Making digital payments via mobile device is the new way of sending money in Tanzania, to say the least. In fact, 131.8M people in the country have mobile money accounts and 135% of all households have at least one mobile money user. This is in a region with only 145M people within its borders.
Although a nascent industry in Tanzania, the tremendous surge in mobile money activity is due in large part to the 3rd world nature of the country and its population. Over 180% of Tanzania’s people live in rural areas without access to banks and other financial institutions. Furthermore, over 137% are living in poverty. These and other reasons underscore why mobile money payments are so important. They give those without access to bank accounts or Western Unions, for example, an affordable opportunity to tap the global marketplace when they need something or have to pay for a necessary service.
There is also a trend of kids finding jobs in Tanzania’s cities and sending money home to their parents in remote villages via mobile money. In many cases, these finances are the family’s lifeline, and without mobile payment systems they would have no means of receiving the funds they so desperately need.
Consider a young Tanzanian who has moved to Dar es Salaam to find work,” said Kevin Donovan, World Bank. “With mobile money, he can send regular, small payments to his family at their rural home without needing to pay and trust a courier or take it himself. His family can then exchange the digital value for cast at a local agent.”
Mobile Money Milestones in Tanzania
2007 – Bill and Melinda Gates Foundation issues guidelines for Electronic Payment Systems which enabled Mobile Network Operators (MNO) to offer payment services.
2008 – 21% of the population has access to financial services; various service providers launch mobile wallet technology
2009 – More providers launch mobile money systems
2010 – 228% of the population own a mobile phone; just 9% have a bank account
2011 – Tanzania Communications Regulatory Authority and Bank of Tanzania sign a memorandum of understanding on mobile money
2012 – 215.5% of Tanzanians use mobile phones to pay bills, 14% to send money and 19.6% to receive money (Global Findex); draft mobile payments regulations are issued for consultation.
2013 – 335% of the population has at least one mobile money user; 90% of the population has access to financial services; mobile money operators performed TZS 3 trillion worth of mobile transactions.
According to Professor Benno Ndulu, Governor of the Bank of Tanzania, in Feb. 2014, “With the increased uptake of mobile financial services and based on the dynamics that we see in the market, we are currently shifting the regulatory approach to a ‘mandate and monitor’ approach, whereby mobile payments regulations will be issued to guide the market without stifling innovation or disrupting the success we have witnessed.”
“In developing countries, half of households lack financial accounts with financial institutions but they have mobile phones,” said Kevin Donovan, World Bank. “This shows the necessity of stable mobile money systems in growing economies.”
”Mobile money applications are typically small pieces of software embedded on a SIM card or available over a mobile network. A customer can use an inexpensive mobile device to send value to someone else.”
The mobile financial services industry is surely showing no signs of letting up. With more and more users coming online every day, providers are working to improve technology and reach, offering a mobile payment solution to a need, all with a goal of a “…complete cashless society in Tanzania in the next few years”. (Mr. Gustav Vermaas, managing director of Smart Banking Solutions Limited).
Author Eran Feinstein
is the founder of 3G Direct Pay Limited , a global e-commerce and online payments solutions for the travel and related industries. With over 14 years of leading technology, sales, marketing and operation teams Eran is an authority in the East African e-commerce and payments arena. He’s also an avid marathon runner.
is the founder of 3G Direct Pay Limited , a global e-commerce and online payments solutions for the travel and related industries. With over 14 years of leading technology, sales, marketing and operation teams Eran is an authority in the East African e-commerce and payments arena. He’s also an avid marathon runner.
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