CRDB Bank: Tanzanian Banking’s Leading Light

By John Manning – john.manning@internationalbanker.com

It is almost unfathomable to think that CRDB Bank has been in operation for only 20 years, especially in light of its eventful and astronomical rise to the top of the banking industry in Tanzania. Under visionary leadership, which has fostered a culture of progression, innovation and distinctive customer experience, the bank is now among the leading lights in the entire African banking sector.

What is particularly sweet about CRDB’s success is that it has been achieved by local excellence, rather than foreign. Since a privatisation drive was launched under the presidency of Mr Benjamin Mkapa (1995-2005), many state-owned firms were transformed from loss-makers to profit-generators, with many successful turnarounds being registered. For all such companies, the one common factor they share is that they are either owned in part and/or capitalised by a dominant foreign presence, or their management is headed by a non-Tanzanian. However, CRDB Bank is almost 100 percent run by a local management and workforce team. In addition to strong leadership and the consistent adoption of new, innovative banking practices, the listing of CRDB Bank on Tanzania’s main stock exchange in 2009 was pivotal in strengthening the balance sheet and reputation of the institution, giving it the ability to fulfil its ambitions in domestic and regional network expansion, and upgrade its core banking systems as well as alternative delivery channels (composed of various electronic banking platforms). Indeed, of its relatively short-lived existence, 2015 could well be CRDB Bank’s greatest 12-month period thus far.

It is expected that the bank will claim the top spot in the East African region sooner rather than later; and with 198 fully integrated bank branches, a profit of TZS139 billion at the end of last year, a 22-percent share of Tanzania’s banking market in terms of assets and deposits, and an overall customer base of 1.8 million (from a very modest 120,000 back in 1996), it would be extremely brave to bet against the bank scaling such lofty heights in the near future.

Today, CRDB offers a full suite of corporate, retail, trade, treasury, premier wholesale- and retail-microfinance services through a network of more than 198 branches, 462 ATMs, 15 depository ATMs, more than 18 mobile branches, more than 1,000 point-of-sale (POS) terminals—and more importantly, the recently introduced network of 2,036 CRDB Banking Agents (branded Fahari Huduma Wakalas). Perhaps most pleasing for the bank has been that the success has been achieved across a wide range of the bank’s business units, with innovation lying at the heart of this success. Ground-breaking alternative banking products and services have been developed, for instance, while a focus on increasing flexibility and self-service platforms has meant that customers can access their accounts using mobile phones, Internet banking and mobile branches fully equipped with ATMs and mini-teller cubicles. Its retail-banking division has also been at the forefront of product and service development. CRDB’s cash-back service conveniently allows customers to obtain cash back at selected shops through smart POS devices, using CRDB Bank Visas and/or MasterCards branded as TemboCards. A customer can purchase goods at a supermarket, for example, and then also request an amount of cash, which the cashier can provide after swiping the card for two separate transactions—the purchased goods and the cash. Similar services are available at Banking Agents, where customers may also open accounts, deposit or withdraw cash from their accounts as well as transfer money to other bank accounts or to mobile wallets of the Mobile Network Operators (MNOs).

The bank’s corporate-banking division has also adopted a refreshing, forward-looking approach to what is normally considered a traditional type of business. Identifying India and China as its two key future growth markets, CRDB has positioned itself impressively to benefit from expansion in these economies. India and Tanzania have had strong historical and cultural ties, with Tanzania having a large Indian population that dates back centuries. As such, CRDB has set up its first India Desk in Tanzania, which functions as a single window to support all banking businesses related to Indian sub-continental investors, exporters and importers in Tanzania and Burundi. Similarly, a China Desk staffed with Mandarin speakers has also been established to facilitate continuously emerging business opportunities resulting from the growing trade and investment links between China and Tanzania. The initiative has already managed to attract the involvement of some of the world’s biggest banking names, with CRDB being able to boast of collaborative partner banks, including Bank of China, ICICI and HSBC. The desk can be considered as a one-stop “shop” for Tanzania’s Chinese community, as well as for Tanzanians and Burundians doing business with mainland China and Hong Kong.

Indeed, the reason that Burundians are able to get involved at all is thanks to the establishment of CRDB’s Burundi subsidiary, the first outside of Tanzania. The unit has already performed beyond expectations, posting a solid profit in 2015 of TZS657million. Remarkably, this annual profit amount was nearly eclipsed in 2016’s first quarter alone, which hit TZS416 million in only three months, which is even more notable when one takes into consideration the political upheaval that is widespread in Burundi at present. The bank’s target of 5 percent market share in the East African country by the end of 2017, moreover, has come a staggering two years ahead of time, according to the bank.

CRDB Bank Managing Director Dr. Charles Kimei addressing invited guests during CRDB Bank and Temeke Municipal Council loan agreement signing ceremony at Serena Hotel

Indeed, CRDB’s charismatic CEO and managing director, Dr Charles Kimei, is even more bullish about this year’s performance. “We are now figuring out that the subsidiary will have a 10-percent market share coming 2017,” adding that CRDB could well have attained a 10-percent share to date, were it not for Burundi’s current prevailing unrest. The performance of the Burundi subsidiary has elevated ambitions for further cross-border investments.

