Reviving Postal Savings Banks in East Africa

This paper presents the experiences of postal savings banks (PSBs) of Japan, Kenya and Tanzania. It supports stronger, efficient and market-centric PSBs so as to utilise their network for mobilising savings and providing credit.

The author discusses the following issues:

• Savings mobilization was neglected in the socio-economic development programmes of Africa;
• Mobilisation of domestic savings for economic development is a challenge in the next century for Africa;
• Though the PSBs have been neglected and their share in the retail banking is marginal, they are the only organisations that can provide financial services in the remote areas of Africa;
• The PSBs should build their strategies around professional banking practices.

The paper further makes these recommendations to reform PSBs:

• Improving operational efficiency;
• Providing services suited to the demands of the market;
• Building a system of checks and controls through periodic internal and external audits;
• Integrating with the formal banking sector to come under the supervision of the central banks;
• Seeking to provide credit only after developing sufficient expertise.