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A N N U a L R E P O ANNUAL REPORT FOCUSED TOWARDS INDUSTRIALISATION 2 TIB Development Bank Annual report 2016 3 Contents Page General information 5 Directors’ report 56 – 71 Statement of directors’ responsibility 72 Report of the controller and auditor general 74 – 77 Financial statements: Consolidated statement of profit or loss and other comprehensive income 78 Consolidated statement of financial position 79 Consolidated statement of changes in equity 80 – 81 Consolidated statement of cash flows 82 Notes to the consolidated financial statements 83– 150 4 TIB Development Bank Annual report 2016 5 GENERAL INFORMATION Head Office Building No 3, Mlimani City Office Park Sam Nujoma Road P.O Box 9373 Dar es Salaam, Company secretary Mr. Crispin B. Mwebesa P.O Box 9373 Dar es Salaam, Other contact details P.O. Box 9373, Dar es Salaam Tel: (0)255 (0)22 2411101-9 Telefax: (0)255 (0)22 2411095 E-mail: [email protected] Website: www.tib.co.tz Main bankers TIB Corporate Bank Limited Mlimani City Branch BOX 9102, Dar es Salaam, Tanzania NBC Limited Corporate Branch P.O. Box 9062 Dar es Salaam, Tanzania Auditors Principal auditors: The Controller and Auditor General National Audit Office Corner of Samora Avenue and Ohio Street P. O. Box 9080 Dar es Salaam, Tanzania Sub-contracted auditors: KPMG (Certified Public Accountants) 11th PPF Tower Corner of Ohio Street and Garden Avenue P.O. Box 1160 Dar es salaam, Tanzania. 6 TIB Development Bank Innovation Annual report 2016 7 Transmittal Letter TIB Development Bank, P.O. Box 9373, Dar es Salaam. Hon. Dr. Philip I. Mpango (MP), Minister for Finance and Planning, P.O.Box 9111, Da es Salaam. Dear Honorable Minister, I hereby submit, on behalf of the Board of Directors, The Annual Report and Audited Financial Statements of TIB Development Bank Limited for the period from 1st January to 31st December 2016 as approved by the Board of Directors, on 22nd March 2017. Yours Faithfully ………………………………………… Brig.Gen (rtd) Mabula B. Mashauri Ag. Chairman of the Board of Directors 8 TIB Development Bank Chairman’s Statement Introduction It is my pleasure to present to you the Annual Report and Audited Financial Statements of TIB Development Bank Limited for the year ended December 2016. Our report is being presented at the time when monetary policy in Tanzania was geared towards aligning inflation to the medium-term target of 5% and supporting output growth projection of 7.3%. During the year under review, the Bank continued to consolidate reforms and taking necessary steps to ensure two tier bank groups operate effectively and make a strong contribution to the economy. The bank launched a new strategy aligning its direction to that of the National Five Year Development Plan (FYDP II) and redirecting financing towards industries and creating an enabling environment for the financed industries to undertake operations efficiently. This necessarily meant focusing on various infrastructure projects that link industries to raw materials supplies and markets. Economic Outlook Tanzania’s maintained a stable macro-economic environment during 2016. GDP grew at 7.0% enabling the country to continue in an upward trajectory trail towards a middle income economy by the year 2025. Operating under this strong environment, the bank’s strategy rests on financing projects that will stimulate a higher rate of growth, preferably around 12% per annum, as a means to ensure resilience to any economic shocks. According to the 2016/17 budget Gross Domestic Product (GDP) was forecasted to grow by 7.2% in 2016 as compared to 7% in 2015; driven by rising private consumption and strong growth in the telecommunications, construction, port and service sectors. Services contributed almost 50% of GDP and driven by private- sector activity in telecommunications and financial services. In the context of the prevailing outlook, Tanzania ranked 139 out Brig. Gen. (rtd) Mabula B. Mashauri of 189 economies in starting a business as per the ease of doing Ag. CHAIRMAN OF THE BOARD business report, 2016. Poor access to finance and inadequate infrastructure were seen as the largest barriers to doing business. In his regard the Tanzanian government named these sectors as some of the main focus areas in the 2016/17 budget. Inflation in the year ending 2016 according to IMF, Economic Intelligence Unit decline slightly in 2016 to about 5.4% with the effects of continued depreciation of the Tanzanian shilling (TZS) off-sited by the impact of lower oil and food prices. As fiscal policy is continue to be tightened and the introduction of the Bank of Tanzania’s planned inflation targeting regime to bolster the effectiveness of monetary policy Inflation is projected to Annual report 2016 9 return to the 7-8% range in 2016-19. A relatively stable positive outlook in the operating environment. Overall, inflation environment nonetheless bodes well for future the drive