GOVERNMENT EARNS DIVIDENDS WORTH SH19.5 BILLION FROM CRDB BANK "Credit News 24"
The government owns a 21.5 per cent stake in the bank.
This is the same shareholding portion which appears in CRDB’s books of accounts as belonging to the Danida Investment Fund (DIF).
The Sh19.5 billion is part of the government’s Sh70 billion dividend from the bank.
The money is to be channeled to the Ministry of Health, Community Development, Gender, Elderly and Children to improve service delivery in the sector, according to government decision.
Receiving the cheque from CRDB managing director Charles Kimei, the permanent secretary in the Ministry of Finance and Planning, Mr Dotto James, said the government owns a 21 per cent share in the financial entity, noting however that the shareholding has traditionally been referred to as belonging to DIF.
Explaining how the fund came to be operational, Mr James said that in 1996 when CRDB Bank was operating as a Cooperative Rural Development Bank -- then wholly owned by the government -- it went into a crisis that almost led to its bankruptcy.
To improve its condition, the government entered into an agreement with Denmark and in the process, they agreed to establish DIF.
The DIF was established with grant funds from the government of Denmark. The condition, said Mr James, was that it was the responsibility of the Ministry of Finance to manage it (the DIF). It was through the DIF Grant that the bank was restructured to what it is today.
The DIF thus remained under the stewardship of the bank and the government.
However, throughout the fund’s existence the government never took its dividends because it continued to support the bank to grow.
“Following the establishment of the fund, CRDB formed a Board of Trustees of which I (the Treasury PS) am its chairman and therefore, when the fund makes profit, the government deserves to get its dividend,” he said.
He said that the government will continue to receive its dividends until 2021 before coming to a decision in 2022 on whether to withdraw all its dividend and invest in other income generating activities or keep it in CRDB.
For his part, Dr Kimei said that DIF shares currently stand at Sh70 billion in value which has been put into a fixed account as per board of trustee’s instruction, adding that part of the money is also invested in shares.
“Initially, the government owned 30 per cent of the shares but when we listed at the Dar es Salaam Stock Exchange (DSE), we needed to offload some of the shares to the public and that was how about 10 per cent of the government’s 30 per cent stake was sold to PPF Fund,” he said.
He said that since the fund was established the dividends had never been given to the government but recently the governments of Tanzania and Denmark discussed and agreed that the dividends should be given to the former to enable it improve its service delivery in certain priority sectors.
The Citizen
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