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Strategic Business Plan [2nd Draft] – CRDB Workers SACCOS Limited ©2013

CRDB WORKERS SACCOS LIMITED

FIVE YEARS STRATEGIC BUSINESS PLAN

[2014 – 2018]

DECEMBER 2013

Strategic Business Plan [2nd Draft] – CRDB Workers SACCOS Limited ©2013 Page | ii

Chairman’s Note

In developing a comprehensive five years Strategic Business Plan for CRDB Workers SACCOS Limited – from 2014 to 2018, the process needed support and inputs from a diverse of stakeholders. Because of the importance and scope of the exercise, it was necessary to engage an independent person to facilitate the process – coordinating and compiling ideas and comments from various stakeholders. The process saw a thorough review and improvement of strategic areas of the SACCOS – its mission, vision and cultural values. It should be noted that in the course of developing this Strategy, it demanded remarkable time and resourcefulness of members of the Board and Supervisory Committee and the Management and Staff of the SACCOS. It is their unrivaled commitment that this document has been completed. Therefore, in a special way, I would like to express my sincere appreciation to them. In the same gratitude, I would like to extent my gratitude to all ordinary members for their immense and generous contributions towards the script. Moreover, I extend my special thanks to the Management of CRDB Bank Group for granting their specious time to carry interviews with the Strategy Team. Here, I would like to acknowledge invaluable inputs from the Deputy Managing Director – Shared Services, Mrs. Esther Kitoka. Her inputs will greatly pave a way for close working relationships between CRDB Workers SACCOS Limited and the Management of CRDB Bank Group. Lastly, but not least, my special thanks go to some members of the SACCOS, who took their precious time to respond to a survey that was meant to gather firsthand information on the SACCOS. With this note, I request support and collaboration from all the stakeholders; especially members of the SACCOS and CRDB Bank Group to assist the Board and Management of CRDB Workers SACCOS to implement these strategies in order to achieve the desired goals and objectives. -------------------------------------------- JOHN F. KOMBA ACTING CHAIRMAN, CRDB WORKERS SACCOS LIMITED

Strategic Business Plan [2nd Draft] – CRDB Workers SACCOS Limited ©2013 Page | iii

Executive Summary

CRDB Workers Savings and Credit Cooperative Society Limited (CRDB Workers SACCOS) is a

cooperative society with a discretion membership of employees of CRDB Bank Plc and its subsidiaries

– and its own employees. The SACCOS started operations since 1986, with 166 founding members.

However, as at the end of December 2013, the SACCOS had membership of 1,412 – which is 68% of

the total employees of CRDB Bank Plc and its subsidiaries (the Bank). From year 2014, the SACCOS is

commencing its five years strategic journey, with an ultimate goal of recruiting 95% of all employees

of the Bank – thus, projecting 3,420 members by 2018. Between 2010 and 2013, CRDB Workers

SACCOS has exhibited impressive growth in almost all other business areas – shares, savings and loan

portfolio. Notably, shares and savings grew from TZS 46.5 million and TZS 1.36 billion, to TZS 172.62

million and TZS 3.37 billion, respectively. Similarly, over the same period the loan portfolio increased

from TZS 1.67 billion to TZS 4.22 billion; and subsequently, profit increased modestly – from TZS

56.87 million in 2010 to TZS 178.8 million in 2013.

However, despite these achievements, the SACCOS has not done very well on its products and

services – still offering basic generics cooperative products – shares, savings and loans. This has not

been inline with continuously varying financial needs and wants of its members and employees of the

Bank. As a result, the SACCOS has remarkably been losing its market share and the potential market

to the competition where the supply and innovations for financial services is increasingly growing.

Therefore, in order to improve further its business to curb the competition, for the next five years the

SACCOS is embarking on the strategic planning and execution process – that will see review and

introduction of new products and services and improved delivery processes. Its Five Years Strategy is

focused on: increasing membership; enhancing governance systems to oversee and lead the growth

of the SACCOS; rehabilitating its ICT and operational systems; improving its brand and image, and

products and services; enhancing and developing its workforce; and ultimately generating enough

profit to cover its operations and bringing healthy returns to its members.

Henceforth, due to the expected business transformations over the next five years, the loan portfolio

is expected to grow from TZS 5.5 billion to TZS 20.44 billion; contributed by the increase in

membership from 1,756 to 3,560 in 2018, and introduction of new and review of existing loan

products – that will attract more borrowing from members and the potential market. Nonetheless,

despite the increase of the volume of the loan portfolio, its quality is projected to remain below a

threshold of a portfolio at risk (PAR) of 5% and non-performing loans (NPL) of 2% throughout the

Strategic Business Plan [2nd Draft] – CRDB Workers SACCOS Limited ©2013 Page | iv

period. On the other hand, savings will also grow magnificently at an average annual rate of 35%,

from TZS 4.51 billion in 2014 to TZS 17.32 billion in 2018; and deposits, that will be introduced in year

2015, is projected to reach TZS 1.2 billion by 2018.

Subsequently, interest income will as well increase from TZS 670 million to TZS 2.3 billion – this is

obviously attributed by the growth of the loan portfolio. However, as per the projections, the SACCOS

is expecting to finance its loan portfolio mostly through its savings and deposits from members –

henceforth expecting limited borrowing from external sources.

Growth of these key areas will phenomenally influence growth of other areas, i.e. institutional capital

of the SACCOS and dividends payout; and administrative costs, especially staff expenses.

Strategic Business Plan [2nd Draft] – CRDB Workers SACCOS Limited ©2013 Page | v

Table of Contents

Chairman’s Note .................................................................................................................................................... ii

Executive Summary .............................................................................................................................................. iii

1. Introduction .................................................................................................................................................... 1

Background ..................................................................................................................................................................................................................... 1

Activities, Products and Services ............................................................................................................................................................................. 2

Ownership and Governance ........................................................................................................................................................................................ 3

2. The Approach and Structure of the Strategic Plan .................................................................................. 4

The Approach in developing the Strategic Plan ..................................................................................................................................................... 4

Structure of the Strategic Plan ................................................................................................................................................................................. 5

3. Strategic Review of CRDB Workers SACCOS ............................................................................................. 7

Performance Overview ................................................................................................................................................................................................ 7

Mission Statement ...................................................................................................................................................................................................... 10

Current Vision Statement ........................................................................................................................................................................................... 11

Values Statements ........................................................................................................................................................................................................ 11

SWOC Analysis .............................................................................................................................................................................................................. 12

4. Environmental and Market Analysis ........................................................................................................... 18

Environmental Analysis ...............................................................................................................................................................................................18

Market & Competition Analysis ................................................................................................................................................................................. 21

5. The Future of CRDB Workers SACCOS...................................................................................................... 26

Mission Statement ..................................................................................................................................................................................................... 26

Vision Statement ......................................................................................................................................................................................................... 27

New Cultural Values.................................................................................................................................................................................................... 27

6. Strategic Objectives, Goals and Activities ............................................................................................... 29

Key Strategic Areas................................................................................................................................................................................................... 29

Strategic Objectives .................................................................................................................................................................................................. 29

Key Goals, Targets and Key Activities .................................................................................................................................................................... 30

7. Performance Measures, Implementation and Monitoring ...................................................................... 38

Projected Financial Performance ........................................................................................................................................................................... 38

Key Performance Indicators ..................................................................................................................................................................................... 41

Implementation and Monitoring ................................................................................................................................................................................ 41

Appendices .......................................................................................................................................................... 44

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COMPREHENSIVE FINANCIAL FORECAST ................................................................................................................................................................. 45

Strategic Business Plan [2nd Draft] – CRDB Workers SACCOS Limited ©2013 Page | 1

1. Introduction

1.1. Background

CRDB Workers SACCOS (Saving and Credit Cooperative Society) Ltd was registered in December 1986

with Registration no 5410, with a common bond of “being an employee of CRDB Bank Limited”; and

with a total of 166 founding members. As the CRDB Bank has changed form and expanded through its

subsidiaries – the common bond is now “employee of CRDB Bank PLC and its subsidiaries” to be

referred as the “Bank”. Since then, the SACCOS has grown to 1,412 members – 68% of the number of

staff of the Bank, as the end of December 2013. However, the objective of CRDB Workers SACCOS Ltd

is to mobilize all employees of the Bank to become members of the SACCOS and instilling adequate

saving and borrowing culture for their economic development.

Based on previous reviews, the mission of CRDB Workers SACCOS Limited was “to provide effective

value-added microfinance services, in promoting adequacy savings, wise borrowing and prudent

utilization of funds to attain sustainable development and financial freedom among members”. The

vision of the SACCOS was “to become the preferred, unique leading SACCOS model, providing

competitive and reliable financial services to members”. However based on the development of this

strategy, the mission and vision of the SACCOS have been reviewed to reflect its new strategic focus

for the next five years.

Furthermore, the SACCOS has been operating within the following cultural values - Customer Centric

(C), Unity and Solidarity (U), Professional Integrity (P), Value based (V), Accountability (A) and

Prudence (P); famously known as CUP-VAP. These values were meant to shape the ways of conduct

of the SACCOS when dealing with its stakeholders. Likewise, these cultural values have been

reviewed inline with the current Strategic Plan.


1.2. Activities, Products and Services

Key activities of the SACCOS are:

Mobilizing members from a pool of employees of CRDB Bank, and its subsidiaries to join the SACCOS;

Mobilizing members to buy more shares and make savings in order to build an adequate internal fund;

Proving loans to members to meet their various financial needs;

Designing other products and services to address financial needs of members – especially deposits, insurance, etc;

Overseeing and management of the institutional funds in order to create value to members of the SACCOS; etc

The SACCOS is offering the following financial products:

(a) Loan Products – these are further subdivided into two major categories: i. Emergency loan – that is repayable within six (6) months, for emergent financial

needs; and with a limit amount of TZS 1,000,000/=, and regardless of the value of savings of the borrower;

ii. Development loan – that carters for longer-term financial needs of members – and with a longer repayment period of up to three (3) years – that are further in two categories:

A loan twice as much of borrower’s savings but with a limit of TZS 30 million – for members whose savings are higher than TZS 10 million;

A loan twice as much of the borrower’s savings, with a limit of TZS 20 million – for members whose savings are less than TZS 10 million

(b) Savings product – this is a prerequisite for members who want to borrow from the SACCOS. There is no interest paid on members’ savings – hence limiting higher savings in excess of the prerequisite amount for the loan limits.

