Lender NMB be­comes bor­rower of the pub­lic


A bond is an in­vest­ment prod­uct in which an in­vestor lends money to an en­tity as a cor­po­rate or gov­ern­men­tal, which bor­rows the funds for a de­fined pe­riod of time at a vari­able or fixed in­ter­est rate.

Early last week, the Na­tional Mi­cro­fi­nance Bank (NMB) launched a first bond ser­vice which is­sues a 13 per­cent in­ter­est aimed at ev­ery­one who wishes to in­vest in the bank and earn an at­trac­tive re­turn. It is a new con­cept whereby the nor­mal lender (bank) has be­come a bor­rower.

It is the first bond to be is­sued by the bank and that can be bought from any of its branches in the coun­try or se­lected bond bro­kers with a min­i­mum pur­chase of 500,000/-.

Speak­ing in Dar es Salaam after launch­ing the new prod­uct which cus­tomers have been given a three months pe­riod to in­vest, the NMB Man­ag­ing Direc­tor, Ineke Busse­maker told The African that the move is a re­sult of the Cap­i­tal Markets and Se­cu­ri­ties Au­thor­i­ties (CMSA) grant­ing ap­proval to the Lib­erat Mfu­mukeko, thanked the Gov­ern­ment of the Fed­eral Repub­lic of Ger­many for its sup­port to the EAC span­ning the years since the re-estab­lish­ment of the Co­op­er­a­tion be­tween the three found­ing EAC Part­ner States to the present, when the Com­mu­nity has ex­panded to in­clude the re­publics of Rwanda, Bu­rundi and South Su­dan.

“We have truly ben­e­fited from the Ger­man sup­port which has is­sue the first tranche of the NMB Plc Medium Term Note (MTN) Pro­gramme.

She said in­vestors in the bank Re­tail Bond will earn an in­ter­est rate of 13 per­cent per an­num payable half yearly for its term of three years un­til June 2019, the in­ter­est rate paid is sub­ject to with­hold­ing tax.

She adds the bond is trad­able so a cus­tomer can sell it to an­other buyer and re­ceive the prin­ci­pal be­fore the ma­tu­rity date, also they can sell the bond be­fore ma­tu­rity on the open mar­ket through a stock­bro­ker in ac­cor­dance with the Dar es Salaam Stock Ex­change (DES) rules. It is good op­por­tu­nity for those with ex­tra money to in­vest.

On the is­sue of how small scale farm­ers who are the most pri­or­i­tized cus­tomers of the bank will ben­e­fit or get in­volved, Ineke said they too can be able to ben­e­fit from the new ser­vice and that is why more ed­u­ca­tion is be­ing de­liv­ered at all re­gions to en­sure that they ac­cess it.

“The said min­i­mum rate of 500,000/- might be a bit high to some small scale farm­ers but there cat­alyzed other De­vel­op­ment Part­ners to sup­port our projects and pro­grammes.”

On his part, Egon Kochanke con­grat­u­lated Mfu­mukeko for his ap­point­ment and noted the im­pres­sive progress in the EAC in­te­gra­tion process and re-af­firmed to the Sec­re­tary Gen­eral his coun­try’s con­tin­ued sup­port to the EAC Project and pro­grams.

“We are very happy with our are so many who can af­ford so through them the bank can be able to gain more profit at the same time be of much ben­e­fi­cial to the in­vestors cus­tomers and at the end of the day the profit gained can be de­liv­ered as loans to those farm­ers who could not af­ford to in­vest in bond­ing ser­vice, “she said. It is a scratch my back and I scratch yours phe­nom­e­non.

Ineke said many in­vestors have shown in­ter­est about in­vest­ing in high qual­ity bonds and the bank will con­sider it to be a good op­por­tu­nity to sat­isfy the need which will help stim­u­late the de­vel­op­ment of the lo­cal cap­i­tal mar­ket and di­ver­sify the bank’s fund­ing sources. Adding that, the op­por­tu­nity will al­low the bank to mo­bi­lize funds that it can use to cre­ate a new cus­tomer loans at fa­vor­able rates.

“NMB is prin­ci­pally funded by re­tail de­posits but there are other at­trac­tive fund­ing op­tions with the bank’s re­tail bond we are look­ing to raise 20bn/- with a green shoe op­tion of 5bn/-,” said Ineke.

Com­ment­ing on the is­sue, the Dar es Salaam Stock Ex­change re­la­tion­ship with EAC and I am look­ing for­ward to a strong part­ner­ship in the de­vel­op­ment of the re­gional bloc”, as­serted the Ger­many Am­bas­sador.

Present at the meet­ing were the EAC Deputies Sec­re­tary Gen­eral in charge Plan­ning and In­fra­struc­ture, Dr Enos Bukuku, and that of Po­lit­i­cal Fed­er­a­tion, Charles Njoroge, and other of­fi­cials from the EAC Sec­re­tariat. Man­ager for mar­ket Re­search and de­vel­op­ment Ibrahim Mshindo said the new prod­uct is very stim­u­lat­ing for the mar­ket to see a high pro­file name con­tin­u­ing the ex­pan­sion to the range of bonds avail­able.

“The NMB re­tail bonds are spe­cial for they are open for buy to gen­eral pub­lic and can be pur­chased from the bank’s largest net­work of branches across the coun­try, and with the sup­port of is­suers like NMB we look for­ward to grow­ing the ser­vice fur­ther in the months and years ahead, “he said.

The re­tail bond will be on of­fer start­ing on 10th this month to June this year and in­ter­est rate ac­crued from last week the same start­ing date. NMB has about 175 branches all over that coun­try. Also the ser­vice will also be pro­vided by ap­pointed bond bro­kers.

The NMB Chief Fi­nan­cial Of­fi­cer, Waziri Barn­abas said time has come for Tan­za­nia in­vestors and cus­tomers to stop keep­ing large amount of money at home in­stead in­vest in bond­ing in­vest­ment op­por­tu­nity.

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