Digital payments platforms increase financial access points

DAR ES SALAAM: THE number of financial services access points rose by 21.4 per cent last year, driven by growth in digital payments, banking and microfinance services.

According to the BoT Annual Financial Inclusion Report 2024, digital payments accounted for 82.3 per cent of access points, banking services 13.7 per cent, and microfinance 4.0 per cent, reflecting a strong shift toward digital financial inclusion and tech-driven solutions.

“The growth was highly contributed by number of bank agents who accounted for 99.3 per cent of the total number of financial services access points in banking services,” BoT said in the report.

The BoT report showed that the number of financial services access points in banking services increased substantially over the past five years. During the period under review, the total number of banking services access points grew by 36.6 per cent to 146,505 in 2024 from 107,238 recorded in 2023.

The increase in bank agents was associated with supportive legal and regulatory environment on agent banking, which are cost efficient compared to establishment of bank branches in both urban and rural areas, as well as being an opportunity for self-employment.

The number of licensed microfinance services providers, according to the report, continued to increase; a trend observed since the formalisation of the microfinance subsector in 2018.

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Moreover, BoT said the number of financial services access points rose by 21.4 per cent to 62,232 by the end of 2024, up from 50,881 in December 2023.

“The increase was driven by growth in community microfinance groups and money lenders, spurred by streamlined licensing, more accommodative regulations and rising demand for microcredit,” BoT said in its report. During the reporting period, institutions in tier IV accounted for 94.7 per cent of the total with the growth rate of 22.0 per cent.

The laws categorised microfinance institutions into tiers I to IV. The number of capital markets access points in 2024 increased by 9.7 per cent to 417, higher than 2.3 per cent increase in 2023.

Additionally, the 2024 growth was mainly attributed to an increase in the number of registered warehouses, collective investment schemes, fund managers, members licensed dealing, investment advisors and custodians of securities. Further, the BoT report said the number of insurance service access points rose to 2,208 last year, marking a 42.5 per cent increase from 1,549 in 2023.

“This growth was primarily driven by the entry of new insurance companies and other service providers, including health service providers, automobile repairers and maintainers and Sales Force Executives,” the Bank report stated.

As of last December, the total number of social security services access points remained at 140 as it was in 2023 raising from 131 in 2022. Access to payment services improved, with ATMs, mobile money agents and POS terminals growing by 18.8 per cent to 1.49 million last year.

Mobile money agents were the main driver, increasing by 19.0 per cent, compared to 9.7 per cent for ATMs, supported by favourable legal and regulatory conditions for agent registration.