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Happy Revolution Day: Celebrating roaring success in financial services

THE People of Zanzibar celebrate the 56th anniversary of Revolution, the biggest historical event for the country, with parades, fireworks and other entertainments, but the People’s Bank of Zanzibar (PBZ) also celebrates great strides in financial services in the United Republic of Tanzania.

The bank has been improving financial services along with increasing branches and Automated Transaction Machines (ATMs). Many banks face problems of providing better services to customers.

Long queues, bureaucracy and delays in attending to customers and frequent breakdowns of ATMs to the disappointment of customers, but as we celebrate Zanzibar’s Revolution, PBZ is on track to minimise or end the problems.

Introducing a core banking system (CBS) and the recent launch of mobile money services related to the Tanzania Telecommunications Corporation (TTCL) are other efforts to improve customer care. The customers of PBZ and TTCL (through its T-Pesa) can now carry out several financial transactions on the mobile money service using their mobile phones and PBZ’s ATMs.

Services offered include cash deposits, transfers, withdrawals, payment of utility bills and airtime purchases. TTCL Executive Director Wazir Kindamba said his company, in collaboration with PBZ, simplifies operations, while Mr Juma Amour Hafidh, the managing director, PBZ said his bank had been performing well, particularly in recent years.

Mr Hafidh said the core banking system known as ‘BANKS’ installed by the ICFS Company of Japan last year at $1.9m, had improved services.

He said advantages of the CBS system, when implemented well, would ensure accuracy and error-free delivery of financial services to customers, thus adding to banks’ efficiency and performance and that some of the most positive impacts of deploying CBS in banks: made the staff more competent.

The MD explained further that the core banking system was a set of basic software components that managed services provided by the bank to its customers through its branches (branch network). The bank’s customers can make their transactions (deposits and withdrawals) from any agency on the ATM/RCMP at their disposal.

”Transparency of financial institutions, anti-financial crime (eg money laundering), multi-channel (internet, phone), multi-currency and multiple languages,” are some of the advantages of the CBS system. Linking to the 56th anniversary of the Revolution, Mr Hafidh said the PBZ was the product of the Revolution and was established in 1966 to provide services to the government and ordinary people.

Until 2006 the bank was operating with a manual banking system and then due to growing information communication technology (ICT) the bank started undergoing reforms to replace a bankers realm (BR) system installed when PBZ had 50,000 customers and only three branches: Forodhan, Mwanakwerwekwe and Chakechake supplied by Craft Silicon of Kenya.

He said BR later started showing inefficiency since 2012 after connection to ATMs, mobile banking and internet, yet the number of customers was increasing due to expanded services (from three to 14 branches).

“The BR system had to be replaced to pave the way for better services, including VISA and Mastercard services to the convenience of bank customers and the need for the bank to advance in use of ICT.

The MD said “Our plans to improve the bank system started in 2015 driven by pressure from customers who were complaining about poor services at our branches after the announcement of a CBS tender at least 13 companies showed interest, but only 10 of them filled in and returned application forms.

Nowadays most banks use core banking applications to support their operations where ‘CORE’ stands for “Centralised Online Real-time Environment.” This basically means that the entire bank branches access applications from centralised data centres.

It means that the deposits made are reflected immediately on the servers of the bank and the customer can withdraw the deposited money from any of the branches of the bank throughout the world. “As we the 56th anniversary of Revolution, we are doing the same for our bank’s success. Despite some challenges some years ago, both the Zanzibar government and individuals mainly civil and other employees have benefited a lot,” he said.

Established by the government of Zanzibar, the bank serves as a retail bank, serving individuals, small and medium enterprises (SMEs) and large corporate clients because the fiscal policy is union matter so it operates under the Bank of Tanzania (BoT).

Initially, its service area was limited to the islands of Zanzibar, then in April 2011, the bank opened a branch in Dar es Salaam and Mtwara, and plans are underway to open new branches in Arusha Mwanza, and Mbeya in Mainland Tanzania.

