WHAT BANKERS EXPECT FROM LUOGA

In Summary

Last month, President John Magufuli appointed Prof Luoga, the immediate-past vice-chancellor for Academic Affairs at the University of Dar es Salaam (UDSM) (in the picture) as the new governor of the BoT, replacing Prof Benno Ndulu, whose tenure in office expires in January 2018.

Dar es Salaam. Bankers are hopeful that the new governor of the Bank of Tanzania (BoT), Prof Florens Luoga, will come up with a lasting solution to the rising levels of non-performing loans (NPLs) when he takes office in the next few weeks.

Last month, President John Magufuli appointed Prof Luoga, the immediate-past vice-chancellor for Academic Affairs at the University of Dar es Salaam (UDSM), as the new governor of the BoT, replacing Prof Benno Ndulu, whose tenure in office expires in January 2018. 

Bankers, in separate interviews to The Citizen, praised the way Prof Ndulu handled the country’s monetary policy during his 10 years as governor. They also believed that Prof Luoga was the right choice – and that he needed time and unstinted cooperation of all stakeholders in performing his new duties as a matter of course.

Going forward, the bankers further said, the two governors – ‘old and new’ – needed to get together and design a handing over/taking over plan that would undoubtedly see to the banking sector recovering from the harm brought upon it by NPLs in recent years.

“The main issue with banking today is inordinately high NPLs and we need to discuss what to do on this,” counselled NMB Bank managing director Ineke Bussemaker, adding that the high NPLs matter had also been of considerable concern to the government.

“I see a connection between high NPLs and high interest rates; banks need to recover their NPL-related costs, and the only way (to do that) is to put a higher margin of interest rates,” she said, nonetheless insisting that Prof Ndulu had done a credible job during his tenure at the central bank.

CRDB Bank managing director Charles Kimei had similar sentiments, saying he understood that Prof Luoga was a person, who readily lent his ear to professional advice. “He is a capable person – and was, indeed, the right candidate. I know him as a man of integrity, who also listens to good advice... And, with such qualities, I’m very optimistic that he’ll do well.”

The chief executive officer of one of the top ten banks told The Citizen on condition of anonymity he hoped Prof Luoga would maintain his predecessor’s positive habit of conducting regular meetings with members of the Tanzania Bankers Association with a view to sharing concerns from lenders. “So far, the liquidity in the economy is not stable, onthe same level across the board. But the central bank created mechanisms that helped banks to borrow more when the government shifted its money to the BoT,” the banker explained.