Exim Bank of Tanzania

completed

With its total assets of close to US$31 million and net worth of US$4.3 million as of September 30, 2001, Exim Bank is the market leader in its niche business of pre-export crop financing as well as trade and financial services to small and medium enterprises (SMEs). The bank has maintained high growth, profitability, and portfolio quality since its inception four years ago. As a result, it was able to double its capital base in less than three years. Given domestic resource constraints for funding for its core business and increased competition among the banks for resources, Exim Bank is planning to adapt a strategy of diversifying its funding sources and mix, including mobilizing further domestic deposits, public equity in the near term, and raising funding from international financial institutions such as IFC and others active in the region. The project is expected to have a significant development impact. IFC’s funds would enable the bank to expand its operations in much needed areas of financing: namely, Tanzania’s economic back-bone, crop exports. If IFC were to play a role in Tanzania''s economy and financial sector, Exim Bank is a good route. Furthermore, the financing would help Exim bank enhance/strengthen its capital base; diversify its shareholding structure before public listing, and expand its growing portfolio. IFC will also support Exim Bank''s efforts to mobilize additional resources from other lenders in the region.IFC has three roles in this project: (1) developmental role: by supporting a sector that generates the highest employment and contributes close to 55% of the GDP, IFC is playing a modest role in supporting the growth of a key economic sector; (2) institutional building: by enhancing the capital base and funding capacity of an emerging export oriented bank, IFC will continue to play a role in the development of Tanzania''s private banking industry. Furthermore, with IFC involvement, the bank''s profile would be enhanced and its positioned strengthen; and (3) capacity building: IFC staff is also working with the SME department in analyzing Exim Bank''s institutional capabilities in serving its largely SME market. As a result of this mapping exercise, staff working with SME department will work in developing appropriate SME systems focused on strengthening the bank''s underwriting and monitoring skills.