ABSA Tanzania MD speaks on the Banks Key Highlights

Following the successful launch of the Absa brand in Tanzania, our editor had the opportunity to catch up with Absa Tanzania Managing Director Abdi Mohamed. In a wide ranging exclusive interview he was able to share the key highlights of the journey to Absa and the turnaround in financial performance over the last 4 years.

Q: What is the status of the Absa brand transition so far?

A: Three years ago, we set out on a challenging and exciting journey to transition the Barclays brand to Absa in all our presence markets in Africa. In February we successfully launched the Absa brand in Tanzania. In the months since then we have fully concluded our separation programme and are now operating in Tanzania as Absa Bank Tanzania limited. We appreciate the support and guidance from the Bank of Tanzania under the leadership of the Governor, Professor Luoga. I would also like to mention the support of other government agencies in this process.

Q: How is the Absa brand performing in Tanzania

A: As Absa Bank Tanzania, we are well represented within the country. We maintain a network of 15 branches and 60 ATMs in which 49 are deposit accepting ATMs that are strategically placed within a number of cities that includes Dar es Salaam, Dodoma, Mwanza, Arusha, Zanzibar, Moshi, Morogoro, Iringa and Mbeya.

As a Group, we have a presence in 12 African countries and an international representative office in London. We have almost 41,000 employees, more than 1,000 branches, and approximately 10,000 ATMs. We are one of Africa’s largest diversified financial services groups, offering an integrated set of products and services across personal and business banking, corporate and investment banking, wealth and investment management and insurance.

As an organisation, we believe in bringing possibility to life. We are here to fulfil the ambitions of our customers and communities, and we look forward to continuing to build strong partnerships in both private and public sectors to make this a reality.

In Tanzania Absa has performed well financially over the past three years supported by the growth in key economic sectors in the economy as well as an enabling regulatory environment. We have provided over 500 billion TZS in credit facilities to among others Manufacturing, Construction, Tourism, Trading and Agriculture since 2016. We have introduced a Bancassurance unit, enhanced our online and digital channels capabilities and improved our transactional and card prepositions in both acquiring and issuing.

As a result of these efforts and initiatives, we have grown revenues by a Compounded Annual Growth Rate (CAGR) of 7.2% since 2016. Our total balance sheet has grown from 673bilion TZS to 1Trilion TZS as at the end of 2019. The bank continues to be well capitalized and has sufficient and growing levels of liquidity to continue serving our customers.

We have optimized and refreshed our branch network to be of the state of the art. We currently have six branches in Dar es Salaam namely Alpha house, Mikocheni, Pugu Road, Slip way, Dar City Mall, Ohio and nine branches in nine regions namely Arusha , Moshi, Mwanza, Tanga, Dodoma, Iringa, Mbeya, Morogoro, Zanzibar. We also have invested in top of the range ATMs with our ATM network now standing at 60 ATMs.

The feedback from our customers in the latest survey indicates satisfaction with the Absa brand and its services. We of course continue to research, innovate and improve our offerings to the market.

Q: How has the COVID19 crisis affected your business?

A: Covid 19 as you know is a global crisis that has affected the global as well as regional economies with global projections indicating a significant impact on key sectors such as travel, tourism and hospitality. The Tanzania economy has been more resilient and has performed better than regional peers during the Covid period, mainly as a result of early mitigating actions taken to ensure a balanced approach to the crisis.

In the financial services sector, the BoT and the TBA have taken a leading role in coordinating industry efforts to ensure the financial effects of the crisis are well managed. Some of the measures that were issued by BOT to mitigate the COVID-19 impact include:-

Lowering the SMR by 1%, Reduction of discount rate from 7% to 5%, Reduction of haircuts on government securities, increased daily transactions limits for mobile money operators as well as permitting regulatory flexibility in order for banks and financial institutions to discuss restructuring of loans with borrowers who are facing financial difficulty due to COVID-19

In Absa we have taken a number of actions to ensure our staff and customers remain safe in line with Ministry of Health guidelines. As part of our social responsibility agenda, we have donated a PPE material (Mask, Sanitizers and Gloves) which was received by the Minister for Health on behalf of the government of Tanzania.

Recognizing the impact of Covid19 on some of our customer’s businesses we have instituted a debt relief programme, in line with the guidelines of the BoT. This is done to alleviate the impact and after thorough discussion and agreement with the clients. It is also done strictly in accordance with the existing regulatory guidelines. Under this debt relief programme we have restructured to the tune of 125Bilions TZS to support the customer during this time.

