, edging closer to the regulatory capital benchmark of 15 billion/-.
Additionally, the KCBL shareholders have also given the green light to the formation of a Cooperative Holding Company (CHC), which will hold a 51 percent stake in the Cooperative Bank of Tanzania (CBT) on behalf of cooperative unions.
In a related development, Mr. Abdulmajid Nsekela, Chairman of the Tanzania Cooperative Development Commission (TCDC) and CEO and Managing Director of CRDB Bank, announced that CRDB Bank would acquire a 20 percent stake in the new National Cooperative Bank. “CRDB’s foundation as a cooperative bank and its transition over the past three decades to a commercial bank uniquely positions it to significantly contribute to this initiative,” said Mr. Nsekela.
Minister for Agriculture, Mr. Hussein Bashe, lauded the move, highlighting the positive impact the National Cooperative Bank is expected to have on the cooperative sector and other economic stakeholders in Tanzania. “The establishment of a National Cooperative Bank, built on the solid foundation laid by KCBL, is a beacon of hope for the cooperative sector in the country,” Mr. Bashe stated in a speech read by the Kilimanjaro Regional Commissioner, Mr. Nurdin Babu.
Reflecting on KCBL’s journey, General Manager Mr. Godfrey Ng’urah pointed out the bank’s significant achievements in the past three years, thanks to a strategic investment from CRDB. “Our growth in deposits and loans, along with our contribution to the tax revenue, sets a strong precedent for the establishment of the National Cooperative Bank,” he added.
The establishment of the National Cooperative Bank is a response to past financial challenges faced by KCBL, which received a crucial capital injection of 7.0 billion/- from CRDB in 2020 to boost liquidity and overcome management issues.
This move towards a National Cooperative Bank is poised to revolutionize Tanzania’s cooperative banking sector, offering enhanced financial services and support to cooperative unions and other economic entities throughout the country, driving growth and sustainable development.