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Funds Management Services FUNDS MANAGEMENT SERVICES TZS www.tib.co.tz i Funds Management Services This booklet describes the products and services offered by the TIB Development Bank Ltd under the Directorate of Managed Funds. As a national Development Financing Institution (DFI), TIB is mandated to drive several initiatives to foster national economic growth and realize various national development policies and initiatives. One such mandate is to administer, on regard, TIB established an independent behalf of the Government and other Directorate known as the Directorate of development partners, funds desired Managed Funds to administer the funds to achieve specified social and/or in a manner that assures the fund owners economic objectives or target specific (principals) commitment, dedication groups in the economy such as SMEs, and independency in management of Farmers, Miners, Contractors, etc. In this their funds at a fee. 1 The TIB Group structure includes three developmental focused institutions namely the TIB Development Bank Ltd, About the the TIB Corporate Bank Ltd and the TIB Rasilimali Ltd offers innovative products TIB Group and exceptional services to its clients through a ‘one-stop shop’ model hence delivering convenience and consistency to the customers. 2 About TIB Development Bank Ltd TIB Development Bank Limited was of the country. The Bank was able to established in November 1970 initially by fulfill its mandate with notable success an Act of the Parliamentary, the Tanzania until the macroeconomic instabilities of Investment Bank Act of 1970 with the the 1980s when the country’s economy main purpose of financing development deteriorated and the bank almost with emphasis on the industrialization collapsed. 3 The economic reforms of the re-designated TIB as a DFI in 2005. 1990s highlighted the lack of long The Bank completed the process of term funding in the economy as transformation into a Development it was not offered by any of the Finance Institution in 2015 with an commercial banks and financial engagement focus centered primarily institutions operating in the country on infrastructure, industrialization, oil then. The Government therefore and gas, service industry and mining. 4 Mileage and strengths of the bank in fund management Over the past ten (10) years the bank horticulture, mining and water. A total has gained useful experiences on fund of thirteen (13) projects worth TZS 895 management through managing a billion in different sectors have been number of funds in different sectors and managed by the bank over the period as sub-sectors namely agriculture, energy, indicated in the table below: 5 Table 1: Bank’s Fund Management Experience SN PROJECT NAME NAME OF FUND OWNER SIZE OF FUND 1 Administration of the Rural Rural Energy Agency (REA) TZS 569.4 billion Energy Funds in Tanzania 2 Administration of Tanzania World Bank –IDA through USD 23.0 million Energy Development Access Rural Energy Agency (REA). Project (TEDAP) Credit Line 3 Administration of Credit World Bank – IDA through USD 42.0 million Line under Tanzania Rural Rural Energy Agency (REA). Electrification Expansion Program (TREEP) 4 Agriculture Financing Window Ministry of Finance and TZS 42 billion Fund Planning 5 Credit Facility and Grants to Ministry of Minerals and TZS 2.3 billion Credit Small Scale Miners in Tanzania Energy (MEM) Line and USD 3.50 million grant 6 Result Based Financing (RBF) SNV Netherlands EUR 2.2 million Fund for Rural Solar Market Development Organization. Development 6 SN PROJECT NAME NAME OF FUND OWNER SIZE OF FUND 7 FLORICULTURE Financing Bank of Tanzania (BOT) TZS 48.8 billion 8 Food(meat) Processing Bank of Tanzania (BOT) TZS 14.0 billion Financing 9 Revolving Fund Scheme for Ministry of Water EUR 2.0 million supporting water utilities to supported by French expand distribution networks Development Agency(AFD) 10 Accelerating Solar Water Ministry of Finance and USD 4.5 million Pumping via Innovative Planning supported by the Financing World Bank 11 Promotion of bioethanol as UNIDO USD 1.1 million clean alternative cooking fuel in Tanzania 12 Commodity Import Support Ministry of Finance and JPY 1,554,024,203 (CIS) Planning 13 Tanzania Housing Bank (THB) Ministry of Finance and TZS 900 million Planning 7 Branch Network TIB DFI has a network of four (4) zonal offices located in Dar es Salaam, Mwanza, Arusha and Mbeya which ensure delivery of quality services to fund owners, beneficiaries and other stakeholders within the shortest proximity possible. Taking advantage of the group structure designed to provide all banking services under one roof, TIB uses its subsidiary TIB Corporate Bank Ltd (TIB CBL) for provision of banking services to its customers including of Managed funds’ clients. TIB CBL has five (5) branches located in Dar es Salaam, Mbeya, Mwanza and Arusha. Also TIB CBL has a working a relationship with TPB Bank Plc which allows TIB’s clients the use of its network across the country for daily transactions. 