(c) Shares – This is a mandatory condition to be a member. One must buy at least 10 shares at TZS 10,000/= each, i.e. TZS 100,000/=, in order to become an effective member. There are no limits for the amount and value of shares for each members – except that one member cannot hold more than 20% of the total share value of the SACCOS;

(d) Deposit products – Currently, there are no deposit products in CRDB Workers SACCOS Limited. The SACCOS should design appropriate deposit products in order to attract deposits from members – especially by offering higher interest rates.


1.3. Governance and Management Structure

CRDB Workers SACCOS Limited is owned by individual members, who own at least ten (10) shares in

the SACCOS. Members, through their Annual General Meeting (AGM), form the highest authority and

decision-making body of the SACCOS. However, through AGMs, members elect the Board of Directors

to oversee the business of the SACCOS – and the Supervisory Committee to inspect the work of the

Board of Directors. Furthermore, these responsibilities of the Board are escalated to the

Management team – and other members of staff, through Strategic and Operational Plans, and

operating policies, to run daily operations of the SACCOS.

Because of the nature of operations of CRDB Workers SACCOS Limited – having members in almost

all branches of CRDB Bank – the SACCOS introduced the concept of branch representation. Thus in

most branches the SACCOS operates through Branch Representatives – who are supposed to mobilize

and sensitize members, market products and services, disseminate information and knowledge

regarding the operations of the SACCOS – and conveying feedback from members to the Head Office

of the SACCOS for decision-making.

However, in delivering services to its members, the SACCOS has centralized systems based at the

Head Office: management of loans - assessment, approval, disbursement and recovery processes;

awareness campaigns, mobilization and recruitment of new members; marketing and selling of

products and services; and management of inquiries from members and non-member staff.

Furthermore, these processes are not well harmonized and aligned for smooth execution – that leads

to ineffectiveness and inefficiency in serving its target market.


2. The Approach and Structure of the Strategic Plan

2.1. The Approach in developing the Strategic Plan

Because of the importance of the exercise to develop the first Strategic Business Plan of CRDB

Workers SACCOS, the Board and Management of CRDB Workers SACCOS engaged an independent

facilitator to coordinate the planning process. The role of the facilitator was to provide guidance in

the process, collecting and putting together inputs from various stakeholders and finally developing

the final copy of the Strategic Business Plan. For a better understanding of the operations of the

SACCOS, the starting point of the facilitator was to review its business and testing the level of

satisfaction of members and getting opinion from non-members. Therefore, the facilitator reviewed

products and services of the SACCOS, its delivery methodologies, its strengths and weaknesses, and

opportunities and challenges. Thereafter, the facilitation started with the development of a set of key

steps and activities in crafting the Strategic Business Plan, as shown in table 1 below.

Table 1 A Set of Activities in Developing the Strategic Business Plan of the SACCOS

S/N Key Activity Responsible

1 A thorough review of the products, processes, SWOC for a better

understanding of CRDB Workers SACCOS;

Management, Board of Directors, Facilitator

2 Carrying out strategic dialogues with the Board of Directors in order to grasp

the strategic focus and the envisioned future of CRDB Workers SACCOS

Board of Directors, Facilitator

3 Developing a Work Plan and a consensus approach on the exercise Board of Directors, Facilitator

4

Carrying out an independent survey to assess the level of satisfaction from

members and collecting independent opinion from non-members regarding

CRDB Workers SACCOS

Facilitator

5 Conducting interviews with key stakeholders to the business of the SACCOS Facilitator

6 Developing the first draft of the Strategic Business Plan Facilitator, Management, Board of Directors

7 Conducting Stakeholders Workshop for validation of the Strategic Business

Plan and producing a second draft

Facilitator, Management, Board of

Directors, some ordinary Members

8 Presenting the second draft to Members Meeting for deliberation and

approval

Board of Directors, Facilitator

8 Evaluation of the reviews and development of the Final Copy of the Strategic

Business Plan

Facilitator, Management, Board of Directors


Therefore, the overall process has engaged diversity of stakeholders to the SACCOS – members and

non-members; members of staff and management; the Board and Supervisory Committee; and the

Management of CRDB Bank Plc – and its subsidiaries. The interviews and discussions basically focused

on three categories of stakeholders: the management of CRDB Bank Plc – targeting the MD, DMD-ss,

Director of Credit, Director of Human Resources and the General Manager for CRDB Microfinance

Services Company Limited; and other outside stakeholders – the two major pension funds – PPF and

NSSF, and the regulator. The attention of interviews and discussions with key people of the

management of CRDB Bank Plc was to explore on working relationships between the SACCOS and the

employer – getting insights from key management personnel in order to craft new approaches and

relationships between the two, for the next five years.

On the other hand, the center of interviews with pension funds (PPF and NSSF) was to grasp the

modality of the wholesale loans, under their respective “SACCOS Schemes”, granted to their

members’ SACCO societies. While for the regulator it was to check with key legal issues and

development programs that are expected to shape the business of Savings and Credit Cooperative

Societies.

2.2. Structure of the Strategic Plan

The Strategic Business Plan of CRDB Workers SACCOS has been structured into the following three

key areas as shown in figure 1 below.

Figure 1 Three Major Areas of the Strategic Business Plan

Assessing the current strategic position of the

SACCOS

Deciding on the desired future of the SACCOS

and how to measure its progress towards there

Deciding on How the SACCOS is Going to Get to

the strategic future

• Review of its current strategies • Assessing its mission• Assessing its values• Assessing its competitive advantages

• The desired vision • Key performance indicators (KPIs)• Performance Monitoring & targets

• Setting its Strategic Objectives • Setting its Goals• Deciding on Actions• Deciding and aligning resources

•Chapter 3 •Chapter 4

•Chapter 6

•Chapter 5, •Chapter 7


Chapters three (3) and four (4) of the Strategic Business Plan, explore the current strategic position of

the SACCOS. These two foundational chapters are assessing the current products and services of

CRDB Workers SACCOS, and effectiveness of its operational systems in serving its members;

evaluating performance of its current strategies to fulfill and achieve its mission, vision; usability of its

corporate cultural values; appraising its strengths and weaknesses in harnessing the existing

opportunities in the market, while counteracting the challenges (SWOC analysis). Furthermore, the

chapters are analyzing: the external environment of the SACCOS (political, economic, social and

technological environment) to further ascertain key business interfaces and how the SACCOS should

address them; and related challenges; and the source and impact of competition to its business.

Chapter five (5) sets where the SACCOS envisions to go in the next five years – the mission, vision and

values it wants to reflect to its customers and the society; and Chapter seven (7) indicates the ways of

measuring its progress along the way in reaching its destination. On the other hand, Chapter six (6)

identifies the means – initiatives and resources – in terms of strategic objectives and goals, activities

and periodic targets to assist CRDB Workers SACCOS to achieve its five years’ vision.

Therefore, in summary this document has been divided into three main areas: (i) what is the current

position of the SACCOS in terms of performance of its current strategies, strengths and weaknesses of

its products and services, systems and priorities; (ii) where it wants to go or to become in the next

five years – in terms of a new mission, vision and cultural values it wants to reflect to the society; and

(iii) how it is planning to reach there – the objectives and goals, initiatives and resources.

These areas are well explained in details in subsequent chapters of this document.


3. Strategic Review of CRDB Workers SACCOS

3.1. Performance Overview

3.1.1. Evaluation of Previous Strategic Business Plan

The SACCOS has had no opportunity to plan for a period beyond one year. Its planning has been

focusing on its annual businesses – and mostly with no annual operational plans, rather with only

annual budgets with specific activities. Therefore, despite the fact that there has been some strategic

issues to be tackled over a longer period of time, there has never been a strategic framework to plan

and enforce implementation for concrete results. Thus, in a way, it has been difficult for the SACCOS

to achieve bigger goals and objectives for transforming its outlook and performance. Therefore,

because of the pressing need to redesign its image and brand, into a modern and a customer

responsive institution, the Board has earmarked year 2014 to develop its first five years strategic

business plan. This will allow the Board and Management of the SACCOS to develop a sense of

strategic outlook to help them see the business of the SACCOS beyond a year – and hence able to

systematical transform this institution.

3.1.2. Current Performance

As noted earlier, performance of CRDB Workers SACCOS, from 2011 to 2013 (as projected by

December) has been remarkably outstanding. Table 2 below summarizes this performance – for three

consecutive years, from 2011. Membership – as the determinant of growth, has been growing at an

impressive rate, however the SACCOS has been unable to cover all members of staff of CRDB Bank Plc

– only achieving 68% of the entire staff team of the employer. Notably between 2011 and 2013, the

loan portfolio has more than doubled – from TZS 1.91 billion to TZS 5.22 billion; and henceforth

almost doubling the financial income from TZS 248 million to TZS 464 million. However, with these

outstanding results, the quality of the loan portfolio was constantly sustained below 5% of PAR.

Furthermore, from table 2, the management of the SACCOS mobilized considerable value of savings


to finance the growth of the loan portfolio, although at a declining coverage of 93%, 84% and 64% for

2011, 2012 and 2013, respectively. Therefore, from this trend, it’s important the management and

the Board of Directors to put in more efforts to mobilize adequate savings and deposits for increasing

the level of coverage – for at least 95% of the loan portfolio.

Table 2 Performance of CRDB Workers SACCOS for 2012 and 2013

3.1.3. Products and services

Over years now, like other Savings and Credit Cooperative Societies in Tanzania, CRDB Workers’

SACCOS has been offering traditional products to its members – shares, savings, deposits and loans.

However, over the past two years, some of these products have undergone some slight reviews in

the urge to address the changing financial needs of members and the general environment in the

financial market. For example, the SACCOS introduced two varieties of loan products – an emergency

loan to carter for emergent financial needs and a development loan for other purposes. However, as

per the quick survey conducted in August to September 2013 for getting feedback from members and

observations from non-members of the SACCOS, it was clear that these products and services need

improvements to further match the existing needs of members and general community of staff. The

survey reveals that the existing products need to be polished – in terms of segmentation according to

needs and enhanced features; and develop new ones to address un-served financial needs of

members and attracting more members. It was noted that, while it is in the best interest of the

SACCOS to have its members consume a whole set of its products and services for profitable

operations, most members apart from buying shares and making normal monthly savings

contributions, are borrowing from somewhere else. The reasons from not borrowing from the

SACCOS ranges from “high interest rates” to “lack of information regarding the products and

services”, especially for those who have been in employment for less than two years.

