Earlier today I was graced to attend the launching ceremony of the Kilimanjaro Cooperative Bank ATM and Mobile Banking services. This Bank is a cooperative on its own right and it’s also a commercial bank regulated by the Bank of Tanzania. The dual nature of this bank, reminds me of the Meghji, Kwayu & Meghji (1985) argument that ‘Cooperatives are business entities’.

 Well, I learnt many things from the speeches and testimonies given at the ceremony. Some of the phrases caught my attention, made me think, and gave me hope especially for rural development in Tanzania. I would like to share some of those below:

–       When rural cooperatives decided to establish their bank after Tanzania liberalized its economy, the Bank of Tanzania required minimum of TZS 250,000,000 as capital. In three harvesting seasons, farmers in Kilimanjaro through their cooperatives managed to collect TZS 358, 000,000. So they started their bank in 1994/1995.

–       The bank has a number of financial products that are designed for small-scale farmers such as ‘pembejeo loans’, ‘farm implements loan’, and ‘uwezeshaji loan’. In addition, the bank is the main creditor for several ‘savings and credit cooperative societies’ in Kilimanjaro.

–       In connection to the point above, the Bank is a pioneer of ‘Warehouse Receipt System’ in Swahili ‘Stakabadhi ya Mazao Ghalani’. With this system, farmers can acquire loans using their stored harvests as security. The World Bank recognizes the system and other financial institutions in other parts of Tanzania have also started to use it. The bank is now trying to get copy right for that product.

 I was very proud to see representatives of different rural communities in the ceremony. They were very proud. They sang a ‘ushirika song’, with solidarity lyrics. They held hands while singing it

 This experience renewed my hope that cooperative movements work and they can lift many out of poverty.  This happens when we separate politics from cooperatives and promote them as business entities.

 I am very proud of cooperatives in Kilimanjaro…the bank made me very happy today. Although I had been saddened by the apparent decline of KNCU for a long time, I see revival. Big revival. Yesterday, I had a meeting with KNCU General Manager and I can’t explain how happy I was. He is young, fresh blood, intelligent and visionary. With such quality of a manager, I am optimistic that farmers in Kilimanjaro are soon coming back on line.

 Finally, I think farmers in rural Tanzania must have commercial mindset. If they could have a commercial idea of establishing a cooperative bank in 1990s, they can do more in the millennium era.

The government plans to open a national cooperative bank. For now, I cannot comment if this is a good idea or not, but the national bank will have a lot to learn from the Kilimanjaro Cooperative Bank. The national bank will work if it is an initiative of members of cooperatives and not government. To ensure ownership and sustainability such initiatives should be bottom up not vice versa.