Remittance inflows surge by 34.7 per cent

TANZANIA: REMITTANCE inflows through banks and Money Transfer Operators (MTOs) surged by 34.6 per cent to 1.89tri/- last year, driven by policy measures that streamlined the process for the diaspora to send money through formal channels.

According to the 2024 Annual Report on National Payment Systems by the Bank of Tanzania (BoT), the volume of remittances grew by 40.5 per cent, reaching 1.3 million transactions.

“The increase in remittances is partly due to policy measures that reduce transaction costs, enhance inclusivity and make it easier for the diaspora to send money through formal channels,” the Bank report stated.

Similarly, the volume and value of outward remittance increased by 16.33 per cent and 14.39 per cent to reach 148,274 transactions and 1.16tri/-.

During the period under review, Tanzania recorded a positive net remittance of 1.2 million transactions worth 728.72bn/-.

The report said also that inclusivity measures include increased partnership between domestic payment system providers with global MTOs and remittance hubs.

The incoming remittances facilitated by EMIs recorded a mixed trend with volume decreasing by 4.23 per cent while the value increased by 8.60 per cent.

The volume and value reached 3.45 million worth 1.06tri/-, respectively.

The growth of incoming remittance is contributed by increased cooperation between EMIs, MTOs and remittance hubs.

The cross-border payments processed by banks through Society for Worldwide Interbank Financial Telecommunications (SWIFT) channel recorded a growth for both incomings and outgoing payments.

The inflow volume increased by 33.85 per cent to 298,580 transactions compared with 223,065 transactions in 2023.

The value of incoming cross-border payments through SWIFT was 32.71tri/- indicating an increase of 35.61 per cent.

Similarly, outgoing crossborder recorded a rise of 73.70 per cent to 310,622 transactions rising from 178,829 transactions recorded in 2023.

The corresponding value increased by 86.52 per cent to 116.11bn/-. The increase is attributed to increased cross border trade activities, import and export of goods and services.

The EMIs facilitate crossborder payment in the East African Community (EAC) and SADC –Regions.

During the year under review, incoming cross-border payments from the region increased by 45.48 per cent to and 43.40 per cent in terms of volume and value to 4.32 million transactions and 523.03bn/-, respectively.

The volume of outgoing cross-border payments also increased by 38.68 per cent to 2.21 million transactions while the corresponding value increased by 31.99 per cent to 340.45bn/-.

A diagnostic study on cross-border remittances in Tanzania, conducted in the first half of the 2023/24 financial year by the BoT reviewed East African cross-border remittances through desk research and structured interviews with financial institutions and government bodies in Tanzania.

The findings revealed that Tanzania received approximately 747 million US dollars in formal remittances in 2023, primarily from the United States, United Kingdom and Canada. This amount represents 0.9 per cent of the country’s nominal GDP, which is lower compared to other EAC nations.

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The study recommended regulatory reforms, improved remittance infrastructure, cost-reduction measures, strengthened diaspora policies and enhanced regional and international cooperation.