Performance Indicator Performance for

2011

Performance for

2012

Expected Performance (as at 31st

Dec., 2013)

Membership 929 1085 1412

Total Staff of CRDB Bank Group 1653 1898 2063

Percentage of Members to total Staff 56% 57% 68%

Deposits 0 0 0

Savings (TZS Billion) 1.77 2.23 3.37

Shares (TZS Million) 35.9 66.52 172.62

Outstanding loan portfolio (TZS Billion) 1.91 2.66 5.22

Quality of the outstanding loan portfolio

(PAR in %) ≤5% ≤5% ≤5%

Financial Income (TZS Million) 247.84 331.14 463.53


Therefore, going forward the SACCOS needs to review its products and services in order to address

specific financial needs for various segments of its members. This will improve its earning capacity –

and hence increased benefits to its members and modernizing its operations.

3.1.4. Operational Effectiveness

3.1.4.1. Staffing and Support of the Branch Representatives

CRDB Workers SACCOS has a total of six members of staff – the Manager, the Accountant, and Four

Credit Officers – as shown in the figure below. There has been a feeling whether this number is

optimum to serve about 1,000 members, who are scattered all over Tanzania – in more than 76

branches of CRDB Bank Plc. The whole team of staff is based at the Head Office, in Dar es Salaam.

This team is responsible for the overall running of the SACCOS – handling of members routine

inquiries, processing loan applications and preparing payment vouchers for disbursements,

mobilization and recruitment of new staff, preparation and follow on deductions, updating members’

records in their ledger cards and passbooks, entering members’ information into the system, etc.

Through a brief survey conducted, there are some members who are of views that the SACCOS has an

optimum number of staff – only that it lacks proper operational systems. Thus, that in case SACCOS

deploys and leverages on use of ICT platforms existing in the market, there will be no need to

increase a number of staff. Nonetheless, some are of views that, the number need to be increased in

order to enable the SACCOS to reach out to more members in all branches and mobilizing more

members who are lacking information regarding the SACCOS and its products and services.

Apart from the management, other members of staff and the Board – all based in Dar es Salaam, the

SACCOS works through the concept of representatives – some members based in upcountry branches

act as representatives of the SACCOS. Branch representatives are meant to act as contact persons

between the SACCOS and its members – at a branch level. However, there are no specific terms of

reference to set a platform for their operations, in order to measure and remunerate their

performances.

3.1.4.2. Communication and ICT Platforms

Currently, there are no standard communication platforms between the SACCOS and its members.

For example, the SACCOS receives applications for loans or membership, or otherwise, from its

members – for those who are based in Dar es Salaam and nearby regions, can afford their

applications to reach the SACCOS immediately; but for those from distant branches – especially in

remote regions, communication is not smooth and somehow disrupting flow of services. Therefore,

communication channels between members and the SACCOS is currently not streamlined – mostly


members are unofficially using platforms of the employer to communicate with the SACCOS, i.e. EMS,

courier services, internet and intranet systems, etc. There is a need for the SACCOS to have a

communication policy between its Head Office and its members – especially those who are located in

upcountry branches. Through a proposed support framework by the employer – the SACCOS should

clearly stipulate and request the employer to ‘officially’ use its communication platforms and

channels to serve its members – who are as well employees of the Bank.

Although CRDB Bank Plc, and its subsidiaries, is at the highest level of automation, CRDB Workers

SACCOS is still conducting its operations manually. Its core functions – management of the loan

portfolio, transacting for members’ deposits, savings and shares are done manually. Although there

are some initiatives to automate core functions, in the next five years, the SACCOS is focusing on

automating some other functions like finance and accounting, HR, members’ correspondences,

applications and inquiries.

3.1.4.3. Strategic Support from the Employer

Although currently, the SACCOS is getting some support from CRDB Bank Plc – in terms of discounted

loans; ICT platforms; and management of deductions for loans, savings, deposits and shares, there is

no agreement on such support and hence giving the SACCOS the rights to access and use such

support. Furthermore, there is an opportunity for the Bank to assume farther obligations in ensuring

the SACCOS is performing and delivering its best in serving members – and hence improving the

welfare of staff. Therefore, going forward, the SACCO, in liaison with the Management of CRDB Bank

Plc will identify areas of support and define the standards and approach of accessing and using such

support in order to better its services to members – and hence welfare of employees of the Bank.

3.2. Mission Statement

“To provide effective value-added microfinance services, in promoting adequacy savings, wise

borrowing and prudently utilization of funds to attain sustainable development and financial freedom

among members.”

Therefore, the core reasons for the existence of CRDB Workers SACCOS are:

(i) Promoting savings from its members – to provide convenient saving/deposit avenues for

members to build their own personal resources through their SACCOS; and henceforth

mobilizing its own internal fund, as a remarkable cheap source of financial resources;

(ii) Encouraging and providing conducive environment to its members to borrow, but

inculcating the culture of borrowing wisely, i.e. borrowing for productive purposes;


(iii) Prudent utilization of funds – to ensure the Board and Management safeguards the funds

of the SACCOS for the benefits of its members;

(iv) Ultimately, the mission of the SACCOS is to ensure its members are prospering

economically and achieving financial freedom;

The Board and Management has been striving to achieve these broad areas of the mission, through

its annual business plans; and it therefore from this year, the Board is embarking on the strategic

roadmap to enable CRDB Workers SACCOS envisions and plans over a long horizon of 5 years. In

subsequent sections, as they develop Strategic Objectives of the SACCOS, the Board will highlight

some areas of improvements on the mission for a clear strategic focus.

3.3. Vision Statement

To become the preferred, unique leading SACCOS model, providing competitive and reliable financial

services to members.

This is the statement of what CRDB Workers SACCOS is striving to become. Going through the

statement, the SACCOS wants to:

(i) Become an institution of choice by its members;

(ii) Become an modern and unique institution for other SACCOS to learn from in the industry;

(iii) Providing competitive and reliable financial services to members – as compared to other

providers

Therefore, through its annual business plans, its products and services, and its processes, the SACCOS

has been wanting to reflect this image to its stakeholders in that context. However, there has never

been a conduit and framework for systematic work in achieving the envisioned image. It is another

reason then, that the Board wanted to embark on strategic planning – in order to pave a strategic

way for the CRDB Workers SACCOS to become what it wants to become – in a specific period of 5

years. Similarly, the vision of the SACCOS will be improved in order to reflect its horizon of five years.

3.4. Values Statements

The Board and Management passed the guiding principles of the operations of the SACCOS, dubbed

and easily recalled as “CUP-VAP” (as detailed in table 2 below). These values are meant to be

experienced by all stakeholders in their interface with the SACCOS.


Table 3 Values Statements and their implications to the business

Values Business Implications

Customer Centric (C)

The values had no “documented” descriptions and specific implications to the business of

the SACCOS

Unity and Solidarity (U)

Professional Integrity (P)

Value-based (V)

Accountability (A)

Prudence (P)

In subsequent chapters these values will be enhance to reflect where CRDB SACCOS wants to go. The new

cultural factors will be integrated in daily conduct of staff, management and the Board in interface with all

categories of stakeholders, to ensure excellent customer experience.

3.5. SWOC Analysis

Table 3 below, provides an analysis of the strengths and weaknesses of the SACCOS in relation to the

existing opportunities and challenges in the market – and their implications to the business of the

SACCOS.

Table 4 SWOC Analysis, Business Implications and Strategic Focus

SWOC Attributes

Implications to the Business

or Operations of the

SACCOS

Strategic Focus

S T

R E

N G

H T

S

A salary-based

SACCOS

Quick services to

customers – as it’s easy

and quick to assess loan

applications and disburse

loans to customers;

Easy to manage loans

(deductions) through the

existing payroll systems of

the employer;

To continue leveraging on

payroll platforms – widen a

product menu to members

and hence increasing

earning capacity of the

SACCOS;

Being part of strong

brand of CRDB Bank

Plc

Credibility of CRDB

Workers SACCOS in the

market;

This will enable the SACCOS

to attract cheap resources

from the market to grow its

business

Learned and

committed leaders

(skilled, competent,

Ability to make informed

decisions to safeguard the

As the SACCOS grows, the

Board and Management

will need to explore and


SWOC Attributes



SACCOS

Strategic Focus

experienced and

committed members

of the Board,

Supervisory

Committee and

Management)

interest of the SACCOS;

Instituting appropriate

systems to manage affairs

of the SACCOS

Potential management the

resources of the

learn on governance,

strategic planning and

management, risk

management, etc in order

to continue reflecting

professionalism in service

delivery;

Operating within

systems of CRDB

Bank Plc

Providing a robust conduit

of communication

between the management

and members of the

SACCOS (information

sharing, loan applications,

etc) through GroupWise,

Intranet, internet

accessibility;

Ability to make payments

to members through their

staff accounts and using

the accounting systems of

the Bank – hence less

operating costs;

Constituting a “Service

Level Agreement” between

CRDB Bank Plc and CRDB

Workers SACCOS on areas

of support – and agreeing

on standards of services

and support the employer

will provide to the SACCOS

Impressive trend of

financial

performance

Increasing credibility to

members and non-

members;

Increasing credibility to

lenders and other

strategic partners for

establishing working

relationship with the

SACCOS

The SACCOS should

continue to make steady

profit in order to keep this

credibility to stakeholders

W E

A K

N E

S

S E

S

Inadequate

guarantee

framework and

systems amongst

members on loan

disbursements

Inability of recovery in

case the guaranteed loan

is defaulted;

Inability to measure the

available capacity of the

guarantor’s

savings/deposits to cover

the guaranteed loans –

hence the SACCOS

assuming the risks;

To explore further on types

and values of securities

members can offer on their

loans;

Looking for possibilities of

requesting the Employer to

facilitate recovery through

pension funds – when

employment of a member

ceases


SWOC Attributes



SACCOS

Strategic Focus

Lack of legal capacity

of the SACCOS to

access the

pensionable fund

(pledged as security)

to settle the

outstanding loan on

grounds of

termination of

contract or

retirement or

resignation of the

member from his/her

employment

Increasing cases of the

SACCOS to lose the

outstanding loan portfolio

– hence a financial loss to

the SACCOS;

The SACCOS should find an

alternative reliable type of

security to cover loans

given to its members;

The SACCOS should closely

work with the legal

department of CRDB Bank

Plc on appropriate

contracting to facilitate

recovery on pensionable

funds that members pledge

as securities

Absence of effective

use of ICT systems

(use of manual

systems) and

inadequacy of the

reliable accounting

systems

Lack of internal controls

on operations of the

SACCOS – prone to losses

and inefficiencies;

Challenges to the

Management in serving

members;

Loss of credibility to some

members as some

information are subjected

to human errors;

The SACCOS should

automate most of its

operations – especially the

management of the loan

portfolio;

The SACCOS should review

its accounting system to

ensure all the transactions

are accurately accounted

for;

The Board, apart from

COASCO inspections, should

liaise with the Management

of CRDB Bank Plc to access

some services like internal

audit, risk assessment, etc

Lack of legal capacity

to manage legal

documents

(mortgage, title

deeds, chattel

mortgaged, etc)

Failing to perfect these

documents on properties

pledges as securities;

Failing to use these

securities as reliable

securities instead of

“pension funds” that it has

never been able to

recover from

The SACCOS should

establish close working

relationship with CRDB

Bank Plc on perfecting

these documents to stand

as reliable securities for

loans granted to members

Little support from

the Management of

Lack of mentorship to

leaders and management

The Board should put a

clear objective to bridge


SWOC Attributes



SACCOS

Strategic Focus

CRDB Bank Plc

(Inadequate

members from CRDB

management team –

MD, DMDs,

Directors, Managers

and Supervisors)

of the SACCOS – for

instituting professionalism

in delivery of its services

to members;

Absence of a liaison

platform for the support

required from CRDB Bank

Plc

this gap so that the SACCOS

works for the betterment of

the employees of CRDB

Bank Plc – and the Group.

