NCBA Group has announced plans to invest $16.6 million in its Tanzanian subsidiary this year, a move that will see the firm increase its capital that was famished by losses and a rise in defaults due to the economic fallout from the global COVID-19 pandemic.
The new capital being deployed in Tanzania will raise the firm’s cumulative investment in that market to $58 million from the $42 million recorded at the end of last year.
The capital injection into NCBA Bank Tanzania Limited is part of efforts to improve the performance of the regional subsidiaries that have recorded lower profitability compared to the Kenyan market.
“We have made $8.3 million investment in Tanzania so far to support capital and we intend to continue with more investment and make another close to $8.3 million by the end of the year,” The East African quotes NCBA chief executive John Gachora.
The Tanzanian subsidiary made a net loss of $9.2 million in the year ended December 2021, larger than the Kes 770 million($6.4 million) net loss recorded in the year 2020.
Mr Gachora added “We had closed four branches this year. We don’t plan to open the branches but what we are doing is reconfiguring the business to go after corporates and we need to lend them more money and therefore need more capital to do so. The investment is really to support business growth in Tanzania.”
The bank was also slightly above other capital requirements constraining its ability to lend more. The new funds channelled into the Tanzania subsidiary are expected to recapitalize the business and put it on an expansion path.
NCBA Bank Tanzania is now pivoting to serve large businesses while closing excess branches in specific locations.