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Introducing Kagera Farmers Cooperative Bank to AFRACA

Introducing Kagera Farmers Cooperative Bank to AFRACA. Map of Tanzania showing Kagera region – KFCB’s area of operation. Location. The Kagera Farmers Co-operative Bank Located in Kagera region, North West of Tanzania Postal address: P. O. Box 1656 Bukoba Email: kfcbltd@yahoo.com

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Introducing Kagera Farmers Cooperative Bank to AFRACA

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  1. Introducing Kagera Farmers Cooperative Bank to AFRACA

  2. Map of Tanzania showing Kagera region – KFCB’s area of operation

  3. Location The Kagera Farmers Co-operative Bank Located in Kagera region, North West of Tanzania Postal address: P. O. Box 1656 Bukoba Email: kfcbltd@yahoo.com Telephone: Mobile 0784 499792

  4. Background KFCB was established under the following provisions: The Banking and Financial Institutions Act No. 12 of 1991 The Cooperative Societies Act No. 15 of 1991 KFCB Rules and establishment By-Laws and Regulations Licensing and Prudential Guidelines issued by the Bank of Tanzania.

  5. Background KFCB was registered on the 4th February, 1999 vide Registration Certificate No. 5553. The Bank commenced operations with effect from 19th July 2002

  6. KFCB is the Farmers Bank • KFCB extends its financial intermediation services to farmers organized in cooperatives, SACCOs, CBOs, women and youth groups in the rural areas of Kagera Region. • KFCB is serving a total of 637 SACCOS and groups with over 8000 beneficiaries to date.

  7. Membership and Shareholding Structure of KFCB • Membership of KFCB is drawn from all registered Eihanika Co-operative Societies, all registered Marketing Co-operative Societies and its related institutions, the registered Kagera Farmers Trust Fund and all other registered cooperative institutions in Kagera region that have fulfilled the conditions stipulated in KFCB By-Laws.To-date, there are 201 members.

  8. Vision of KFCB • To become a vibrant and competitive Bank that is community and customer-driven aimed at reaching customer satisfaction and empowerment so that farmers can sustainably improve their incomes for reducing rural poverty.

  9. Mission of KFCB • To provide quality and timely services through innovative banking and coordinated efforts of key stakeholders aimed at improved livelihoods of the people and enhanced cooperative movement in Tanzania.

  10. Objectives of KFCB • Promote the prosperity of members of the Bank by carrying on the business of banking in all its affiliated societies, affiliated local registered community banks with members and non-members in accordance with the cooperative law (Cooperative Societies Act 2003) and Banking and Financial Institutions Act 1991

  11. Objectives of KFCB • Undertake all such other activities that will encourage the growth of the Cooperative Movement in Tanzania (By-Laws of KFCB LTD, 1999 )

  12. Objectives of KFCB • Strengthen AMCOS and SACCOS within Kagera region and ensure they are strongly linked to sustainably meet the financial needs of its members

  13. Objectives of KFCB • In collaboration with other development partners to facilitate the networking of SACCOS within the district and the region at large to enable them share experiences, exchange ideas and learn from each other while improving their bargaining power

  14. Objectives of KFCB • To forge very close working relationship with public and private sectors including reputable financial institutions in an attempt to enhance efficiency and to promote improved livelihoods among vulnerable groups especially female-headed households, the elderly, youth and resource-poor households

  15. Services provided by KFCB • Providing a central fund facility by pooling of resources from within the system for lending (internally) and external investments • Financing or co-financing members of Eihanika/local community banks as and when their credit requirements cannot be met by their institutions

  16. Services provided by KFCB • Providing advice and support for management and organization of the Eihanika/local community banks • Developing and supporting savings and credit production of Eihanika/local community banks, including advice on interest rates and other conditions

  17. Services provided by KFCB • Designing joint marketing strategies and operations for coops, SGAs • Mobilizing lending resources on the money and capital markets from donor agencies for lending to the Eihanika/local community banks • Promoting expansion of the co-operative banking system in Kagera region

  18. Linkages • The linkage between KFCB, Rural Primary Cooperative Societies, Cooperative Unions (of which Primary Co-operative Societies are affiliated) and Eihanika, societies and local community banks sustain an efficient payment system for farmers’ crop sales proceeds that guarantee farmers prompt and safe receipt of their money.

  19. Linkages contd • KFCB being a member of AFRACA has opened new opportunities and widened the frontier for further linkages with sub-regional and other international institutions

  20. The financial delivery model • The Bank mobilizes savings from the rural areas in Kagera region along with the introduction of customized lending services for rural farmers, groups and businesses.

  21. KFCB’s financial delivery model The three pillars • To provide adequate financial services and continually increasing outreach to the rural clientele • To allocate scarce resources and efficiently manage risks and reduce transaction costs

  22. KFCB’s financial delivery model The pillars contd • To enhance institutional sustainability through mobilizing own resources, covering costs from the margin and ensuring profitability.

  23. The financial delivery model is aimed to improve the banking services delivery procedures, the tools and facilities, understanding the needs of the people and application of appropriate systems to ensure quality services. KFCB’s innovative approaches and best practices

  24. KFCB Growth in lending, liabilities, capital and profits

  25. KFCB Growth in lending, liabilities, capital and profits

  26. KFCB Growth in lending, liabilities, capital and profits

  27. KFCB Growth in lending, liabilities, capital and profits

  28. Operational Challenges • Limited capital base leads to serious liquidity problems and our inability to meet the growing demand for loans. • The circumstances that influence credit risks for rural/farmer borrowers are so diverse to be estimated accurately. • KFCB,s operations are largely manually done leading to fatigue and time wastage dealing with loan evaluation procedures.

  29. Operational Challenges • Few SACCOS maintain poor data bases making it difficult to track records to evaluate loan applications. • There exists inadequate knowledge by the SACCOS members and their leaders on banking operations, microfinance best practices and investment opportunities.

  30. Operational Challenges • Low membership levels and a multitude of SACCOS located at wide distances has led not only to slow growth of savings but also high administrative overheads. • Security risk of money in transit call for expensive arrangements to collect money and arrange for insurance.

  31. Strategic challenges of KFCB • To be the all time vibrant, competitive, customer-oriented, rural development-oriented and profitable bank • To expand the capital base to meet customer requirements, consolidation of KFCB operations and future growth.

  32. Strategic challenges of KFCB • To strengthen and expand lending and deposit mobilization and to diversify the services and sources of income. • To strengthen staffing/human resource functions of the bank in order to deliver a wide menu of financial services, to offer quality services and to reach rural areas.

  33. Strategic challenges of KFCB • To strengthen and improve financial, financial delivery/operational and macro-environment risk management policies, strategies, methods, procedures and regulations.

  34. Macro-environment challenges • Promoting and educating existing and potential customers on using banking and financial services • Strengthening cooperatives and SACCOS to be effective banking agents of KFCB and macro-finance/rural financial intermediation institutions

  35. Macro-environment challenges • Active involvement, networking, linkages, consultation and communication with all stakeholders and partners and cultivation of their goodwill and patronage.

  36. The Way Forward • Respond to the operational, strategic and macro-environment challenges. • Implement the rural banking initiative aimed to improve the infrastructure, expand the capacity, scaling up the outreach

  37. The Way Forward • Enter into agency partnership contractual arrangements with SACCOS in high potential areas of Kagera region

  38. THANK YOU FOR YOUR ATTENTION

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