O P

P O

R T

U N

I T

I E S

A reliable customer

base – of a total

employees of the

Bank and its

subsidiaries in

Tanzania

Potential to increase

membership of the

SACCOS

The SACCOS should focus

on recruiting 100% of all

employees of CRDB Bank

Group – at any given time

Availability of low-

cost resources for on-

lending (CRDB,

MFSCL, SELF, PPF,

NSSF, LAPF, PSPF,

GEPF, OIKO, etc

Borrowing avenues for

growing its portfolio at

lower costs of funds

The SACCOS should

continue to explore cheaper

sources funds;

However, the focus should

be to grow and use its

internal funds before it

devotes on borrowing

Employer’s decision

to improve terms on

mortgage finance

loans to staff –

extending repayment

period to 20 y ears;

This has improved the

borrowing ratio to some

members of the SACCOS

and hence giving them

more borrowing room –

ultimately increased loan

portfolio of the SACCOS

The SACCOS should be

strategic and aggressive to

take advantages of such

opportunities – otherwise,

other providers of financial

services are grabbing them

Employer’s decision

to barn commercial

loans to staff.

This has given room to the

SACCOS for possibility of

granting

business/commercial

loans to its members who

would have accessed the

same from the employer

The SACCOS should plan to

commence commercial

loans to its members;

Only that it needs to put in

place all the necessary

arrangements;


SWOC Attributes



SACCOS

Strategic Focus

If this portfolio performs

well, the Bank might

consider the SACCOS to

manage its previously barn

portfolio of commercial

loans to staff;

Commercial loans should be

adequately secured and

securities perfected;

The Bank, through the

Department of Credit, can

assist the SACCOS to build

the necessary capacity to

manage business loans to

its members

C H

A L

L E

N G

E S

Conflicting interest in

accessing loans from

the external markets

that are cheap

sources. It has been a

challenge for the

SACCOS to get loans

from pension funds –

like PPF and NSSF

because of this

decision to conflict

with the mission of

CRDB Microfinance, a

subsidiary of CRDB

Bank Plc

This is limiting the SACCOS

from accessing cheaper

loans from these

institutions;

And hence limiting the

possibility of offering

remarkably bigger loans to

its members;

The SACCOS need to

bargain on the way forward

with the subsidiary on the

agreed approach or to be

able to access loans at

lower interest rates;

Strengthening working

relationships between

CRDB Workers SACCOS

Limited and CRDB

Microfinance Services

Company Limited

Conflicting products

offered by CRDB

Bank Plc to its

employees. Typically,

the Bank is offering

loans, e.g. staff

unsecured personal

loans, which charges

lower interest rate

Posing competition on

financing avenues to the

SACCOS;

Bad reflection of the

image of the SACCOS to

members and non-

members (potential

members) – as most of

them are failing to find

value of the SACCOS

whereby CRDB Bank Plc is

The SACCOS, in close liaison

with the Management of

CRDB Bank Plc, should chat

out on the approach

whereby the offering some

credit products to

employees of the Bank

(members to the SACCOS)

would be a value-addition

collaboration between the

two;


SWOC Attributes



SACCOS

Strategic Focus

offering similar loans to its

employees (who are

members to the SACCOS)

Strengthening capacity of

the SACCOS to manage

other loans given by the

Bank to its employees; The SACCOS should review

its products and services to

be able to compete in the

market

Increased

competition from

members’ informal

social funds and

other providers of

financial services

Posing competition on

financing avenues to the

SACCOS;

This is where most

members are accessing

business commercial loans

The SACCOS should conduct

a thorough survey to

establish the

competitiveness of its

products and services in

order to establish some

areas of improvement to

attract this demand lost to

other markets;

The SACCOS should

consider innovative

products and services – for

example to start thinking

exploring on Islamic

Banking


4. Environmental and Market Analysis

4.1. Environmental Analysis

For the context of the SACCOS, whose membership is from employees of the Company, the

environment of the SACCOS should focus on the stability of the business of the employer. Therefore,

the major analysis of the environment of CRDB Workers SACCOS will largely dwell on assessing the

stability of the business and the working relationship with CRDB Bank Plc. It is obvious the SACCOS

will need a tranquil general environment, outside CRDB Bank Group, but will not be the first

determinant for the success of its operations.

4.1.1. Political Analysis

Therefore, the political environment of the SACCOS would largely be the stability of the business of

the CRDB Bank Plc. With a general assessment of the growth trend of the Bank over the last five

years, one can firmly project that CRDB Bank Plc will still be in operations over another next five years

– and may be growing stronger. However, here the assessment includes the working relationship

between the Bank and the SACCOS. The relationship has been perceived to be good, although there

has never been a charter to clearly define what entails in this relationship – what values should the

SACCOS command to employees of the Bank and what support should the SACCOS get from the

Bank. It is expected as well that the Bank will not barn operations of the SACCOS – and that its

policies will always favour its operations.

On the bigger picture of the general environment, Tanzania is politically stable, like it has been over

the last five years. Therefore, it is projected to remain stable over the next five years. There are key

policies and strategies implemented by the Government that are directly favouring the growth and

development of the modern financial cooperatives in the country. Typical ones are the Rural Financial

Services Strategy (RFSS), the National Financial Inclusion Strategy, the formation of Cooperative

Commission and the expected review of the National Microfinance Policy. All these strategies and


policies do earmark SACCOS as the right vehicles to reach and serve a mass of population – though

they all recognize some challenges to be addressed.

4.1.2. Economic Analysis

Like the political assessment, the economic environment of CRDB Workers SACCOS starts with the

business welfare of CRDB Bank Plc. Thus, we project a stable economy (business) of the Bank – for

the next five years, like it has been over the past period. Moreover, over the last five years, from

2007 to 2012, the Bank has grown remarkably – for example, an increase of branch outlets of 111%

from 44 to 93, an expansion of ATM network of 245% from 71 to 245, and growth of the number of

staff 65% from 1,153 to 1898, over the same period. Therefore, over the next five years, the Bank is

projected to continue growing – even at a higher rate. This will have positive implications to the

business of the SACCOS – in terms of increased membership, and hence a need for more

improvements on service delivery systems.

Generally, we expect the economy of Tanzania will growth – as there are much new prospects and

indicators – emerging economies in gas, mining, farming and construction industry. However, as the

government focuses on building robust systems that will include and serve the financially-

marginalized groups in the community, this might create further competition to the SACCOS as more

institutions offering diversity of financial services, will start to emerge in the market. Thus, the

SACCOS should expect increase in competition over the next five years – especially from other

providers of financial services (commercial banks, other community-based SACCOS, micro-credit

companies and MFIs). It should therefore work on improving its products and delivery methodologies

in order to provide unrivaled services to its members. Furthermore, as the Tanzanian economy

grows, more employees (members to the SACCOS) will effectively engage themselves in real

entrepreneurship ventures – that will need financing from financial institutions and others – like

SACCOS, and the like. Therefore, CRDB Workers SACCOS, should project a boom in demand for such

financial needs.

Furthermore, because of the expected industry growth and consumer spending over the next five

years – interest rates, for both borrowing and savings, will remarkably increase. Therefore, in order

for the SACCOS to be able to access least expensive resources – savings and deposits – to build its

loan portfolio, apart from reviewing and designing attractive products, it should be able to pay

adequate interest rates on savings and deposit accounts. Therefore, interest on lending to members

will as well increase gradually to reflect this rise in the cost of funds. This will be the outlook of the

SACCOS in order to avoid borrowing from Banks – and related financial institutions, which will further

swell the cost of funds.


4.1.3. Social Analysis

The employee base of the Bank is expected to rise from 2,392 in year 2014 to ……..in 2018 – whereby

it is projected 95%, i.e……, will be members of the SACCOS. Furthermore, apart from increase in

number, the demographics of the employee population of the Bank (as the potential market of the

SACCOS) is vastly changing – more young employees are coming in which lowers the overall average

age of this population. This translates into a changing lifestyle of SACCOS members as well – putting

emphasis on “classy and stylish lifestyle” – living in good apartments, driving nice cars, nice mobile

phones and gadgets, etc. This presents a vast financing avenue, although if not well monitored, might

lead to multi-borrowing and hence potential default cases to the SACCOS. However, the SACCOS

should encourage its members to initiate other non-employment income generating activities and

hence develop appropriate financial products to match this new demand. Moreover, as the

Tanzania’s economy is growing very fast – more banks and related institutions will be coming in, and

henceforth expecting higher labor mobility and turnover will eventually go up before it stabilizes

thereafter. Therefore, in the next five years, especially towards the end of this period, the SACCOS

will experience higher members’ dropouts due to these changes. The SACCOS should start to institute

mechanisms for recovering loans from resigning member employees to continue repaying their loans

– instead of demanding immediate liquidation that might result to defaults.

