How digitalisation accelerates Tanzania’s economic growth

FOR several years now digital has been an add-on to business as usual.

Although recently digital transformation has reached the tipping point, where digital has become business as usual occasionally perceived as the tail has become the dog.

Digital is not just part of the economy; it is the economy and to succeed in the digital economy, Tanzanian case has been looked at in this discussion with an open mind that could make it more competitive in the ever-changing global economy.

Many of us will recall, during the budget sessions in the Parliament in June 2022, the Minister for Information, Communication, and Information Technology Mr Nape Nnauye (pictured) submit ted that Tanzania is geared to build a digital economy during the financial year 2022/2023 and beyond.

The minister attributed that, the rapid digitalisation is affecting all sectors of the economy in Tanzania, including the way Tanzanians access government services, how they pay for services, how they work, study, innovate, shop, socialise and receive services.

To us, this meant an economy of limitless opportunities for some and disruption and displacement for others.

This is the digital economy rapidly emerging in Tanzania which encompasses the ICT and telecoms sector, all digital services, e-Business, e-Commerce, e-Agriculture, e-Education, eHealth, e-Transport, e-Tourism, e-Manufacturing, e-Financial services, e-Taxation” said Mr Nape Nnauye during his ministry’s budget speech in June 2022.

With this background in our mind, subsequent analysis and discussion aimed at assessing the information provided by the communication sector regulator and showing the communication status and readiness for Tanzania’s digital economy, through mobile and fixed phone subscriptions, mobile money, and internet use in the country as a process towards a Tanzania digital economy.

Our discussion hinges on ten years of data provided by TCRA from January 2011 to December 2021. We believe that data don’t lie and speak for themselves.

Reflecting on the budget speech by Mr Nnauye, a Digital Economy Vision, Mission and Strategy for Tanzania would enhance productivity across all sectors of the economy using the Internet and other digital platforms.

There is no doubt that the current development and use of ICTs especially e-commerce and e-transactions globally pose not only certain socio-economic and legal challenges but disruption and displacement to developing countries like Tanzania.

In recent years, the use of ICT as an enabler in various sectors of the economy in Tanzania has increased, while the policy and regulatory regime in Tanzania have not evolved enough to effectively keep pace with these changes and regulate all activities that are happening in cyberspace.

Thus, to analyse whether the digital economy can be reached and for how long, we need to visit statistical evidence and the best place for ICTs information is its regulatory body.

According to statistics by the Communications Sector Regulator, Tanzania Communications Regulatory Authority (TCRA), telecommunication services in the country have experienced exponential growth in the last ten years, paving the way for the digital economy to take off as explained by Minister Nnauye during the Ministry Budget submission in Parliament.

This evolution signals that Tanzania’s telecom sector enjoys effective competition, particularly in the mobile segment at a time when the government has encouraged foreign participation to promote economic growth and social development.

Policy-wise, government direction and reforms have led to the country having one of the most liberal telecom sectors in Africa. Mobile telephone subscribers in Tanzania tell it all. As of December 2021, there were seven mobile operators in Tanzania comprising Airtel, Halotel, Smile, Tigo, Tanzania Telecommunication Company Limited (TTCL), Vodacom, and Zantel.

As of December 2021, Vodacom had the largest share of telecom subscriptions with 29.4 per cent, followed by Airtel (27.2pc), Tigo (24.7pc), Halotel (13.3pc), Zantel (2pc), TTCL (3.4pc), and Smile (0.002pc) (see From this data it is clear that Tanzania is the second-largest telecoms market in East Africa behind Kenya with a penetration of 91 per cent of the expected total population in 2022 with 54 million mobile telephone users.

However, in the past ten years, landline subscriptions decreased by 6.9 per cent while mobile subscriptions rose by an average of 8.0 per cent per annum since the year 2011. Undeniably, mobile subscribers in Tanzania have been increasing at an average of 8.0 per cent per annum since the year 2011.

The most notable increase was in the year 2015 when subscribers increased by 24.5 per cent as summarised in the table below.

The growth is attributed to the increase in coverage, lower airtime costs enjoyed by mobile phone customers and the interoperability between operators due to lower interconnection charges. Contrary to the Mobile Subscriptions, Fixed Line subscribers decreased from 161,063 fixed subscribers in the year 2011 to 71,834 fixed subscribers in the year 2021.

