Published by the African Executive, 2006-04-19 and by The Citizen, 2006-05-04


Blind Banking Craze


An efficient and well working financial sector is crucial for an efficient and well working economy in general. That, at least, some countries in Africa, in this case Tanzania, still have a long way to go is a fact I discovered a few months ago.


As a business journalist and consultant with a special interest in the financial sector, I set out to know more about the performances of the banks in Tanzania. If one wants to learn how banks are doing, the most natural thing to do is to start with the annual report from each bank. Studying a bank’s profit and loss account, balance sheet together with a brief description of the bank’s strategy is an easy way of getting a first glance on how, and also what, a certain bank is doing. 


After looking up the physical addresses of the banks in Dar es Salaam in the Yellow Pages, I began my tour in the city’s bank offices. Knowing from my experience in Europe that most banks are more than willing to provide one with their annual reports (Very often, you don’t have to ask for them - they are on the information desk near the entrance, ready to be picked), I entered the first bank on my list, confident to be through with my task within a couple of hours.


“Annual report?”


The girl at the information desk looked very surprised and puzzled. After explaining to her what I wanted, she said; “Just a moment, Sir”. After more than one telephone call to different people within the bank, she told me to  go to another office in the same building where I would find a certain person who maybe could help me. I found the particular lady, and she told me to visit her office. In the office, she told me that those figures were not official. When I told her that I would be very surprised if they weren’t very official, she told me to go to the bank’s head office situated a little bit outside the city centre.       


On arrival, the same story began.


“Annual report? Have you called the financial department?”


After many internal telephone calls to different people within the bank I got the name of a person at the financial department who maybe could assist me. He could indeed, but not on the same day. He had just one copy of the annual report whose photocopying process would tarry until the next day.


I felt a little bit low-spirited after my first attempt but  decided to cheer myself up, and  headed for the head office of one of the biggest commercial banks in town.


“Annual report?”


After a few internal telephone calls by the girl at the reception, I was informed that they didn’t know if they had any annual reports available, and that they would call me back later. They called me the next day to inform me that they had no (!) reports available.


After two days I had visited six banks but still didn’t have a single annual report in my briefcase. Always the same reaction: “Annual report?” “Which annual report?” “Do you have an account here?”  “Do you wish to open an account here?” “I think you must see the financial manager.” 


At one bank they told me I must write a letter to the managing director (!) of the bank and ask for the annual report. At another they handed me the only copy they had on condition that I photocopy it myself in town. At one of the biggest banks in town the man I spoke to had given away the only two copies of the annual report he used to have. At more than one bank they simply asked me what I wanted the report for.  


The way the people at the banks reacted when I asked for the reports shows that they are not used to such requirements. Like in most other countries, the banks in Tanzania are obliged to report and publish their performance in figures, but apart from a few reporters and analysts, people, including most bank employees, do not read them. That’s a problem in many ways. It means that most people put their money in a bank without knowing how the bank is performing and operating. They borrow money from a bank without knowing how the bank is performing. Many bank employees do not know how their own bank is performing.


The fact that many people don’t know, or maybe don’t even care, about the performances of the different banks is also hampering the competition among banks in the country. If people are unaware of the different banks performances, how can they make a rational choice among the different banks? A further reduction of the bank’s lending rates, for instance –  needed in a country like Tanzania - will only occur when potential customers actually go around and compare the different banks with one and another. With no doubt, more information from the banks, and, most of all, more demanding customers when it comes to financial information from the banks and financial institutions in general, is very important for a further development of the financial sector in the country.  People must  learn that banks are companies; not infallible and almighty institutions, and that they operate in a market.  


Of course, I did experience one exception when I visited my last bank.


“The annual report? Certainly, Sir. Just a moment”.


After spending less than two minutes in that bank office I had the annual report in my hand. After that I am willing to support that particular bank’s slogan that reads they are “an edge above the rest”.