4.1.4. Technology Analysis

Not only in delivery of financial services, but in almost all economic sectors, over the past ten years

technological developments have been remarkable and have equally commanded huge growth in

these sectors. However, the financial sector is one of a few economic areas that have experienced a

sharp positive impact of technology – on products and services, delivery methodologies and

management of core functions for providers of financial services. The impact of all these is the

increased efficiency and quality of services, reduced network expansion costs, increased outreach

into new areas, new products and services, etc. In the less span of next five years, more advanced

technologies in the financial industry are foreseen to continue emerging. Therefore, for CRDB

Workers SACCOS to be able to offer services that match the needs of its members and hence able to

compete with other providers, it needs to explore and invest in robust ICT platforms, for example the

use of mobile and smart phones, internet, etc for members to access their accounts with the SACCOS.

Specifically, for fast and convenient services to its members the SACCOS should immediately explore

platforms like Internet Banking, SimBanking and M-Pesa (and other telecom-led mobile money

platforms) to expedite services to its members – rather than checks and transfer systems.


4.2. Market & Competition Analysis

4.2.1. Market Analysis

The entire market of CRDB Workers SACCOS is limited to employees of CRDB Bank Group – CRDB

Bank Plc and subsidiaries in Tanzania, i.e. CRDB Microfinance Services Company Limited. Therefore,

no matter how effective products and services of the SACCOS become, the market will never increase

beyond this number of employees. It is however unfortunate that the Employer – CRDB Bank Plc is

offering financial services, especially credit, to its employees. This limits some financing opportunities

to the SACCOS. Furthermore, there are numerous “informal” social funds that are formed by groups

of employees within CRDB Bank Group – at the level of Branch, Department or other sections. The

employer and these informal groups are offering financial services that are in a way similar to what

the SACCOS is offering to its members.

While the market is limited to the number of staff of CRDB Bank Group, suppliers of financial services

are diverse – the Employer, informal social funds – but notably other providers of financial services

beyond the realm of CRDB Bank Group – that are targeting the general market or other segments in

which members of the SACCOS fall.

Therefore, the SACCOS needs to clearly understand financial needs of all employees of CRDB Bank

Group – as its potential market and systematically choose the segments that it has competence to

serve better – while it is further developing its competitive edge to reach out other segments.

Considering expansion of CRDB Bank Plc – opening subsidiaries outside the boundaries of Tanzania,

the SACCOS will not cease membership of those who are allocated to these subsidiaries or deny

membership to new staff in these subsidiaries whose country of residence is Tanzania.

4.2.2. Competition Analysis

In order to analyze competition of CRDB Workers SACCOS Ltd, five categories of providers of financial

services have been assessed. However, a sixth category is a non-provider of financial services but it

has similar impact to the SACCOS – especially on its savings and deposit products. These categories

are as follows:

The Employer – CRDB Bank Group

“informal” social and economic funds within CRDB Bank Group

“Informal” social and economic funds in communities where employees live;


Other providers of financial services – Commercial Banks, membership to other community

SACCOS;

Emerging microcredit Companies;

Increasingly growing investment avenues

Table 5 below shows the types of products and services provided by each of these categories – their

competitive edge – how they compare to each other, and what might be strategic choices to CRDB

Workers SACCOS.

Table 5 Competition Analysis for the Five Major Categories

Category of

Competitors

Types and features of

products and services

Key competitive

edge

Key limitations to

the competitor

Business Implications and

Strategic choices to the

SACCOS

CRDB Bank

Group

Housing loans – up to 20

years repayment period,

at 6% interest, no

application fees;

Unsecured staff personal

loan – up to 5 years, at

6%, no appl. fees;

Secured staff personal

loans – up to the

repayment period of 5

years;

A wide option of accounts

– varieties of SAVINGS

Account for self, children,

business, dependants; and

CURRENT Account for

businesses

Lower interest

rates on loans;

Ample resources

to provide

bigger loans to

employees;

Effective and

efficient systems

to take various

types of

securities,

evaluate, perfect

and monitor

value of these

securities

no salary advance

loans;

no clear

segmentation of

needs;

it is not the option

for “emergence”

loans;

The SACCOS can introduce

“salary advance loans” to all

employees of the Bank –

recovered through the

employer;

The SACCOS need to

conduct a critical survey to

understand exactly uses of

“unsecured personal loans”

to staff in order to find the

niche it can serve better;

To continue improving on

delivery and features of

emergency loans

The SACCOS need to study

the financial needs of all

employees of the Bank in

order to increase its

products and services – and

improving features thereon,

that would attract new and

retain members – increasing

consumption rate of its

products and services;

The SACCOS and

Management of CRDB Bank

Plc will have to bargain on

the possibility and modality

of allowing some financial

products offered by the

Bank to employees to be

managed by the SACCOS.

This has benefits to both –

to staff (management of


Category of

Competitors



Key competitive

edge

Key limitations to

the competitor



SACCOS

interest taxi differential) and

to the SACCOS (increased

earning avenues)

Employees

“INFORMAL”

social and

economic

funds

These are informal funds

under a group of employees –

at a Branch level, Department

or other social interactions;

They offer avenues for

savings – mostly direct

monthly deductions/

standing orders;

They provide social

benefits to member

employees – during close

or self deaths, weddings,

births, etc;

They provide quick loans

to member employees –

up to TZS10,000,000; a

maximum repayment

period of 1 year; and

interest rate of up to 15%;

Quick services –

loans are offered

very fast –

usually within

some hours, or a

maximum of

day;

No

bureaucracies in

getting loans –

approval in in

most cases, by

two people (who

are signatories)

– the Secretary

and the

Chairman;

Increasing social

bonds between

members

Limited resources to

grant bigger loan

amounts

Limited menu of

products and

services;

Most of these have

social inclinations –

they are not for

profit and hence

credit is not in their

core functions;

The SACCOS need to

continue improving on its

delivery – to be able to offer

quick and prompt services

to its members–at least

within a day, or any justified

period;

To continue exploring

further possibilities to offer

bigger and economically-

meaningful loans to its

members;

The SACCOS shall explore

the possibilities of inviting

these “informal” funds to

become members to the

SACCOS – in order to

contain competition and

creating a new lending

avenue

Community

“INFORMAL”

social and

economic

funds

These are similar to the

“employees’ social funds”,

except that they are outside

CRDB Bank Group – they are

within the residence

communities of employees.

Although they offer loans

and savings avenues, they

are mostly joined by

employees of CRDB Bank

Group for social reasons –

keeping ties with the

community;

They grant social benefits

– on deaths and wedding

ceremonies of family

members;

Loans granted are not

very remarkable – mostly

quick loans of not more

than TZS2 million

They have

higher social

values to

employees – and

hence most

members don’t

miss their

regular

contributions –

as this may

trigger

possibilities to

miss

constitutional

social benefits

They don’t have

enough resources to

offer “economically”

viable loans;

They have strong

ties with members –

creating a higher

sense of discipline –

to make

contributions;

attending social

meetings and

fulfilling their

membership

obligations;

There is no possibility of

detaching employees from

community-based social

funds as they hold social

values the SACCOS cannot

grants to its members;

however, the SACCOS MUST

design appropriate products

and services that address

financial needs provided by

these funds. To start with,

the SACCOS should liaise

with African Life Assurance

or through CRDB

Microfinance Services

Company Limited to design

Funeral plan schemes to

address issues of death

benefits. Further, it can

explore into other insurance


Category of

Competitors



Key competitive

edge

Key limitations to

the competitor



SACCOS

products like health and life.

Other

providers of

financial

services

(commercial

Banks,

SACCOS and

other MFIs)

These are commercial banks,

other community-based

SACCOS and MFIs, apart from

the above.

They offer a variety of

products and services – at

market rates;

Mostly, employees access

financial services from this

category for business

loans – as the employer

aborted business loans to

staff and the limit of

SACCOS’s development

loan of TZS40 million to

members not adequate to

‘serious business’.

Therefore, members/

employees are borrowing

from multiple sources to

satisfy their business

needs;

Savings in other

institutions are mostly

related to business

accounts – and basically as

the requirement for

getting loans

For the case of

commercial

banks, they have

huge resources

to offer large

business loans;

They take “real”

securities to

cover their loans

in case of

defaults;

They grant loans

based on

assessment of

the business or

“needs” of the

customer, rather

than a mere

pegging with

savings;

They charge

competitive

market rates for

sustainably

meeting their

operational

costs

They don’t have

direct access to the

core income of

borrowers (salary of

employees of CRDB

Bank Group) – and

hence legible to

defaults in case the

business fails to pay

the borrowed

money

The SACCOS should liaise

with CRDB Bank Plc to

explore possibilities and

modalities to commence

offering business loans to its

members – this should call

for the SACCOS to build the

necessary capacity to run

such a countrywide

portfolio;

The SACCOS should critically

analyze types of financial

needs its members – and

generally employees of

CRDB Bank Group, are

accessing from other

providers in the market

Emerging

Microcredit

Companies

and

Increasing

Money

Mongers

These present the last

options in case access to the

above avenues has failed.

No savings are required to

access loans;

Interest rates are so high –

ranging from 4% to 30%

per month;

Loans are pegged with

values of securities and

are very quick if there are

“attractive securities”;

In most cases loan

agreements have

Appropriate for

bigger

emergence loans

– to carter for

business

emergencies;

Accessing

resources from

various

commercial

banks

Extremely high

interest rates;

Lack of customer

focus – impaired

relationships with

customers

If the SACCOS could improve

on its delivery speed,

amount of loans, especially

on emergency loans, it could

hugely limit its members

who are getting loans from

money mongers and micro-

credit companies


Category of

Competitors



Key competitive

edge

Key limitations to

the competitor



SACCOS

provisions for forfeiture of

securities in case of failure

to repay – even a single

installment on the loan

Emerging

lucrative

investment

avenues

These are various investment

avenues emerging in the

market – for example, shares

in registered Companies,

incomes from investment

schemes, i.e. Umoja Trust

Fund (UTT) with investments

schemes that are attractive

than savings and deposit

accounts with SACCOS or

Commercial Banks

Investment

Schemes are

providing higher

incomes to

investors than

interest incomes

on members’

deposits and

savings

Accounts with

the SACCOS

Not directly

attached to

members of the

SACCOS – hence

relatively limited

proximity (outreach)

to income sources of

members of the

SACCOS/staff of the

Bank

The SACCOS need to review

its savings and introduce

deposit products that are

relatively competitive in

order to grow its savings

and deposit portfolio;

The SACCOS should design

and develop an

independent Investment

Fund for members (or even

non-members) to contribute

and invest in mutual

investment avenues.