The other major CRDB unit that has performed admirably of late has been its thriving microfinance-services subsidiary, which has been originating and managing microloans on a wholesale and retail basis for the parent bank. The subsidiary posted a pre-tax profit increase of 41 percent in 2015. The unit is on the verge of being transformed into a standalone microfinance bank, so the healthy growth figures have come in at just the right time. Strong profitability for this subsidiary in 2015 has been credited specifically to growth in insurance commissions from the Insurance Brokerage unit (which it hosts on behalf of the Bank Group), interest income on term loans and non-interest income, with the loan portfolio particularly improving on the back of an astounding 81-percent rise in deposits mobilised from partner microfinance institutions (MFIs). The subsidiary, CRDB Microfinance Services Ltd, was able to establish 75 service outlets across Tanzania during 2014-15, enough to act as branches to support the establishment of a full-fledged microfinance bank. These “mini branches” have been established in semi-urban and rural areas of Tanzania and are categorized as services centres, which are smaller in size than a typical bank branch, as well as even smaller mini-service centres, or sometimes known as “Bank Kiosks”. These have been designed with the specific goal in mind of improving financial inclusion within Tanzania, as they can be set up with relative speed and ease, allowing them to access more remote locations that have minimal financial accessibility.

CRDB Bank Managing Director & CEO, Dr. Charles Kimei (3rd from left) handing over a dummy cheque to Tanzania Police Force Inspector General Ernest Mangu. The Bank donated TZS 255 million for the construction of new and modern Police Call Centre.

Today, nearly 450 partners, mostly savings and credit co-operatives (SACCOs), are the recipients of CRDB’s highly revered wholesale-microfinance services. The bank is also currently piloting a mobile-money wallet (branded as mWallet) aimed at encouraging microfinance and unbanked beneficiaries to open virtual mobile accounts and access a wide range of financial services including credit, micro-insurance and money transfers. They will also have access to an electronic platform that supports the management of informal microfinance groups. CRDB considers this project to be of the utmost importance for the finance industry in Africa, with some believing that the model can be replicated in other parts of the continent and beyond.

As a result of CRDB’s outstanding 2015 performance, a slew of awards have come the bank’s way. The Institute of Certified Public Accountants of Kenya (ICPAK) deemed the bank to be the best in Tanzania, as well as first runner-up in the entire East African Region in the banking category. The country’s National Board of Accountants and Auditors also recognised the lender’s meticulously presented financial statements, while also awarding it a second-winner prize in the banking category as well as the Best Board Leadership Award. The Association of Employers in Tanzania has consecutively awarded the bank first place for it excellent human resources policies and practices. And the bank was deemed to be the Best Local Trade Finance Bank in Tanzania by GTR Africa Leaders in Trade. CRDB has also won the Best Board Award from Capital-Plus International Tanzania.

A remarkable proportion of award recognition in recent times has specifically been bestowed upon Dr Charles Kimei, CRDB Bank’s inimitable CEO. Dr Kimei received the coveted CEO of the Year prize at the Tanzania Leadership Awards 2015 from Purple Cow Media Solutions, while the bank overall won in the Brand Excellence, Banking and Financial Services category. Indeed, Dr Kimei’s work has not only achieved local recognition; the prestigious Europe Business Assembly (EBA) of Oxford, UK, decided that CRDB’s CEO was the best manager of 2015. Simultaneously, the bank won an award from EBA as the Best Enterprise of 2015 in Tanzania. Additionally, Kimei was for the third time re-elected as chairman of Tanzania Bankers Association last year, whilst he also served on the boards of Tanzania National Business Council and Tanzania Private Sector Foundation. Dr Kimei also holds leadership positions in various financial and business associations in Tanzania, such as the Tanzania Mortgage Refinance Company, Higher Education Student’s Loans Board, Financial Inclusion Council of Tanzania, National Institute for Productivity and Tanzania Education Authority as board member.

CRDB Bank Managing Director & CEO, Dr. Charles Kimei handing over solar panels and food stuff worth TZS 55 million to First Lady Mama Janeth Magufuli (second right) being a donation to Bukumbi elderly and disabled centre at Misungi district, Mwanza. Second left is Mwanza RC Magesa Mulongo and Misungwi DC Mwajuma Nyiruka

Such a wealth of expertise has allowed Dr Kimei to produce stellar results for CRDB. As such, it is not surprising that his contribution to the prosperity of the bank—as well as the wider industry as a whole—has been garnering as much acclaim as it has recently. During the last year or so, the CEO led his bank through a successful capital-raising exercise—through a Rights Issue that was underwritten by international investors—with a view to consolidate the bank’s capital position and provide a solid foundation for further expansion over the next five years; the bank also launched a proprietary-in-house developed Fast Account Opening mobile application, which allows customers to complete the account-opening process quickly and without even having to visit a physical bank branch; and it won 70 percent of the open business tenders initiated by the government. A comprehensive process review has also been put in place under Dr Kimei’s leadership, in conjunction with global industry leader KPMG, to examine and improve operational performance with the ultimate goal of achieving the highest standards of customer service and experience. The initial phase has involved an overhaul of the structure of bank branches, with the creation of a centralised processing body; while the next phase will usher in the standardisation, simplification and automation of key processes. Improving customer service is, again, the main objective of such measures.

This year, the bank is officially celebrating its two decades in operation. Dubbed 20 Years of Growth and Transforming Lives, the celebration involves offering donations to various social institutions—mainly education, environment and health-based—as well as rewarding long-term staff members, outstanding staff and shareholders. It also seems like an appropriate time to pause and take stock of just how meteoric CRDB’s rise has been, although it is unlikely that the bank will be resting on its laurels any time soon. Indeed, future plans include the unrelenting expansion into new frontiers, such as the Democratic Republic of the Congo, in order to gain a healthy share of East African markets; create a separate, fully functioning microfinance bank to help those fellow Tanzanians who require the most financial assistance; and continue to be a cutting-edge, forward-thinking institution under the guidance of Dr Kimei. As such, the African continent’s banking sector has a light that is shining ever brighter in the East.