This is an average of 6.9 per cent yearly and the most notable decrease was registered in the year 2019 whereby 38.6 per cent of fixed telephony discontinue to subscribe to the services. Lack of enough and slow spread fixed telephony infrastructure can be cause for decrease as briefly illustrated below.

As fixed subscription declines, one of the most important pillars of the digital economy is payment platforms that include most Tanzanians.

Tanzania Interbank Settlement System (TISS) facilitate payment clearing amongst the banks. However, there are around 8 million bank accounts in populations of above 60 million people.

This means that Mobile Money Accounts are the game changers in terms of financial inclusion and bring more citizens into the digital economy payment platforms as reflected in data on mobile money accounts below.

Mobile Money Accounts have been increasing by an average of 10.7per cent annually since the year 2015. This indicates that mobile phones contributed largely to financial inclusion in Tanzania since the number of Mobile Accounts surpassed the number of Bank Accounts in Tanzania.

In the year 2020, the Mobile Money Accounts registered the highest growth in 7 years an increase of 24.8per cent the trend of mobile money accounts is shown below.

The trend of Mobile Money Accounts

The Tanzania Instant Payment System (TIPS), an interoperable digital payment platform operated by the BoT; a government payment platform, interoperable mobile payment services operated by Mobile Network operators including M-Pesa, Tigo Pesa, Airtel Money, T-Pesa, EzyPesa and Halo Pesa is critical to economic growth. Likewise, Internet Users in Tanzania have increased an average of 11.0 per cent annually since the year 2011.

This indicates that data consumption in Tanzania is increasing which as well is a good sign that most of Tanzania will be contributing to the Digital Economy and enjoying E-services provided by the Government as well as the private sector. In the year 2015, the Internet users grew by 52per cent as briefly shown below.

The Mobile Telecom Operators are the leading internet service providers following the launch of mobile broadband services based on 3G and LTE technologies in Tanzania.

Operators are hoping for revenue growth in the mobile data services market, given that the voice market is almost entirely prepaid, and voice average revenue per user (ARPU) continues to fall.

In terms of Bandwidth Consumption, the communication sector in Tanzania experienced a scenario whereby Data consumption increased at a tremendous rate of 22,185 per cent annually since 2015.

Internet Users in Tanzania have increased at an average of 11.0 per cent annually since the year 2011.

This indicates that data consumption in Tanzania is increasing which as well is a good sign that most of Tanzania will be contributing to the Digital Economy and enjoying E-services provided by the Government as well as the private sector. In the year 2015 Internet users grew by 52 per cent as briefly shown below.

From this growth, it is obvious that the mobile telecom operators have invested in network upgrades, which in turn has supported mobile data use, as well as m-money transfer services and m-banking services. Together, these have become a fast-developing source of revenue for them.

Given the statistics discussed above, it has been demonstrated that Tanzania can achieve a digital economy without a doubt.

The statistics from the Regulator shows that the Telecom industry in the past ten years has created many new economic opportunities and hence plays a crucial role in achieving Digital Economy in Tanzania.

Digitalisation has transformed Tanzania’s economies on various fronts including the nature of markets and products, technique, service delivery, the scale of capital and human capital requirements. It has also enhanced productivity, exposing companies to new ideas, technologies, management styles and business models, and creating new market access channels.

In the last 10 years in Tanzania, the initial digital economy has contributed to better service delivery, revenue collection efficiency, increased payments ecosystem efficiency, and enhanced human capital and employment opportunities management. What is being articulated in this brief analysis is that undeniably the digitisation of the economy is one of the most critical issues of our time.

Digital technologies are rapidly transforming both business practices and societies, and they are integral to the innovation-driven economies of the future that we believe is where Tanzania is aiming at. But there is another dark side of evolving technology that shouldn’t be taken for granted.

Technological revolutions are highly disruptive to economies and societies, especially culture. This was the case during the Industrial Revolution, and it is the case today.

Thus, while technologies advance speedily, organisations and skills advance slowly, and the gap between swiftly evolving technology and the slower pace of human development will grow quickly in the coming decades as exponential improvements in artificial intelligence, robotics, networks, analytics, and digitisation affect more and more of the economy and society.

Designing effective organisations for the digital economy is the grand challenge for our time, and the companies that are already adapting are leading the way.

Thus, as the year 2022 ends, Tanzanians have all reasons to put their head up for good work done and the desire to improve efficiency within the government system and provide an enabling environment for the private sector to do their businesses swiftly as soundly articulated by the Minister for Information, Communication, and Information Technology in the budget for 2022/23.

Related Articles

Back to top button