5. The Future of CRDB Workers SACCOS

5.1. Mission Statement

The core reason for existence of the SACCOS will remain the same over the next five years – like it has

been over the past years. However some minor changes have been made in its mission as follows:

The Original Mission Statement was “to provide effective value-added microfinance financial services,

in promoting adequacy savings, wise borrowing and prudent utilization of funds to attain sustainable

development and financial freedom among members.”

Now, the mission statement has been reviewed to read as follows “to provide value-added financial

services, promoting saving culture, wise borrowing and enhancing prudent management of resources

to attain sustainable economic development and financial freedom to its members and staff.”

Therefore, the ingredients of the mission of the CRDB Workers SACCOS will remain the same as

follows:

(i) Promoting savings from its members – to provide convenient saving/deposit avenues for

members to build their own personal resources through their SACCOS; and henceforth

mobilizing its own internal fund, as a remarkable cheap source of financial resources;

(ii) Encouraging and providing conducive environment for its members to borrow, but

training and inculcating the culture of borrowing on productive purposes;

(iii) Prudent management of resources – for the Board, members of various Committees and

Management for enhancing their capacity to manage financial and other resources of the

SACCOS for the interest of members – and to members for enhancing their capacities to

manage their financial resources to improve their economic conditions;

(iv) Encouraging members to invest in mutual investment vehicles of the SACCOS in order to

take advantage of the increasingly growing investment avenues;

(v) Ultimately, the mission of the SACCOS is to ensure its members are prospering

economically and achieving financial freedom;


5.2. Vision Statement

The original vision of CRDB Workers SACCOS was “to become the preferred, unique leading SACCOS

model, providing competitive and reliable financial services to members”.

Therefore, although what the SACCOS wants to achieve and become remains the same, there are

some minor improvements and hence rephrasing the vision to read as: “to become the model and

leading SACCOS in Tanzania, the most preferred institution to its members and potential market, that

provides competitive and reliable financial services”.

Thus, through the reviewed vision CRDB Workers SACCOS wants to:

(i) Become an institution of choice for financial services by its members and the potential

market;

(ii) Become a model and leading SACCOS in Tanzania – operating on modern management

and leadership principles, with appropriate operating systems, an employer of choice. To

set standards for other SACCOS to learn from;

(iii) Providing competitive and reliable financial services to its members – as compared to

other providers in the industry

5.3. Adopted Cultural Values

Because of simplicity and the desire to emulate the culture of CRDB Bank Plc in all its conduct, the

Board and Management of CRDB Workers SACCOS have decided to adopt the corporate cultural

values of the employer – dubbed as PRACTICE, as described in the figure below.


Figure 2 Adopted Cultural Values of CRDB Workers SACCOS

PROFESSIONAL

RESPONSIVE

ACCOUNTABLE

COMMITTED

TEAM PLAYER

INNOVATIVE

COURTEOUS

EFFICIENT

We are guided by our skills, knowledge and values of our profession to adhere to moral and ethical principles while displaying the highest levels of trustworthiness, integrity, honesty and loyalty to uphold our Bank's reputation.

We are responsible to our customers and society; we listen to and provide solutions promptly to meet their expectations.

We are responsible for the accomplishment of what is supposed to be done and accountable for our actions as employees and members of the society.

We are ready to dedicate our efforts towards achieving the objectives of the Bank by making them our own personal objectives and in so doing create value to our customers and shareholders.

We are ready to work with others in cooperation, respect individual views in pursuit of our goals and embrace diversity and collaboration without functional boundaries to achieve the best for ourselves, customers and the Bank.

We are committed to develop and adopt creative solutions and put them into action to meet our customers' demand and increase value to shareholders.

We show respect and consideration in all our interactions; we are polite and attentive and useful at all times to our customers and colleagues.

We are committed to accomplish the best for our customers and theBank by deploying optimal resources.


6. Strategic Objectives, Goals and Activities

6.1. Key Strategic Areas

From the review of the current strategic position and the envisioned future of the SACCOS, the Board

of Director of CRDB Workers SACCOS has identified six major areas of focus for the next five years:

Growth of Membership

Brand and image, and products and services

Governance and Leadership

Operational and ICT Systems

Financial Sustainability

HR management

6.2. Strategic Objectives

From the six strategic areas above, the Board has derived the following six strategic objectives as

follows:

Strategic Objective 1 To increase and maintain membership to cover at least 95% of

employees of CRDB Bank Plc

Strategic Objective 2 To improve brand and image of the SACCOS; and review and design

new products and services to address financial needs of members and

the potential market

Strategic Objective 3 To enhance governance and leadership framework to support the

envisioned business growth


Strategic Objective 4 To enhance ICT platforms and operational systems to increase

efficiency and effectiveness in service delivery

Strategic Objective 5 To achieve stable and sustainable financial growth

Strategic Objective 6 To procure, develop and maintain competent workforce to deliver

professional services to its members

Therefore, the Board has designed the above six objectives to cover the above strategic business

areas of the SACCOS – hence through these six objectives, CRDB Workers SACCOS is confident to

achieve its mission and vision for the next five years.

6.3. Key Goals, Targets and Key Activities

Strategic Objective 1: To increase and maintain membership to cover 100% of employees of CRDB Bank Plc

This objective entails to include all members of staff of CRDB Bank Group to become members of

CRDB Workers SACCOS. The Board plans to recruit and provide appropriate products and services to

maintain membership of all members of staff of the Bank. In order to achieve this, table 6 below

identifies some key goals and strategic activities in order to achieve this objective.

Table 6 Key goals, measures, targets and activities for Strategic Objective 1

Key Goals Measures Baseline [2013]

Targets Strategies

1.1

Recruiting

new

members

Percentage of

Members to the

total number of

staff of the Bank

Percentage of

Senior Managers,

Directors and

Executives of

CRDB Bank

Group who are

members to the

SACCOS

68%

(……..) -

Aliko

95%

100%

1.1.1 Improving the concept of “branch representation” to allow branch representatives to create the intended value to the SACCOS

1.1.2 Enhancing communication between the Head Office (of the SACCOS) and all Branches of CRDB Bank to allow online campaigns

1.1.3 Setting clear performance indicators to staff of the SACCOS in terms of membership mobilization and growth

1.1.4 Enhancing processes during introduction and awareness campaigns in orientation programs of new staff of the Bank

1.1.5 Strengthening working relationship between the SACCOS and Management of the Bank


Key Goals Measures Baseline [2013]

Targets Strategies

1.2 To maintain

active

members to

the SACCOS

Percentage of

members with at

least one loan

account

Percentage of

members with at

least one deposit

account

[……..]

Aliko

0%

80%

90%

1.2.1 Conducting members’ satisfaction survey and general financial needs assessment of the potential market in order to determine the competitiveness of SACCOS

1.2.2 Promoting use and benefits of SACCOS’s products and services to members

1.2.3 Improving features of existing and developing new products and services in order to address financial needs of the target and potential market

1.2.4 Developing mechanisms for getting frequent feedback from members and swiftly taking advantage of them

Strategic Objective 2: To improve brand and image of the SACCOS; and review and design new products and services to address financial needs of members and the potential market

The SACCOS will review and develop new products in order to address financial needs of its target

market – in order to address the increasing competition, especially from within (CRDB Bank Group

and the increasingly emerging staff informal funds); but also remarkably from the rest of the market

– typically for commercial loans from banks, microcredit companies and other community-based

SACCOS. This is strongly justified from a quick survey conducted by the Facilitator to assess members’

satisfaction on products and services and getting opinion from non-members – whereby each

category expressed a need for the SACCOS to review its existing products to reflect needs of the

vastly changing social profiles of its members.

Therefore, in order to achieve this, Table 7 below depicts some key goals and related strategies that

the SACCOS shall be carrying out.

Table 7 Key goals and strategies for Strategic Objective 2

Key Goals Measures Baseline

[2013] Targets Strategies

2.1

Increase

consumption

rate on

products and

services

Annual growth

rate of the loan

portfolio

Annual growth

rate of savings

37%

45%

37%

45%

2.1.1 To enhance features of existing products

and services to reflect needs of the

market

2.1.2 To develop new products and services to

carter for emerging needs in the market

2.1.3 To review and improve delivery




Growth rate of

deposits

0%

40%

methodologies to ensure prompt services

to members and profitability to the

SACCOS

2.1.4 To build the necessary operational

capacity and forming a strong liaison with

the Employer for managing some of

financial services offered to members of

staff

2.1.5 To enhance product brands and

marketing strategies to create awareness

among members and the general staff

2.1.6 To explore and form a framework of

operations for members who are still

employees of the Bank but whose country

of employment is no longer Tanzania

2.2 Introduction

of innovative

and

competitive

products to

counteract the

competition

Framework for

serving

employees’

informal funds

developed

Funeral plans

and medical

insurance

introduced

Special

products to

address

planned social

events

introduced

N/A

N/A

N/A

By 2014

By 2015

By 2016

2.2.1 Introducing a framework for providing

services to “informal” funds and groups

formed by employees of the Bank

2.2.2 Introducing insurance services to address

most of the financial needs addressed by

informal funds, related to deaths and

funeral, medical expenses to dependants,

etc

2.2.3 Introducing financial products for special

and planned social events – e.g. for

marriage, for births, anniversaries, etc

2.2.4 Introducing commercial loans to members

of the SACCOS

2.2.5 Liaising with the Bank for the possibility of

managing part of its portfolio to members

of staff

2.2.6 Reviewing a Policy for an Internal

Insurance Scheme

Strategic Objective 3: To enhance governance and leadership framework to support the envisioned business growth

Because the business of the SACCOS is expected to grow remarkably fast over the next five years,

there is a need to strengthen the capacity of the Board and governance systems to ensure effective


oversight and leadership over its business. Therefore, the Board will institute appropriate frameworks

for ensuring the business of the SACCOS is producing the intended results. Table 8 below shows some

key strategic activities and related targets to achieve this objective.




