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Pursuing Efficiency While Maintaining Outreach: Bank Privatization In Tanzania

Listed author(s):
  • Cull, Robert

    ()

    (The World Bank)

  • P. Spreng, Connor

    ()

    (The World Bank)

Profitability improvements after the privatization of a large state-owned bank might come at the expense of reduced access to financial services for some groups, especially the rural poor. The privatization of Tanzania's National Bank of Commerce provides a unique episode for studying this issue. The bank was split into the "new" National Bank of Commerce, a commercial bank that assumed most of the original bank's assets and liabilities, and the National Microfinance Bank, which assumed most of the branch network and the mandate to foster access to financial services. The new National Bank of Commerce's profitability and portfolio quality improved although credit growth was slow, in line with privatization experiences in other developing countries. Finding a buyer for the National Microfinance Bank proved very difficult, although after years under contract management by private banking consultants, Rabobank of the Netherlands emerged as a purchaser. Profitability has since improved and lending has slowly grown, while the share of non-performing loans remains low.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4804.

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Length: 36 pages
Date of creation: 01 Dec 2008
Handle: RePEc:wbk:wbrwps:4804
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