COVID 19

Is an infection disease caused by a novel coronavirus called severe acute respiratory syndrome
coronavirus 2, it was first identified in Wuhan, China, in December 2019 the disease has since
spread worldwide leading to an ongoing pandemic.it was prevented by face covering, quarantine,
physical or social distancing ventilation and hand washing.

BANK

Is the financial institutions that has been registered or licensed by the central bank of Tanzania
(BOT) to provide financial services to the customers include deposits acceptance and loan
provision.

Example of Banks available in Tanzania are

 Akiba commercial Bank

 Amana Bank
 Azania Bank
 Absa Bank Tanzania Limited
 Bank of Baroda Tanzania limited

BANK PERFORMANCE

Is defined as the achievement of the objectives set forth by the firm (the bank) within the agreed
time and with minimal costs while using the available resources.
OR
Is the way in which the resources of bank are used in a form which enables it to achieve its
objectives such as efficiency ratio, loan yield, growth rate, non-performing loan ratio

EFFECT OF COVID 19 TO THE BANK PERFORMANCE IN TANZANIA

I. Decrease in business cash flow

The term cash flow refers to the net amount of cash and cash equivalents being
transferred in and out of a company. Cash received represents inflows, while money
spent represents outflows. A company’s ability to create value for shareholders is
fundamentally determined by its ability to generate positive cash flows, during covid 19
 is a quickly changing uncertain situation restriction on day to day of life in which affects
the bank performance and cause economic slowdown.

II. Low provision of loan

As we all know that bank depend most on the fund deposited by customers so as to get
enough loans and provide to people who are in need off, then there will be an interest to
be paid back which will benefit the bank, so during covid 19 it was very difficult for the
bank to receive enough cash from customers so as to operate its day activities some
people were afraid of lockdowns how they will survive without enough cash in their
pocket so they reduce to deposit cash which affects the bank performance as for them not
to meet their objectives at a specific period of time.

III. Decrease in foreign exchange

During covid 19 this affects the bank performance because the dollar depreciates and the
exchange rate falls, the relative price of domestic goods and services falls which had both
direct effect includes inflation rate, government debts, terms of trade political stability
and performance and indirect factors effect foreign exchange towards the bank
performance.

IV. Increase in operational cost and logistic

costs that constitute a considerable percentage of the total sales price of a product or
service. Manufacturers usually define supply chain costs using the total cost of
ownership. The total cost of ownership is defined as the combination of the purchase or
acquisition price of a good or service. To this, they add the additional costs incurred
before or after the product or service delivery. Applying the total cost of ownership
analysis to the supply chain implies identifying all direct, indirect, and other associated
costs, this affects the bank performance since the owners of share during covid 19 they
stop invest in different sectors and companies shares because the point of profits in return
was small because of little cash flow and affect bank performance.
 V. Increase in money transmission
The act of moving money between bank accounts or from one person or organization to
another, another development has been the growth of electronic money transmission,
during covid it was so difficult to transfer organization money from home country to
foreign countries because the rate of exchange increase due to pandemic monetary policy
decisions and aggregate demand which affects the bank performance economically.

VI. Increase in liquidity rate

Liquidity ratios measure the ability of a company to pay off its short-term obligations with its
current assets,A higher liquidity ratio indicates a company is in a better position to meet its
obligations, but can also indicate that a company isn't using its assets efficiently ,during covid 19
it was difficult for companies to work at office most companies did home working which was
very difficult for them to use its current assets to pay its obligations this affect the bank
performance since some companies use sim banking instead of going to a bank to do their
transactions this affect the bank because there was no good face to face communication with
their customers

VII. Reduction of the bank deposit

A term deposit is a fixed-term investment that includes the deposit of money into an
account at a financial institution, Term deposit investments usually carry short-term
maturities ranging from one month to a few years and will have varying levels of
required minimum deposits, many bank users reduce to deposit to the banks since we
were stricted to stay (1m) from one person to another and made high population of
people in a bank some refuse to deposit and go back home in which it affect bank
performance.

VIII. Debtors fail to repay the debts taken from bank

All the people who took loans from bank it was so hard for them to repay back because
money became more and more difficult to get and made borrowers delay paying it on
time.
Example
A tour guides who took loan from the bank during covid 19 it was very difficult for them
to payback the debts because they were all at home there was no tourist who come and
this made them to stay idle and delay in pay pack for those loans.