COMMUNITY BANK

From left to right is Iringa District Executive Director (DED)Tina Sekambo, Iringa Muncipal Director (MD), Teresia Mahondo, Iringa Urban member of Parliament, Monica Mbega and Iringa District Commissioner, Aseri Msangi during the stakeholder meeting.

 

By Correspondent

Friday Simbaya,

Iringa

 IRINGA Municipal Council is intending to start a community bank that will help people who cannot access loans from commercial banks and other financial institutions due to higher rates of interests.

 But with the coming of the community bank in the area people will get microfinance at the lowest interest rate, and the bank will begin with at least 1.8bn/- as starting capital, it has been disclosed.

This was disclosed yesterday during the stakeholders meeting held here in Iringa which attracted members from all walks of life.

The meeting attracted stakeholders both from Iringa Municipal and Iringa District councils including the incumbent Member of Parliament for Iringa Municipal Constituency Monica Mbega as a pioneer                       

According to the Managing Director for Dar es Salaam Community Bank (DCB), Edmund Mkwawa has urged municipal and district councils to use community banks available in their areas so that they can give life to community banks.

The community bank of Iringa will be jointly formed by Iringa Municipal Council and Iringa District Council inhabitants, who under one District Commissioner, Captain (rtd) Aseri Msangi.

The managing director made the statement on Thursday during the municipal stakeholders meeting on the establishment of Community Bank held in Iringa Region.

Mkwawa said that if the community bank is started and it never used by directors of both the municipal and district, it will die a natural death since it will have small capital.

He noted municipal and district councils have a lot people who happen to be workers and if all workers can use the community banks they will be in the position sustaining a long life.

“According to the financial sector deepening study shows that only nine percent of close to 40 million population of Tanzania are putting their money in the banks, which is very small percentage compared to number of people,” he pointed out.

He said gap is bigger between the savings and borrowing in the country because people have n culture putting money into banks but only want to borrow when they deposited less than they borrow.

However, he urged people to utilize the community banks because community bank were the only savior in terms of micro financing schemes hence poverty reduction.

The number of people using banks for saving purpose is small as compared to number of people possessing mobile phones of between 12-14 million users, this way banks were now working together mobile phone operators so that encourage customers to use their mobiles for banking purpose hence increase number of people using banks in the country.

DCB managing director said that close to 40 banks in the country, there only seven community banks operating so far out of the total of 126 districts in Tanzania.

The community banks are merely started by the community themselves and help people who have little income to access loans so that they start small enterprises, because they cannot afford to get loans from commercial banks due higher interest rates and the demanding of collaterals.

Furthermore, he urged politicians not to interfere with the running of community banks because they are not experts but their duty to mobilize people to establish community banks in the area hence sustainability of community banks.

He said that another factor that leads to corrupts of community banks is the inside borrowing, whereby board of directors and staff borrow from within the banks and fail to repay their loans by taking advantage of their positions.

One stakeholder, Victor Mushi who doubles as the Chairman of Contractors Association of Tanzania (CATA) Iringa Zone, hauls the establishment of the community bank in the area because it help the residents of Iringa to excel in life since they will be to access microfinance hence income poverty reduction and improving living standards of people in Iringa.

END