Dar es Salaam, Monday - In a strategic move aimed at enhancing the performance of state-owned enterprises (SOEs), the Tanzanian government is set to adopt the NMB Bank ownership model. Nehemiah Mchechu, the Treasury Registrar, announced this groundbreaking development on Monday during the launch of the NMB Jamii Bond offer in Dar es Salaam.
Mr. Mchechu highlighted that this new ownership model is poised to inject the private sector efficiency crucial for the optimal operation of public corporations. Expressing admiration for the management and performance of NMB Bank, he emphasized the government's commitment to replicate its ownership model in SOEs.
"We don't regret investing in NMB because of its continued successes, which should serve as an inspiration to state enterprises as we work towards transforming them into dynamic entities," Mr. Mchechu asserted.
He further elaborated on the government's reform plans, stating, "In these reforms, we will adopt the NMB model, which has demonstrated remarkable operational results and effective bank management. Our ultimate goal is to end subsidies to SOEs."
According to Mr. Mchechu, public entities should follow NMB's example by raising funds from capital markets to finance operations and investments.
NMB Bank, with the government holding a 31.8% stake and Arise BV at 34.9%, has introduced the NMB Jamii Bond at a competitive coupon rate of 9.5% per year, with the aim of raising TZS 75 billion and an additional TZS 25 billion in case of sufficient demand. This issuance represents the first tranche of a 10-year Multicurrency Medium Term Note (MTN) Programme valued at TZS 1 trillion. It also aims to raise USD 10 million from offshore investors, with an option to secure an extra USD 5 million, contingent on investor interest.
The bank's shareholder base includes non-strategic investors and the general public, with respective stakes of 22.4% and 10.9%.
Mr. Mchechu clarified the proposed ownership model for many SOEs, stating that it would involve the government, strategic investors, and members of the public. He underscored that the benefits of this model are evident in NMB Bank's exceptional performance.
NMB Bank has achieved remarkable results, ranking as the most profitable bank locally and third in the region. It also holds a prominent position among the most efficient banks in sub-Saharan Africa. Additionally, the bank is recognized as one of the country's largest taxpayers, having remitted TZS 113 billion to the government between 2019 and 2022.
Mr. Mchechu commended NMB Bank for its sustainability bond, lauded as the first in East Africa to focus specifically on green and social impact projects. He highlighted the NMB Jamii Bond as a significant initiative that not only fosters investment and development opportunities but also activates the stock market. He encouraged support for the ongoing reforms.
Nicodemus Mkama, the CEO of the Capital Markets and Securities Authority (CMSA), praised the government for fostering supportive and inclusive conditions in the sector, which he believes SOEs should leverage for their prosperity.The Tanzanian government's adoption of the NMB Bank ownership model represents a pivotal step in its mission to revitalize and enhance the performance of state-owned enterprises, ultimately benefiting the nation's economy and citizens.