of the fifth phase government on infrastructure investment planning and consumption, which would and industrialization, among others, augurs well with spur demand for credit from corporate and individual. the bank’s mandate and strategies; and it provides a Despite conducive economic environment the bank right setting and environment for excellent performance deliberately slowed down lending activities in order to going forward. align its operations to structural reforms undertaken in 2015 Changes in the Board I would also like to highlight the changes in the board The Bank’s performance during the year under review. In July 2016, President The bank recorded loss before tax of TZS. 33,588 million Dr.John Pombe Magufuli appointed new Chairman in 2016 compared to the previous year’s profit of TZS. Professor Palamagamba J. Kabudi, whereas the Minister 9,236 million. During 2016, the Bank was able to hold for Finance and Planning appointed a new Board of its net asset level at TZS. 811,788 million compared Directors for TIB Development Bank Ltd. The new Board to TZS. 688,968 million recorded in 2015. The gross of Directors consists of 8 members: Prof. Palamagamba loan portfolio reached at TZS. 703,891 million in 2016 J. Kabudi, Maduka P. Kessy, Dr. Said S. Mzee, Dr. Arnold M. compared to TZS. 538,675 million recorded in 2015. Total Kihaule, Ms Rose J. Aiko, Prof. Joseph R. Buchweishaija, assets grew from TZS 688,968 million in 2015 to TZS Brig.Gen. (rtd) Mabula B. Mashauri and Mr. Charles 811,788 recorded in 2016; an increase of 17.8%. Loan G. Singili - who is also a newly appointed Managing disbursements reached TZS 103,178 million against TZS Director following the retirement of Mr. Peter Noni. The 125,631 million recorded in 2015; a decrease of 18%. new Board was formally inaugurated by the Minister for Finance and Planning in October 2016. In January The financial performance during 2016 was not 2017, The President appointed Professor Kabudi as a outstanding showing a substantial loss of TZS 33,586 Member of Parliament which relieved him of his board million from the profit before tax of TZS 9,236 million membership. Following this development Brig.Gen. recorded in year 2015. The substantial loss was (rtd) Mabula B. Mashauri is serving as the interim Board fundamentally attributed to impairment provisions Chairman. resulting from measures taken by the bank to clean up its loans portfolio. I am glad to report that the bank’s Appreciation balance sheet growth of TZS 811,788 million was Finally, I wish to express my sincere appreciation to recorded in 2016 which is above the TZS 740,655 million the team that has enabled us make our repositioning recorded in 2015. I am delighted to report that financial to pursue industrialization strategy on a more strong performance attained during the year was a result of footing. Many thanks to my fellow members of the Board conscious decision clean-up the balance sheet and of Directors for their support and valuable contribution slowdown in lending. during the year, Management and staff of TIB Development Bank for their hard work, our customers Within bank’s setting, I am pleased to report that during for their unwavering support and last but not least to all 2016, the bank started alignment of its operations with our partners and stakeholders who have kept their faith the new mandate to spearhead industrialization while in us throughout this journey. I specifically thank the restructuring to focus on development financing. With Government for its continued commitment to support this new emphasis, the bank offloaded some of the non- TIB Development Bank. Once again I am looking forward developmental projects to TIB Corporate Bank. to your continued collaboration with the current Board of Directors to make 2017 a very successful year. Business environment I am pleased to report that, a current stable macro- economic variable in the country provides a good business environment for the bank to perform better in 2017. National Bureau of Statistics indicates that inflation Brig. Gen. (rtd) Mabula B. Mashauri has generally remained stable and is projected to remain Ag. CHAIRMAN OF THE BOARD OF DIRECTOR at single digit through the years; that to TIB this is a 10 TIB Development Bank Managing Director’s Statement Introduction I take this opportunity to present to you this Annual Report which highlights the performance of the bank’s operations for the year ended December, 2016. The last twelve months have been a special period as the bank consolidated restructuring of its organization and financial position. I wish to sincerely appreciate combined endeavors and commitment of our Board, Management and staff, through whom we were able to overcome challenges and ensure continuity of the business. During 2016, the bank started to position its operations within the new mandate to spearhead industrialization.
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