How TZ expedites financial inclusion

MOBILE money transactions are increasing in volume and value as mobile telecommunication companies expand reach of digital financial services in Tanzania.

Tanzania Communications Regulatory Authority (TCRA)’s June 2022 statistics show the value of mobile money transactions increased by 8.6 per cent to 11.608tri/- in June this year from 10.689tri/- in May, as more customers use digital platforms of mobile network operators.

The value of mobile money transactions had increased by 3.6 per cent in May from 10.321tri/- in April, the statistics show.

The April figures were 3.6 per cent down from March where the value of mobile money transactions reached 10.703tri/-, after rising by 12.2 per cent from 9.539tri/- in February.

The value of mobile money transactions in February was, however, down by 7.8 per cent from 10.35tri/- in January according to the TCRA data.

On a yearly basis, the value of mobile transcription increased by 25.6 per cent from 101.87tri/- in 2019 to 127.943tri/- in 2020.

However the increase declined to 7.2 per cent to 137.2tri/- in 2021.

From January to June this year the value reached 63.2tri/-, TCRA statistics show.

Tanzania registered 4.2 million more mobile money subscribers in a one year period from June 2021 to June 2022.

As of June 2022, Tanzania had 37.4 million mobile money accounts, up from 33.2 million in June 2021, TCRA data show.

By June this year, Vodacom’s M-Pesa platform had 39 per cent of the mobile money subscription market share with 14.5 million users, followed by Millicom Tigo at 26 per cent with 9.7 million users.

Bharti Airtel is the third with a 21 per cent from 8 million customers, followed by Halotel with 9 per cent from 3.4 million customers, and TTCL with its T-Pesa product with 4 per cent from 1.5 million.

All mobile phone companies increased users of their digital money platforms in April – June quarter with Airtel boasting the largest increase of six per cent, state-owned TTCL five per cent, and the rest three per cent.

In 2020 the Central Bank allowed mobile money operators to increase daily transaction limit to customers from 3m/- to 5m/- and daily balance from 5m/- to 10m/- as part of measures to ensure stability of the financial system during Covid-19 outbreak.

The measures were aimed at encouraging customers to use digital platforms hence reducing congestion in bank premises.

Adoption of mobile phones in accessing financial services in Tanzania has boosted financial inclusion compared to other access channels of formal financial services, the Central Bank says in its June monetary policy statement.

Tanzania is the largest mobile money market in Africa. It has become the first country in Africa to introduce interoperability between rival mobile money services and allow transactions to flow between mobile money services and the banking sector.

The market has been driven by the ubiquity of mobile phones among people from all socio-economic backgrounds with extensive coverage of mobile networks and penetration of the internet.

According to industry reports, 64 per cent of adults in Tanzania use mobile phones for financial transactions. Various financial services, such as microloans, mobile insurance, hospitalization covers via mobile money and the credit services offered by mobile operators, have increased the number of mobile money accounts in the region.

Mobile money has also evolved beyond simple money transfer and allows people to save, insure and borrow money as well.

Mobile Money has been a key driver of socio-economic growth in Tanzania, creating employment, driving business productivity and facilitating savings.

It is also facilitating investment, contributing to formalizing the economy, and providing stability during economic downturns.

It is also the main driver of financial inclusion, contributing directly to Tanzania’s economic growth and social development objectives.

As set out in Tanzania’s National Financial Inclusion Framework, “mobile money services have been the main driver in the provision of financial services to the under-served especially women and people living in rural areas”.

The benefits of this positive impact will be realised across various sectors of the economy and will lead to a boost in economic growth.

The government introduced a levy on mobile money transactions in July last year which increased the cost to send, withdraw and transfer money.

The Minister for Finance and Planning, Mwigulu Nchemba said the levy on mobile transactions, estimated to generate 1.254tri/- per year would be used to finance road construction and water projects in rural areas.

However, the government reduced the levy after increased public concern that the levy was too high.

The government also cut the levy by 43 per cent this year bringing relief to users who were shouldering a heavy burden when sending or receiving money using mobile phones.

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