3.1

Improve

governance

frameworks

of the

SACCOS

Introduce internal audit function

Introduce the risk management and compliance functions

N/A

N/A

By 2017

By 2018

3.1.1 Reviewing and instituting a strong

organizational structure of the SACCOS

3.1.2 Review of operational frameworks to integrate

internal audit into other functions of the

SACCOS

3.1.3 Development of an Internal Audit Manual and

an Internal Audit Charter to define the scope of

an internal audit function – specifying the

purpose, authority and responsibilities

3.1.4 To assess whether to recruit or outsource

internal audit functions

3.1.5 Review of operations of the SACCOS to develop

a comprehensive risk management system

3.1.6 Introducing risk management and compliance

functions – employing or outsourcing from the

Parent Company

3.1.7 Review of by-laws and other operational

manuals to reflect internal audit and risk

management functions

3.2 Enhancing

capacity of

the Board of

Directors and

Supervisory

Committee

Learning

programmes

to the Board

introduced

N/A

By 2015

3.2.1 To develop annual study tour programmes to

members of the Board, Supervisory and other

Committees

3.2.2 To undertake training needs assessment (TNA)

for the Board and Supervisory Committee and

soliciting appropriate providers to provide

training on the identified knowledge and skills

gaps

3.3 Improving

working

relationship

between the

SACCOS and

the Bank

A Service

Level

Agreement

between the

Board and

Management

of CRDB Bank

Plc introduced

N/A By 2017 3.3.1 Defining areas of working relationship between

the two parties and developing a SLA to

manage the relationships

3.3.2 Creating a strong interface between the Board

of Directors of CRDB Workers SACCOS and the

Management of CRDB Bank Plc for the latter to

support the SACCOS on governance and

leadership issues;

3.3.3 Mobilization of members of the Management

Team and senior managers to membership of




the SACCOS

3.4 Develop and

review policy

and

procedures

Reviewed and

developed

policies and

procedures

N/A By 2016 3.4.1 Review existing or developing new policies and

procedures to govern operations of the SACCOS

3.4.2 Conduct training to Board, members of various

committees, management and staff of the

SACCOS on new policies and procedures

Strategic Objective 4: To enhance ICT platforms and operational systems to increase efficiency and effectiveness in service delivery

In order to provide prompt services to its members – the SACCOS needs a robust platform of ICT

systems to enable it automate most of its functions and also importantly, to allow its country-wide

scattered members to access real-time services and support from the SACCOS. Therefore, over the

next five years the SACCOS will greatly need to automate its core functions and enhance

communication between the Head Office and its members. This will facilitate quick and prompt

services and support to members. Remarkably, as the SACCOS is planning to review features and

introduce a wider range of products – especially loans and savings, it’s inevitable for a reliable ICT

system to manage the operations related to these products. Table 9 below shows a list of key goals

and respective strategic activities in order to achieve the required ICT platforms and operational

systems to support the business of the SACCOS




4.1

Automation of

core functions

of the SACCOS

Full automation of

loans, savings,

share and deposit

functions

Production of all

reports from FS for

decision-making

N/A

N/A

By 2014

By 2014

4.1.1 Updating Finance Solution software

to adequately carter for loans,

savings, shares and deposits

4.1.2 Transforming from manual into

electronic data system and updating

the same in the system

4.1.3 Training all cadres of staff and the

Board for effective utilization of

Finance Solution

4.1.4 Review of all processes in the

management of loans, savings, share

and deposits for assigning roles and

responsibilities, and setting

appropriate rights in the system

4.1.5 Integration of Finance Solution with




mobile phones, online helpdesk (

website), etc, in order to allow

members to view their accounts and

do basic transactions

4.2 Enhancing

communicatio

n systems

Development of an

integrative website

Functioning of the

web-based

helpdesk;

Functioning of the

web-based systems

for application of

loans and

membership

Functioning of the

web-based account

inquiry system

By 2015

By 2016

By 2015

By 2015

4.2.1 Development of an integrative

website to allow communication and

self-service platforms to members

4.2.2 Introduction of the helpdesk

functions through the website and

SACCOS hotlines

4.2.3 Introduction of online application

system for loans and membership

4.2.4 Introduction of online inquiry

platforms through mobile phones

and the website of the SACCOS

4.2.5 Streamlining usage of communication

systems of the Bank through a

Service Level Agreement (SLA)

4.3 Enhancing

records and

information

management

systems

Reviewed filing and

documentation

system

Electronic archiving

system introduced

and fully

functioning

By 2015

By 2017

4.3.1 Reviewing the documentation and

record management system in order

to improve access and use of

information

4.3.2 Introducing an electronic archiving

system to allow easy management of

electronic information of the SACCOS

4.3.3 Conducting training to all members

of staff in order to implement an

effective record management system

within the SACCOS

Strategic Objective 5: To achieve stable and sustainable financial growth

The SACCOS will only be able to achieve its other objectives when it is able to attain a stable and

sustainable income over the strategic period of five years. This entails initiatives in growing its assets


and managing all risks associated with this growth; increasing income earning avenues; investing

prudently – directing resources of the SACCOS to profitable ventures; and management and control

of costs. The table below highlights the key goals and strategic activities for achieving this objective.




5.1

Maintaining a

growing and

quality loan

portfolio

Annual growth

rate of the loan

portfolio

Quality of the

loan portfolio

(PAR)

Non-performing

loans (NPL)

37%

≤5%

≤2%

37%

≤5%

≤2%

5.1.1 Improving competitiveness of the SACCOS

and features of loan products and delivery

methodologies to attract demand from

competitors

5.1.2 Reviewing and improving loan recovery

strategies to ensure full recovery of default

loans

5.1.3 Creating adequate awareness and

marketing on its loan products and services

5.2 Attaining and

maintaining an

annual income

growth of 20%

Annual growth

rate of the gross

income

Introduction of

individual based

performance

review system

Full automation

of all income

streams

36%

N/A

N/A

38%

By

2017

By

2016

5.2.1 Review of the pricing policy for products

and services to cover the operating costs

and investments;

5.2.2 Realigning business processes and

introducing regular performance review

systems

5.2.3 Introducing new products and services to

address emerging financial needs for

members and attracting the rest of the

market

5.2.4 Automation of all income processing and

collection - charges, commissions, interest,

etc

5.2.5 Instituting an effective system for cost

management and control measures

Strategic Objective 6: To procure, develop and maintain competent workforce to deliver professional services to members

The Board realizes that in the absence of the workforce – with appropriate skills and knowledge, CRDB Workers SACCOS will never be able to achieve its mission and vision. Therefore, the Board has set an independent objective to ensure the SACCOS is always in hands of an optimum number of


staff, with the right competencies and attitude to achieve its business objectives. As the SACCOS envisions to become a model institution in Tanzania, undoubtedly its starting point is on the development and maintenance of capacity of its members of staff. The table below lists key goals and strategies for ensuring the SACCOS is procuring, developing and maintaining competent workforce. Table 11 Key goals and strategies for Strategic Objective 5

S/N Key Goals Measures Baseline [2013]

Targets Strategic Activities

6.1

Efficient and effective recruitment and employment processes

Improved staff productivity – measured by gross income per employee Implementing the reviewed orientation program

[…..] Aliko

N/A

By 2014

By 2014

6.1.1 Reviewing HR policies to ensure recruitment of competent staff – possibility for outsourcing the services

6.1.2 Developing an effective orientation program to new members of staff

6.1.3 Encouraging staff to advance their careers through self-initiated learning programmes to acquire the necessary skills

6.1.4 Liaising with CRDB Bank Plc for coordinated orientation programmes

6.2

Improved policy on Training and Development of Staff

Implementation of the Training Program to Staff Knowledge sharing and attachment program with CRDB Bank implemented

N/A

N/A

By 2016

By 2017

6.2.1 Conducting a training needs assessment – in order to develop a training plan for training and development of staff

6.2.2 Producing an optimum budget for staff training and development

6.2.3 Introducing an internal library for self-learning and reference

6.2.4 Encouraging knowledge sharing and attachment programme between the SACCOS and CRDB Bank Plc

6.3

Improved Policy on Compensation and Benefits to Staff

Full implementation of the Compensation and Benefits Policy

N/A

By 2014

6.3.1 Introducing an effective system for individual performance appraisal

6.3.2 Introducing a performance-based remuneration and incentive system

6.3.3 Reviewing and improving staff benefit package for job retention

6.4 Review of the Organization Structure

Reviewed Organization Structure

N/A By 2014

6.4.1 Conducting job analysis for clear description and specification of jobs

6.4.2 Reviewing and enhancing an existing organization structure

6.4.3 Integrating branch representative model within the organization structure

6.4.4 Establishing strategic planning for workforce requirements


7. Performance Measures, Implementation and Monitoring

7.1. Projected Financial Performance

Comprehensive projection of the financial performance of the SACCOS as per the Key Objectives,

Goals and Activities is shown in Appendix A [detailed Financial Forecast of the SACCOS from 2014 –

2018]. Below, table 12 shows the actual performance of CRDB Workers SACCOS and its growth trend

over the period of four years since 2010 to date. From the table, although there has been some

noticeable increase in other areas as the business of SACCOS has been growing, remarkably there has

been no corresponding increase on financial expenses. This is due to the fact that the SACCOS has

been not paying interest on savings and deposits, and its borrowing has been dwindling, as its lending

has been adequately financed by savings from members. Important to note is that there has never

been any efforts to mobilize deposits from its customers. Nonetheless, for the next five years, as the

SACCOS is projecting to continue financing a huge part of its assets from members’ funds, it will start

paying attractive interest to mobilize adequate savings and deposits from members. Likewise, it will

certainly increase its borrowing from the Employer, especially as it reviews and introduces new

products to its members.

