SETTING UP IN TANZANIA IN 2007: A MAJOR CHALLENGE FOR THE BOA GROUP IN EAST AFRICA

?

In June 2007, the BANK OF AFRICA(BOA) Group obtained the ‘green light’ from the Central Bank of Tanzania (CBT) for the purchase of the Eurafrican Bank of Tanzania (EAB). The transformation of EAB into BOA BANK-TANZANIA(BOA-TANZANIA), the 10th commercial bank in the network started in Mali in 1982, was completed two months later. As with the other entities acquired in the English-speaking region since 2004, the process of setting up the bank was a difficult one, but the result was well worth the tenacity of the teams working towards this goal.

The move to Dar-es-Salam is first and foremost the final stage in a long process carried out with the Belgolaise Bank Group. Since 2003, various negotiations have taken place to take over the African subsidiaries that this major Belgian bank was planning to sell. Three new banks will finally be integrated into the BOA network at the end of this process. Banque de Crédit de Bujumbura (BCB) in Burundi in 2005, Allied Bank in Uganda in 2006 and EAB in Tanzania in 2007. BOA's move into Kenya in June 2004 has made the network even more attractive to monetary Authorities, regional investors and corporate customers. It also increases the motivation of BOA's managers and will facilitate the mobilisation of the desired partners and EAB teams. These advances will be essential for the successful establishment of a presence in Tanzania.

?

In order to achieve this result, one of the main difficulties, apart from the usual negotiation of the purchase price, was to build up the ‘round table’ of the future bank. EAB's shareholders include, alongside Belgolaise, institutional investors - the Belgians from BIO and the Dutch from FMO - who have been partners of BOA for several years: they are prepared to maintain their stake, which is readily accepted. It also includes a number of private Tanzanian shareholders with whom it will be necessary to negotiate on a case-by-case basis in order to find agreements for departure or retention: the latter will notably concern Tanzanian Development Finance LTD (TDFL), which is committed to BOA. Above all, the specific requirements of the Central Bank of Tanzania (CBT) in terms of local bank shareholders led to the young BANK OF AFRICA-KENYA being given a key role in the capital, while the Aureos Investment Fund also joined the project, as it did in Nairobi and Kampala. It has been a long and delicate process, but the resulting shareholder base provides a strong foundation for the bank's future growth.

The arduous discussions with the CBT will also cover many other aspects of the buyers' file, in application of a particularly demanding procedure in Tanzania, and it is in August 2007 that the bank will be able to be accessible to the public under its new identity.???

?

It is then necessary to work on restructuring and relaunching the establishment. BOA-BANK TANZANIA will be able to count on several assets to achieve these objectives. Firstly, the presence at its head of two successive Chief Executive Officers - the one from EAB, who will stay with the buyers for a while, and then the one chosen by the Board of Directors of the new entity - who both combine skill, dynamism and commitment. Secondly, the active participation of the teams, who have remained in their posts, in putting the establishment back in order and expanding into new customer sectors. Thirdly, the continued presence of the Chairman of the Board of Directors, a respected local figure, who brings confidence and support to the new management team and reassures customers. Finally, the ongoing support of the BOA Group and the other shareholders, who will double the capital in 3 years.

?

With these advantages in hand, the new entity has begun its activities by tackling the immediate task of cleaning up a partly compromised loan portfolio. The Bank's more aggressive approach and the mutual efforts made by the Bank and its customers will gradually reduce the volume of outstanding loans and, consequently, the need for provisions. Above all, and as promised, the Bank will also, from the outset, define and carry out a multi-faceted development programme, in line with the Group's philosophy: building a bank for all classes of s)customers, opening branches in the capital and in the interior of the country, commercial innovations, specific actions in favour of small businesses, stronger presence in international operations supported by major partners. Admittedly, this strategy has to contend with increased competition, which is making progress more difficult: new establishments are being set up on a regular pace and the country's banking system is currently made up of some 40 institutions of varying sizes and origins. But BOA-TANZANIA will also benefit from the country's growing strength in demographic terms - almost 45 million inhabitants in 2010 and around 64 million now - and economic terms - with a Gross Domestic Product growth rate that has been among the highest on the continent in recent years.

?

A new momentum has been given and the actions taken will pay off. Over the next fifteen years or so, BOA-TANZANIA will change dimension and move into the category of Tier 2 banks. The size of its network, its initiatives and the quality of its service have made it a much-appreciated institution, both in Tanzania and internationally. At the same time, it has fulfilled its role in ensuring that the BOA Group, now established in the three main countries of the EAC, takes the most advantages of regional synergies and contributes actively to their development.

?

Happy anniversary to the Bank and its teams!