8 approach that enables the attainment Services of fund objectives as intimated by the fund owner. While the fund owner has The Directorate of Managed Funds offers a great idea of the desired outcome, a comprehensive range of services as the bank through its advisory service narrated below: helps to answer the question of ‘How to’ realize that outcome in an efficient and (i) Advisory Services sustainable manner. In the context of the Managed Funds The tailor -made solutions provided function the bank’s advisory services through TIB Advisory Services to fund focuses at establishing a modality or owners include but is not limited to: 9 • Project structuring including that they can qualify for accessing defining the parties to be involved, the fund in compliance with the roles of each party, relationships set criteria. In addition, TIB advisory between the parties, and project services define and coordinates institutional arrangement. the necessary support needed to • Preparation of project working enhance the ability of the target documents such as Contracts, Project beneficiaries to access the fund. Operations Manuals, and Terms of (ii) Funds Administration Reference for the parties involved. This is the process of administering • Identifying target beneficiaries and funds based on the terms and facilitating their preparations so conditions stipulated in the agreement 10 between fund owner (Principal) and the (b) Fund disbursement: Bank (Fund Manager/Agent). The role Disbursement of fund comprises the encompasses the following: disbursement process to fit the check- (a) Appraisal: and-balance criteria set to ensure value for money and realization of the desired The bank can undertake appraisal of the project impact while ensuring timely financing proposals submitted by the availability of the funds needed for target beneficiaries to establish their the smooth project implementation. viability in line with the expectations of The process will describe documents the fund owners. to be submitted, verification to be undertaken by the bank and obtaining 11 of ‘no objection’ from the fund owner bank to assess operations of the created (if required) prior to making payments asset, provide continuous consultation along with ideal timeframes for each to the beneficiary and report to the fund step. owner till the specified time or outcome (c) Monitoring and Supervision: is realized. Monitoring and Supervision entails (d) Collection and Recovery: following through to ensure that the The Bank can play the role of establishing conversion of disbursed money into arrangements and processes to facilitate desired assets critical for realizing loan repayments where the funds fund objectives has been achieved. disbursed to the beneficiaries need to This also involves periodic visits to be rapid as well as following up with the implementation sites, assessment of site beneficiaries to ensure that compliance development against set milestones, with set repayment schedules is as well as consultations with fund observed. beneficiaries and implementing entities such as contractors and service If so desired by the fund owner, the bank providers, and reporting to the fund can establish recovery processes to be owner as appropriate. The role may followed in case any beneficiary fails to extend beyond implementation for the repay the fund. 12 Pricing Guide The bank may employ one of the under mentioned approaches to price for fund management services offered depending on the scope of the assignment and the preference of the fund owner: Approach 1: Activity-based Pricing FEE TYPE FEE RANGE REMARKS ( VAT Exclusive) Consulting/Advisory 3.0% - 4.0% This fee is charged based on the fund size and fee scope of the work as per the ToR. Appraisal fee 0.5% - 1.5% This fee is charged based on the fund size and geographical location/dispersion of beneficiaries. Disbursement fees 0.5% - 1.5% % of the disbursed amount Collection fees 1.0% - 2.0% % of the collected amount Recovery fee 1.0% - 2.5% % of the recovered amount Retainer fee 2.5% - 5.0% % of the fund size Reimbursable These are direct costs incurred by the bank in the course of executing the contractual mandate and reimbursed by the principal. Note: Under this approach, the fee will be charged on each activity to be undertaken and the range addresses the scope and complexity of the activity. Only contracted services will be charged for. 13 Approach 2: Man Hour-based Pricing SERVICES REMARKS Professional fee This fee is charged for the professional services offered by the bank employees based on the number of hours spent on the project and whether it is on or off site. Reimbursable These are direct costs incurred in the course of executing the contractual mandate, incurred by the bank but reimbursed by the principal Note: Under this approach, the fee will be based on the number of hours spent by TIB employee and/or contracted experts for the project on and off site based on the TIB Man Hour Cost Guide.
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