We currently planning to partner with some of our clients to continue to support the Government with fight against the pandemic.

Q: You recorded positive business trend last year compared to 2018, registering a 6 per cent revenue growth. What prospects do you have for the coming year as far as Covid-19 economic crisis is concerned?

A: During this period the main focus of Absa has been to support our customers in the most affected sectors to manage and mitigate the business impact of Covid19. This has been done through not only the targeted debt rescheduling measures but also through our ongoing technical advice on managing their business through the effects of the global pandemic. The forward looking projections depend to a large extent on the success of the global measures taken to fight the pandemic. The broad consensus at present appears to support a gradual global recovery starting in 2021 as countries continue to reopen and as global trade and travel resumes. In Tanzania we have seen relatively less impact on our economy mainly as a result of the balanced approach adopted with regards to the issue of shut-downs, the diversified nature of the economy and the mitigating actions contained in the Bank of Tanzania statement dated 08 May 2020.

The impact of the depressed global trading environment, the disruption in supply chains as well as the macro impact of global lockdowns and travel restrictions is expected to have sectoral impact in certain key sectors. The impact of this on banking sector performance remains to be seen and is dependent to a large extent on the pace of recovery and how the global situation unfolds in the coming months. Our focus at present is to work with all stakeholders and to support our customers through this period.

Q: Tanzania is focusing on industrial economy, which relies on agricultural produce. Do you have intentions of supporting agriculture in the country?

A: First and foremost, I would like to congratulate our 5th phase Government on the recent reclassification of the United Republic of Tanzania as a lower middle income country by the World Bank. This was achieved ahead of schedule and is a testament to the positive policies in key sectors of the economy such as manufacturing, agriculture and mining among others.

With regards to your specific question on Agriculture, the sector contributes 26% to the country’s GDP and provides livelihood to the majority of the population. Absa is committed to ensure we support the Government initiative and to date, we have supported customers in agriculture and the key value chains to expand their factories, buys from farmers, export, and local processing. Some of the cash crops that we have supported includes cotton, sugar, cashew nuts and sesame among others.

While we continue to provide this support, we constantly review any improvements we can make in our offering to this key sector and you will see more focus on this. In addition to agriculture, Absa has a wide range of products, services and solutions for all major sectors of the economy and we have clients in manufacturing, energy, tourism, construction, health-care, and trade among others.

Q: As you look forward what should your customers expect from Absa

A: Absa continues to play a pivotal role in the banking sector and the wider economy. We will continue in our great tradition to innovate and introduce new products and services to our customers. We have invested significant amounts of money to enhance the look and feel of our branches and invested in cash accepting ATMs. Additionally,

We have obtained a Bancassurance agency License and are in the course of rolling out to the market. We pride ourselves in expertise, excellent support as well as convenience.

We have rolled out the first new vertical Absa card that is contactless. On 24th July, and soon we will be launching a new card capability that is still speaking of bringing possibilities to lives of our customers and Tanzania in general.

We are currently upgrading our mobile banking platform to further improve client experience with new features including password recovery, improved navigation etc.

We are working on client engagement channels including WhatsApp banking as well as Interactive Voice Response (IVR) lines.

We have just introduced a Government Electronic Payment Gateway (GePG) platform where our customers can now easily make all their TRA Tax payments through our branches or our CIB Online portal.

Q: Finally, is there anything that hasn’t been touched upon this you would like to be mentioned?

A: I Just want to emphasize on Digitization and that with the future of banks being digital, we are geared to give our customers products and services that speak to that, and within the next six months, you can expect to see a lot of exciting innovations become part of our portfolio.

We will start commercializing our recently launched Virtual assist (Chatbot) that is available on our public website and WhatsApp, this will allow our customers to be able to talk to us 24/7

Before end of the year we will be rolling out of WhatsApp or social banking channel, this will give our customer ability to perform some banking transactions/services on WhatsApp platform on their smart phones. We will later extend this offering to other social media platform like Facebook and Twitter.

Our online banking platforms have been upgraded to latest cutting edge technologies including finger print authentication and facial Identification, we will continue to enhance these channels this year with additional features like real time bank to bank payments, International payments including standalone application with international inward remittance capabilities, ability to open a new and additional account remotely, remote loan top up capability etc.

In the back end of our operation we are looking continue with backend automation and digitization process that we embarked a couple of years ago e.g. Scanning and Imaging, Intelligent process automation and robotics, advanced analytics & data science, Process redesigning and new platform development to allow new innovations.