The MD said further that in December 2011, the bank launched an Islamic bank window in addition to conventional banking services it offered. In 2007, PBZ Ltd conducted a survey and found out that many citizens avoid putting their money in banks due to their religious beliefs that prohibited interests.

To cater for the needs of the customers, the bank started Islamic banking. Currently, the bank has four branches in Unguja, Pemba and Dar es Salaam and it is growing very fast in terms of deposits at a rate of more than 100 per cent per year.

Under the Islamic banking, PBZ offers an array of products ranging from deposits to financing and services ranging from money transfers to all kinds of trade financing.

Islamic banking products are mainly divided into deposit mobilisation contracts, such as Al Mudharaba (Saving and Time Deposits) and fund utilisation products, such as Bai Muajjal (Sale on Differed Payments) and Murabaha (Sale on Cost plus Mark Up).

Under financing products the Islamic also offers other products such as Bai Salam (Financing of Agricultural Products) and Bai Al Istinai (Financing of Manufactured Goods) and IKHLAS - Mortgage Financing, Lease (Ijarah Financing) and Shariah (Compliant Education Financing).

“We have been doing well and so far we have given out of more than 332.6bn/- loans, including housing loans,” he said, adding that the bank had been finding ways to overcome challenges it was facing.

Mr Hafidh said frequent complaints about long queues during peak business hours, unjustified bureaucracy and frequent breakdowns of ATMs might soon be problems of the past should ongoing bank reforms be successful.

Despite technological advances such as online, mobile banking and ATMs, customers, including legislators, were still complaining about the bank particularly endless queues.

“Improving electronic the CBS to handle as many customers as possible is our current target,” Mr Hafidh said, adding that a recent order to make all payment through the bank had increased the workload.

He said all payments to the government were made through PBZ, which had increased customers and also the use of strip ATM cards had not been so much affected because of poor security features, leading to inefficiency and complaints.

He noted that that the use of new ATM cards (chip card) which are EMV compliance, an increase in ATMs, introduction of agency banking and get way (e-payment) would further improve bank services.

“We have already trained and connected with the judiciary and the licensing department and the introduction of a mobile payment system is expected to solve the problems,” said Mr Hafidh as he talked about admirable achievements recorded by the bank in half a century.

The MD urged customers to visit PBZ branches and get updates on the bank’s reformed and improved services, including on the spot issuing of cards, loans facility and mortgage loans with soft conditions. Ministers from opposition parties, appointed by the President, have also spoken positively about the development of PBZ, urging the bank staff to extend their services to rural areas.

Mr Juma Ali Khatib and Mr Said Soud Said, ministers without portfolio, said PBZ had been doing well, but it needed to serve more people like farmers who were still keeping their money at home. They said many people lived in villages and engaged in farming, fishing and in other activities, but they could not easily access bank services.

“Keeping money at home poses many risks, which include theft, losses through fire accidents and to avoid unnecessary disturbance when receiving payments. “You need to keep your money in a bank of your choice. It is safe and having an account will enable you to access loans if you need them,” Mr Soud said, urging citizens to use banks in the country for their financial transactions and loans.

The ministers asked government parastatals to educate people, including farmers, on the importance of having bank accounts, including risks of keeping a lot of money at home. Pemba Island remains the biggest producer of farm products.

Mr Mussa Kombo, who is a farmer from Unguja Island, said he recently closed his account in one of the banks because of inconveniences whenever he wanted his money, “It is a problem. Queues and frequent breakdowns of ATMs have prompted me to close my account and keep the money at home.”

President Ali Mohamed Shein also hailed the bank for roaring progress, urging the staff not to relax because of the achievements, but to work harder to achieve the objectives, including extending the services to rural areas. He said banking helped a small business by making it easier to manage day-to-day financial tasks, including making it easier to borrow money when “your business grows.”

Researchers say that the future of banking is changing. With high interest rates, low fees and a propensity for digital technology, online banks are successfully competing with traditional banks, forcing many banks to go mobile.

Author: DAILY NEWS Reporter in Zanzibar

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