The Citizen (Dar es Salaam)
Zephania Ubwani
24 December 2011
Arusha — After eight years of preparatory work and mobilization of shareholders, Meru Community Bank (MeCoB) has at last taken off to serve one of the districts with a fastest growing economy.
The bank started operations on October 31, this year, and, according to its officials, it was attracting a stream of clients from around the rural district keen to deposit their money as well as enjoy the associated benefits such as credit facilities.
The manager, Mr Simon S. Mangara, said on Tuesday that the bank, based at Usa River along the Arusha-Moshi highway, aims to improve the economy of Arumeru district and would target the money lending institutions at grassroots levels such as Saccos and Vicobas.
Until early this week, it had collected some Sh419.4 million for the purchase of shares and it is anticipated that the amount would reach Sh1.6 billion by June 2013.
He said a recent baseline survey among the credit societies indicated that the bank was sufficiently accepted in the area. “We need the bank to harness the economic potential of this area,” he told The Citizen on Sunday in an interview.
The facility, which becomes the eighth community bank to be established in the country, is currently offering a range of services but will take sometime before it turns into a fully-fledged commercial bank as anticipated.
Mr Mangara added that a big chunk of the capital would be generated through the sale of shares to prospective shareholders. The first 35 shareholders who are credited for enabling the bank to take off are already reported to have increased their shares by between 50 and 150 per cent.
These include different types of savings accounts. Credit facilities for agricultural implements are among the new services to be introduced very soon, he said, adding that currently the bank has over 400 shareholders.
Mr Elishilia Kaaya, one of the bank’s board members, said although MeCoB has been established in a district with many commercial enterprises such as tourist lodges and horticultural farms, its focus will remain to be its ordinary producers.
“This is the only community bank started by grassroots support. The big chunk of the capital to establish it has been contributed by ordinary people,” he said, adding that it has taken six years for the project to materialize.
Commitment and perseverance also made it happen, he added. “There was a high level of commitment by members of the steering committee despite the rigorous regulations by the Bank of Tanzania (BoT),” he noted. Mr Kaaya, who is the managing director of the Arusha International Conference Centre (AICC) explained: “We need the bank to harness the economic potential of Meru District but through supporting the small enterprises.”
He says unlike other community banks which were established through pressure from the government, the idea to set up MeCoB started with the residents of the area and that no individual can have more than 5 per cent shares.
“We don’t allow that otherwise it will defeat the purpose of
ownership of the bank by the people,” said Mr Kaaya, who is an accomplished accountant and finance expert during the briefing.
For instance, all the institutions which are shareholders to the bank have a combined shares not exceeding 3.1 per cent, while seven individuals who have bought 1,000 shares each have a combined shares not exceeding 1.8 per cent of the total shares. And another 57 individuals with between 100 to 200 shares have a a combined shares of only 14.7 per cent while 75 others have a total of 19 per cent shares of the bank, meaning few individuals cannot dominate the bank’s operations.
This, however, does not mean the facility is not floating its shares in an effort to have a strong capital base. Already some 22,000 shares are up for grabs for Sh. 220m.
Mr Amini Mungure, the chairperson of the bank’s Audit Committee, said although MeCoB has taken off after many years of preparations, other challenging tasks lay ahead to make it stand on its feet.
“We will have to work hard to capture the market by making ours the alternative bank for the people of Meru,” he said, adding that the immediate challenge is to convince big institutions like schools and colleges to open their accounts there.
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