REPORT__Evaluating_the_potential_of_microfinance_for_sanitation_in_Tanzania_May_2013

Name of financial institution Mkombozi Commercial Bank Ltd
Name of contact and contact Richard Madeni
details
(Head of Microfinance)
Website www.mkombozibank.com
Contacts P O Box 38448,
Dar es Salaam
info@mkombozibank.com
+255 22 2 137806/7
+255 22 2 136775/+255 22 2 137802
1. Main characteristics of financial institution
Mkombozi Commercial Bank is a relatively new bank licensed in August 2009 but which
started operations in October the same year. MCB was founded by The Roman Catholic
Church in Tanzania. Mkombozi Commercial Bank, (which is Swahili word for saviour) was
opened to the general public on August 2009 at its headquarters of St. Joseph Cathedral
Church in Dar es Salaam. It targets small and medium enterprises (SMEs) and low-end
market clientele.
Funding arrangements:
Mkombozi Commercial Bank started with TZS 6.8 billion (USD5 million) capital raised from
investors purchasing shares at Tsh1,000 (USD0.75). The minimum one could purchase
was 100 shares each. MCB officers proudly say the bank is owned by Tanzanians and
therefore focuses on improving the lives of its customers. Being a commercial bank, MCB
mobilises deposits and therefore intermediates such deposits to provide loans and other
financing arrangements.
Product types:
The bank offers a broad range of financial products across different market segments.
Most important for this study is that MCB has an active microfinance unit that targets the
active poor with microfinance products. These include traders and micro-entrepreneurs.
The bank’s microfinance client base has reached 3,100 customers. It offers groups loans,
individual loans (Mkopo Premium loan) and savings and current accounts as offered by
other commercial banks. The group loan customers comprise about 25% of the customer
base. The microfinance portfolio is about TZS 670 million (USD 496,296) and about one
quarter of this portfolio comprise the larger loans: Mkopo Premium – offered to medium
size business people. These are fully secured with assets and titles.
The group based loans size range from TZS 200,000 to 2 million (USD 150 to 1,500) for a
tenure of 3 to 12 months. Repayments are made fortnightly and the loans attract an
annual interest rate of 27%. MCB adopted the fortnightly repayment frequency to reduce
transaction costs for customers and allow clients time to operate their business. This is
unlike most MFIs that prefer weekly repayments.
As a commercial bank, MCB also offers other products such as salary, business and
agriculture loans. These are usually cash flow based and fully collateralised large loans
targeting well established farmers and or business people.
Salary loans are calculated on the basis of the net salary (loan amounts are a maximum of
12 times the net monthly pay). The loan tenure is a maximum of 36 months and attracts
an interest rate of 18% reducing balance (equivalent to 12% flat rate). The salary loans
have been low risk. However, this is changing since the new younger employees tend to
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