63. It is true that in some African countries (Tanzania, Zambia, Zimbabwe etc.), the post office savings banks are already in the process of implementing some of the measures listed
above.
5.1.2 Modernization nf operational procedures
64. The need to modernize the operation of post office savings banks is recognized by the
management of the postal banks in many countries. The reason is not only with a view to
competing with commercial banks but also for the sake of its own survival and growth. In this
regard to minimize the average time required for making deposits and withdrawals, to enable
the customer to make withdrawals in evenings and during weekends, installation of computer
terminal at bigger offices to provide instant counter services, to improve the image of the post
office premises and staff them with trained bankers are some of the measures to be taken by post
office savings banks if they are to compete with commercial banks.
5.1.3 Diversification of the range of products and services offered
65. At present, most postal banks in Africa are offering only the traditional ordinary savings accounts to their customers. This resulted in loses of customers to commercial banks and other financial institutions. To make the postal banks more relevant and responsive to the needs of the customers, they have to improve the existing services and examining possibilities of offering a wide range of banking services. Some of the options includes:
Fixed deposit accounts with competitive interest rate;
Cumulative time deposits, such as, bonus savings accounts, collection deposits, education deposits, housing deposits, retirement savings scheme etc.
Loan facilities, such as, industrial credits, personal loans, farming loans, mortgage loans, renovation and furnishing loans;
Savings certificates, such as, bonus savings certificates, progressive interest savings certificates, capitalization certificates, school savings certificates and treasury certificates of fixed value.
Cheque account facilities and travellers' cheque facilities are some of the options available for post office savings banks.
5.1.4 Introduction of competitive interest rate
66. The level of interest rate on savings deposits in many African countries is determined by either the central banks or Ministry of Finance. However, the economic restructuring
programmes which are undertaken in some African countries allowed financial institutions to set
their own interest rate. This helped some postal banks to introduce higher interest rates similar to commercial banks. This is true in the case of Zambia, Tanzania and Zimbabwe post office savings banks, where they offer flexible interest rates based on the money market, particularly for demand deposits. The level of interest paid on postal savings accounts is a source of customer complaint in most African countries. Thus, introduction of competitive interest rate is one of the preconditions for healthy and sustainable development of post office savings banks.
5.1.4 Exemption from income tax on depositors interest earnings
67. Post office savings banks were created with the main objective encouraging thrift and promoting savings. To strengthen this idea most postal banks are given the privilege of offering payment of interest free of tax for the depositors by their Governments. However, the
application of tax exemption on interest earnings differ from one country to another. In somecountries (Zimbabwe and Uganda) there is a limit to the amount of interest which is exempted from income tax. While in others (madagascar) the degree of exemption goes to the extent of deposits made in the post office savings banks savings schemes entitle the account holders to rebates for the calculation of taxable income. In general, income tax exemption is one of the strengths of post office savings banks compared to commercial banks, which are not allowed to offer tax free interest payment. Therefore, postal banks should maintain this privilege so that they can attract a number tax conscious depositors to use their services.
5.1.5 Introduction of various incentive schemes
68. Introduction of incentives (prize schemes) to popularize post office savings banks services
is not well used in African countries. Prize schemes, such as, drawing of lots among a groupof accounts selected according to certain criteria, gifts of pass books to children born on a
historic date, award of cash prizes are some of the schemes used to promote savings in different countries. Introduction of prize schemes motivates not only the existing account holders to increase their savings, it also attracts potential depositors.
5.1-6 Raising the limit on maximum deposits and number of withdrawals
69. Fixing a limit on the maximum amount of deposit and number of withdrawals deter large savers from using the post office savings banks. For instance, the maximum permissible balance in Zimbabwe for both savings accounts and fixed deposits is 60,000 US$ for individuals and 30,000 US$ for companies. This will discourage large savers from using the postal banks.
Fixing the number of withdrawals from savings accounts (in Zambia once in a week) also limits the access of the depositors from their accounts. Thus, in order to attract large savings and improve accessability of accounts post office savings banks in Africa should consider the raising of the upper limit and increase the number of withdrawals from depositors accounts.
5.1.7 Publicity activities (measures^
70. Promoting post office savings banks services in African countries certainly requires effective publicity. Publicity in these countries is in its primary stage. Funds for publicity are usually meagre or even non existent. However, the loses of customers to commercials banks as a result of aggressive marketing activities obliged many post office banks to strengthen their publicity campaigns and to improve their image as a modern and efficient bank. As a result of this post office savings banks in Tanzania, Zambia and Zimbabwe started aggressive promotional activities by using various publicity media.
71. Proper publicity programmes can be carried out by using mass media, such as, radio (spot advertising), television (advertising at peak viewing hours, childrens' programmes), press (advertisements and articles), films and videos, posters, brochures, sport adverts and leaflets.