Tanzania moving towards cashless society through mobile innovations.

Module 3 - Assignment Sheet.docIn an effort to create cashless society in Tanzania a lot of innovative payment systems has emerge but the most important thing is not about how they work individually, but is on how they have been able to interact between one another and add more value to the way people transact. The “interaction” of these payment system has created amazing business models for local vendors “wakala” who are converting digital values of money into real cash and making profit in the process.

The mobile payment systems (Vodacom M-Pesa, TigoPesa, AirtelMoney and others), the mobile banking payment systems (CRDB SimBanking, NMB Mobile and others) and the point of sales vendor machines payment systems (Max Malipo, PayPoint and others) create the three component business model for digital transactions in Tanzania. All the three systems are integrated. The mobile banking systems are working with the mobile money systems, the mobile money systems are integrated with the point of sales systems and the point of sales system are integrated to the banks.

Recently there have been a trend of banks to partner up with mobile network operators in providing digital transaction services. For example CRDB bank one of the biggest bank in Tanzania has partnered up with major MNO’s in Tanzania to allow people to move money between their bank accounts and the mobile money accounts. People now can deposit and withdrawal money from their bank accounts using their mobile phones.

 “the partnership between financial institutions and telecom companies has bolstered significantly the efforts to reach the under banked population in the country.”  BoT Senior Legal Counsel Mr George Ben Sije

The point of sale vendor machine such as “Max Malipo” which has received presidential recognition has one of the most influential digital payment system locally made, has been able to integrate their devices to the mobile payment systems. For example, one of the services that you are able to do with the machine is to buy mobile vouchers directly from the MNO’s and sell it to the final consumers.

The point of sale vendor machine are also working as banking agents for local banks that doesn’t have branches in remote areas using the point of sales system as their sub branches for people to open and monitor their bank accounts. For example Max Malipo is working with the Dar es Salaam Commercial Bank (DCB).

New range of banking services have been formed up which has improved the standard of living through promoting financial inclusion and quality of service delivery. For example the mobile money service by Vodacom called “M-Pawa” give opportunity to the unbanked to get involved into the formal financial sector which is very important for the development of the community. Due to these business model the banking systems are now at people’s door steps and made the banks to become even more innovative. The new banking services such as Tanzania Postal Bank’s “TPB Popote” and CRDB’s “Fahari Huduma” which uses agents to act as banking branches has allowed more people to formalize their financial activities hence encouraging financial inclusion.

“Wakala” , the agents, are the backbone of all these banking systems, digital payment systems has given employment opportunities to number of youths in Tanzania and other East African countries. Thousands of these Tanzanian youth are receiving commission for turning cash into electronics value. Although there has been some challenges with the security, awareness and people trust on the mobile payment systems, the number of households with at least single mobile money user has increased in the last few years. According to the report of InterMedia Finacial Inclusion Tracker Survey report in Tanzania, 35 percent of households in Tanzania have at least one mobile money user out of 2980 surveyed households in different towns in Tanzania.

“Under the terms of the Maya Declaration, the Bank of Tanzania committed to increase the share of the
population with access to financial services from 27% in 2009 to 50% by 2015. Tanzania surpassed this target at the end of 2013, and is now hoping to achieve 75% within the next six years.”  BoT Governor Benno Ndulu 

10 years from now we expect  at least three quarter of the Tanzanians population  to be banked in the formal banking sector. The employment rate will increase due to the emerging opportunities from mobile payment systems and finally advanced improvement in provision of services using digital means. It is already happening now you can pay for your electric bills, hospital services, water bills even your car’s road license using your mobile phone. For more details about status of mobile money in Tanzania you can view the GMSA report on the Mobile Money for the Unbanked Tanzania.


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