Table 12 Past performance and Growth Trend

P E R F O R M A N CE A R E A

PAST PERFORMANCE

P A S T P E R F O R M A N C E T R E N D

2010 2011 2012 2013 2010 2011 2012 2013

AVERAGE

ANNNUAL

GROWTH

Membership 694 929 1085 1412

B A

S E

Y

E A

R

34% 17% 30% 27%

Staffing of CRDB Bank Plc 1438 1653 1898 2063 15% 15% 9% 13%

Membership to Total Staff of the Bank (%) 48.3% 56% 57% 68% 16% 2% 19% 12%

Quality of the Loan Portfolio (PAR) (%) ≤5% ≤5% ≤5% ≤5% 0 % 0 % 0 % 0 %

TOTAL ASSETS (ZS million) 1,720 2,090 2,720 4,250 22% 30% 56% 36%

Outstanding Loan Portfolio (TZS million) 1,670 1,910 2,660 4,220 14% 39% 59% 37%

TOTAL LIABILITIES (TZS million) 1,470 1,830 2,270 4,060 24% 24% 79% 42%

Members’ Savings (TZS million) 1,360 1,770 2,230 3,980 30% 26% 78% 45%

Members’ Deposits (TZS million) 0 0 0 0 0% 0% 0% 0%

External Loans (TZS million) 100.1 36.1 00 80.44 -64% -100% 0% -55%

TOTAL SHAREHOLDERS’ FUNDS (TZS million) 241.54 263.01 444.00 730.17 9% 69% 64% 47%

Members’ Shares (TZS million) 46.5 35.9 66.52 172.62 -23% 85% 160% 74%



PAST PERFORMANCE

P A S T P E R F O R M A N C E T R E N D

2010 2011 2012 2013 2010 2011 2012 2013

AVERAGE

ANNNUAL

GROWTH

Reserves and Retained Earnings (TZS million) 205.5 216.5 377.48 557.55 5% 74% 48% 42%

TOTAL INTEREST INCOME (TZS million) 186.35 247.84 331.14 463.53 33% 34% 40% 36%

Interest from Lending (TZS million) 185.96 247.37 330.94 462.53 33% 34% 40% 36%

TOTAL INTEREST EXPENSES (TZS million) 16.99 10.44 8.74 34.56 -39% -16% 295% 80%

Interest on Deposit (TZS million) 0 0 0 0 0% 0% 0% 0%

Interest on Savings (TZS million) 0.385 0.471 0 0 22% -100% 0% -26%

Interest on Borrowing (TZS million) 16.99 10.44 8.73 2.56 -39% -16% -71% -42%

PROVISIONS FOR BAD DEBTS (TZS million) 54.17 35.43 27.54 32 -35% -22% 16% -14%

NET INTEREST MARGIN (TZS million) 169.36 234.40 322.40 428.40 38% 38% 33% 36%

Non-interest incomes (TZS million) 17.24 17.60 14.59 13.04 2% -17% -11% -9%

NET INCOME BEFORE TAXES (NIBT) 56.87 89.41 168.33 178.77 57% 88% 6% 51%

The projected performance for the next five years is based on the average annual growth for the past

four years – assuming the business of the SACCOS will continue to grow, slightly above this past rate.

Table 13 shows the projected growth rate of the SACCOS for the next five years; while table 14 is the

projected performance in real values.

Table 13 Projected Rate of Growth for the Next Five Years


P R O J E C T E D G R O W T H T R E N D (%)

2014

(BUDGET) 2015 2016 2017 2018

AVERAGE ANNNUAL

GROWTH

Quality of the Loan Portfolio (PAR) (%) 0% 0% 0% 0% 0% 0%

TOTAL ASSETS (ZS million) 25% 40% 40% 40% 40% 37%

Outstanding Loan Portfolio (TZS million) 23% 37% 37% 37% 37% 34%

TOTAL LIABILITIES (TZS million) 9% 42% 42% 42% 42% 35%

Members’ Savings (TZS million) 13% 40% 40% 40% 40% 35%

Members’ Deposits (TZS million) 0% 0% 100% 90% 100% 58%

External Loans (TZS million) 24% 24% 24% 24% 24% 24%

TOTAL SHAREHOLDERS’ FUNDS (TZS million) 35% 47% 47% 47% 47% 45%

Members’ Shares (TZS million) 7% 74% 74% 74% 74% 61%

Reserves and Retained Earnings (TZS million) 43% 42% 42% 42% 42% 42%

TOTAL INTEREST INCOME (TZS million) 45% 36% 36% 36% 36% 38%

Interest from Lending (TZS million) 45% 36% 36% 36% 36% 38%

TOTAL INTEREST EXPENSES (TZS million) 108% 80% 80% 80% 80% 86%

Interest on Deposit (TZS million) 24% 24% 24% 24% 24% 24%

Interest on Savings (TZS million) 0% 45% 45% 45% 45% 36%

Interest on Borrowing (TZS million) 584% 24% 24% 24% 24% 136%

PROVISIONS FOR BAD DEBTS (TZS million) 9% 37% 37% 37% 37% 31%

NET INTEREST MARGIN (TZS million) 39% 36% 36% 36% 36% 37%

Non-interest incomes (TZS million) 262% 15% 15% 15% 15% 64%

NET INCOME BEFORE TAXES (NIBT) 59% 51% 51% 51% 51% 53%


From the table above, the quality of the loan portfolio will remain unchanged – with a portfolio at

risk (PAR) of not more than 5% for the next five years. Interestingly, the loan portfolio, liabilities and

shareholders’ funds, will all grow at annual average rates of 37%, 35% and 45% respectively.

Subsequently, total interest income and hence net interest margin will both grow at 38% and 37%,

respectively. Table 14 below is the projection of performance of in real value. Membership of the

SACCOS is expected to grow alongside the total number of staff of CRDB Bank Group – with an

ultimate goal of recruiting 100% of all members of staff.

Table 14 Five Years’ Projected Performance


P R O J E C T E D PERFORMANCE (TZS)

2014

(BUDGET) 2015 2016 2017 2018

Membership 1,673 2,042 2,425 2,880 3,420

Staffing of CRDB Bank Plc 2,392 2,553 2,853 3,200 3,600

Membership to Total Staff of the Bank (%) 73% 80% 85% 90% 95%

Quality of the Loan Portfolio (PAR) (%) ≤5% ≤5% ≤5% ≤5% ≤5%

Non-performing loans (NPL) (%) ≤2% ≤2% ≤2% ≤2% ≤2%

TOTAL ASSETS (ZS million) 5,320 7,448.00 10,427.20 14,598.08 20,437.31

Outstanding Loan Portfolio (TZS million) 5,210 7,137.70 9,778.65 13,396.75 18,353.55

TOTAL LIABILITIES (TZS million) 4,420 6,276.40 8,912.49 12,655.73 17,971.14

Members’ Savings (TZS million) 4,510 6,314.00 8,839.60 12,375.44 17,325.62

Members’ Deposits (TZS million) 0 160.00 320.00 608.00 1,216.00

External Loans (TZS million) 100 124.00 153.76 190.66 236.42

TOTAL SHAREHOLDERS’ FUNDS (TZS million) 985 1,448.32 2,129.03 3,129.67 4,600.61

Members’ Shares (TZS million) 185 321.90 560.11 974.58 1,695.78

Reserves and Retained Earnings (TZS million) 800 1,136.00 1,613.12 2,290.63 3,252.70

TOTAL INTEREST INCOME (TZS million) 670.24 911.53 1,239.68 1,685.96 2,292.90

Interest from Lending (TZS million) 669.02 909.87 1,237.42 1,682.89 2,288.73

TOTAL INTEREST EXPENSES (TZS million) 72 129.60 233.28 419.90 755.83

Interest on Deposit (TZS million) 54.5 54.50 54.50 54.50 54.50

Interest on Savings (TZS million) 1.22 1.77 2.57 3.72 5.39

Interest on Borrowing (TZS million) 17.5 21.70 26.91 33.37 41.37

PROVISIONS FOR BAD DEBTS (TZS million) 35 47.95 65.69 90.00 123.30

NET INTEREST MARGIN (TZS million) 597.02 811.95 1,104.25 1,501.78 2,042.42

Non-interest incomes (TZS million) 47.21 54.29 62.44 71.80 82.57

NET INCOME BEFORE TAXES (NIBT) (TZS million) 283.41 427.95 646.20 975.77 1,473.41


7.2. Key Performance Indicators

In order to measure performance of the SACCOS, the table underneath shows some selected key

performance indicators that will be used by the Board of Directors. All the strategic activities in the

previous chapter, from objective 1 to objective 6 are meant to achieve these indicators. Thus, if these

indicators are achieved as projected, CRDB Workers SACCOS will have accomplished its strategic

objectives by 2018.

Table 15 Key Performance Indicators Matrix

Indicators Base Year

(2013)

P r o j e c t e d P e r f o r m a n c e I n d i c a t o r s

2014 2015 2016 2017 2018

Membership growth 1,412 1,673 2,042 2,425 2,880 3,420

Value of the loan portfolio (TZS bn) 4,220 5,210 7,137.70 9,778.65 13,396.75 18,353.55

Quality of the loan portfolio (PAR) ≤5% ≤5% ≤5% ≤5% ≤5% ≤5%

Value of savings (TZS bn) 4,060 4,510 6,314.00 8,839.60 12,375.44 17,325.62

Value of deposits (TZS bn) 0.00 0.00 160.00 320.00 608.00 1,216.00

Value of Shares (TZS mn) 173 185 322 560 975 1,696

Return on Assets (ROA) 6% 5.% 5.7% 6.2% 6.7% 7.2%

Return on Equity (ROE) 38% 28.7% 30% 30% 31% 32%

Savings and Deposits to Total Assets 84% 84% 87% 88% 89% 90%

7.3. Implementation and Monitoring

In order for the Board and Management to achieve the projected business growth of the SACCOS,

they shall institute an effective monitoring framework to ensure the key performance indicators

(KPIs), and hence the expected objectives are achieved accordingly. Therefore, the Board will

institute quarterly performance appraisal system – whereas Annual Business Plans, and

corresponding KPIs, shall be broken down to Quarterly Business Plans in order to allow quarterly

performance assessment throughout the year. This will greatly assist the Management to implement

the strategy and the Board to follow up closely and keep track on the progress.

The SACCOS shall implement its Strategic Business Plan via its annual business planning and

execution process. Thus, each Annual Business Plan of the SACCOS shall be part of the Strategic

Business Plan and intending to achieve its long term strategic objectives. Therefore, performance of

the Strategic Business Plan shall be measured by measuring annual performance of the business

through monitoring systems adopted by each Annual Business Plan.


7.3.1. Effective execution of the Strategy

Effective implementation of the Five Years Strategic Business Plan of the SACCOS shall commence in

January 2014 after the approval by members, through the Annual General Meeting. The approved

SBP shall be well communicated to all members of staff of CRDB Workers SACCOS and branch

representatives, for a common understanding and hence effective implementation of the same.

For effective implementation of the Strategic Plan, the Management and the Board of Directors shall

need collective efforts from employees, members and the employer – CRDB Bank Group.

7.3.2. Review and updates of the Strategic Business Plan

The Strategic Business Plan shall undergo annual reviews and updates, from September to December

of each year as part of the preparation of the Annual Business Plan for the subsequent year. This is

important in order to make sure the Strategy is in-line with the changing business environment and

to address priorities of members. The Management and the Board shall facilitate the exercise to

review and update the Strategic Business Plan. All reviews and updates shall be approved by

members before their implementation.


APPENDICES


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