REPOST:MARCH 13, 2017
TanzaniaInvest had the pleasure of interviewing Ineke Bussemaker, MD and CEO of the National Microfinance Bank (NMB), Tanzania. NMB is one of the biggest commercial banks in Tanzania, 32% of which is owned by the government. Bussemaker talks about the current lack of liquidity in the banking sector, the country’s investment potential and economic outlook.
TanzaniaInvest (TI):Tanzania is among the top African destinations for FDI. What is your view on the country’s potential and framework for investments?
Tanzania, as well as Kenya and Cote d’Ivoire, are the top African countries that investors are very interested in Ineke Bussemaker (IB): Tanzania, as well as Kenya and Cote d’Ivoire, are the top African countries that investors are very interested in. The investment appetite for Tanzania is largely driven by its size with 50m people but the country is still quite underdeveloped so there is high growth potential, especially in agriculture. However, Tanzania is struggling to transform that potential and ideas into practical projects. This is due to a range of issues that Tanzania has to solve. One is political decision-making: it is taking investors a very long time between their first visit to Tanzania and the time when they reach an agreement with any government entity.
TI: In which sectors in Tanzania do you see the highest potential for growth? Tanzania’s largest potential is hiding in agriculture and particularly in the agro-processing industry
IB: Tanzania’s largest potential is hiding in agriculture and particularly in the agro-processing industry. However, the sector is dominated by smallholder farmers, which is somewhat limiting in terms of size of the investments. I believe that medium or large commercial farms will help Tanzania to develop, because these farms will also create infrastructure. Accordingly, there will be power, water, and means of transportation. Large farmers have the advantage of scale, and the small farmers can benefit from it. For example, there are 7,000 smallholder farmers benefiting from the infrastructure of the Kilombero Plantations (KPL), a farm in the Kilombero Valley, charged with developing over 5,800ha of land. I strongly believe in this model and I think that Tanzania can make significant progress by applying it. At NMB, we work with farming cooperatives and farmer groups, providing them with loans and working capital as well as training / capacity building by NMB Foundation.
TI: Which other sectors of the Tanzanian economy have the greatest realistic potential for growth? Tanzania’s gas, helium, energy, and construction sectors also have great potential for growth
IB: I believe that Tanzania’s gas, helium, energy, and construction sectors also have great potential for growth. The government is very focused on building infrastructure, including roads, schools, and health clinics, and so, the building sector is growing especially in the rural areas. Tanzania is also endowed with large mineral resources, which will continue to support the country in the future. The potential of Tanzania to double its population from 50 to 100m people in the next few decades is calling for industrialization Also, the potential of Tanzania to double its population from 50 to 100m people in the next few decades is calling for industrialization.
TI: Tanzania is currently experiencing a lack of liquidity in the market. What are the reasons behind this situation and how is this impacting your balance sheet?
IB: Part of the liquidity was in the banking system, but the government has asked all of that to be transferred to Bank of Tanzania (BOT), especially the deposits from parastatals and local governments. In the last few months there has been a shortage of liquidity in the market, which in turn impacts our capacity to lend and our balance sheet significantly So, in the last few months there has been a shortage of liquidity in the market, which in turn impacts our capacity to lend and our balance sheet significantly. We have tried to mitigate these effects by using other funding sources. These include our own bond issue and longer-term funding from the Netherlands Development Finance Company (FMO) and The European Investment Bank (EIB).
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