The mobile money revolution in Tanzania has been nothing short of impressive. Mobile money was introduced to Tanzania in 2008 and started with less than 200,000 subscribers. Eight years later, Tanzania has become a world leader in mobile money.
The number of registered mobile money user accounts has proliferated to over 16.5 million
, accounting for 32% of the nation’s adults. The growth has brought financial inclusion
to the large percentage of the population that does not have access to formal banking services (currently, only 2%
have a traditional bank account).
The poor level of financial inclusion has been brought about by four main challenges
of Tanzania’s population is rural, making travel to urban areas for financial services costly and time-consuming
– Poor customer education and communication around financial offerings
– High costs associated with financial services
– Regulatory requirements-often a lack of documentation prevents financial inclusion
Providers and their offerings
The vast potential of this market saw the introduction of mobile money providers. Today, there are five: Vodacom with its M-Pesa enjoys the lion’s share of the market at 42%. Tigo with Tigo Pesa has a 31% market share, while Airtel with Airtel Money has 24% and Zantel, with Ezy Pesa, has a 3% share. Halotel joined in 2016 with its Halo Pesa.
Tanzania’s mobile operators have added mobile financial services, such as microloans and mobile insurance. Tigo, for example, offers life and hospitalisation cover via mobile money, as well as an international mobile money transfer service with instant currency conversion.
Tanzania was the first country in the world to achieve full interoperability
. The country’s largest mobile network operators (MNOs) joined with two of the major banks, CRDB Bank and National Microfinance Bank, as well as the Bank of Tanzania, to establish a set of operational regulations. Users of different mobile money services can move funds between accounts of various MNOs, and between mobile money accounts and bank accounts. The interoperable payment ecosystem in Tanzania has substantially contributed (and continues to) to the increase in transactions across network operators.
What this means for merchants is that it is much easier to offer one standard method of payment instead of the current state of play in many countries, where competing payment providers offer separate point of sale (POS) devices that only serve themselves. Having one universal POS device, or even QR code, will increase uptake and transactions at a consumer level because it will reduce confusion and which in turn increases customer satisfaction.
It also opens the door for other opportunities, such as using mobile money as the vehicle for distributing aid to displaced persons. This is the case in western Tanzania where Airtel is leading a pilot project distributing money via mobile to refugees
instead of food parcels.The refugees can then use these funds to purchase other goods and services in a secure and reliable manner without many of the usual risks associated with carrying currency.
Choosing the right partner
With the growing increase in market potential, it is important that MNOs, aid agencies and financial institutions select a partner with vast market experience and expertise. Because each mobile money market is unique in its challenges and opportunities, you will want to side with a company that understands growth markets and can provide a range of solutions so as to give your company a competitive advantage and increase the rate of uptake.