Tanzania towards the future of a cashless economy

Meet Jones Mrusha, the cashless challenge ‘evangelist’ in Tanzania. On June 1, this year, he made a decision to go ‘cashless’ and inspire the majority to do the same through a project he named #CashlessChallenge and documented on social media.

The idea behind this was inspired by the United Nation's Sustainable Development Goals (SDGs) goal number 9 accounting for facilitation of sustainable and resilient infrastructure development in developing countries through enhanced financial, technological and technical support to African countries. It plays the role for expanded financial inclusion through greater savings mobilization for investment and consumption that can spur growth.

The challenge has been successfully received and supported by Vodacom, M-Pesa, NMB, Mimosa, Airtel, Access Bank and some individuals.

Tanzania being a world leader in interoperability and mobile money transfers should champion this goal and set targets in advancing financial inclusion, security and prosperity through its advancement in financial technology. As of 2016, an estimated 46 per cent of Tanzania's adult population were not financially included. But stashing banknotes under the mattress is no way to safeguard families’ savings, much less enable households to accumulate enough capital to escape prevailing poverty.

Millions of Tanzanians are scratching out a living in the informal economy. This leaves them unprotected and without pathways to financial stability and wealth creation. Moving towards a cashless society would incentivize citizens, companies and policymakers to devise mechanisms to bring all Tanzanians into the financial sector, drastically improving the lives of those who are now under-banked or unbanked. The outcome will see millions brought to the formal economy.

The goal should be to achieve prosperity through financial inclusion linked to economic activity. What small businesses and micro-enterprises need is fresh capital to create employment and expand the economic pie, and bank accounts connected to economic activity ensure that even those selling goods by the roadside can secure a piece of that pie.

Such a plan should focus on building the right ecosystem for economic activity. That means not just delivering financial services, but also advancing financial literacy. Newly established bank accounts have little effect if they lie dormant. To ensure that financial inclusion actually enables economic transformation, Tanzanians must gain the knowledge and tools to make the most of financial services.

There is reason to believe that Tanzania can succeed in going cashless. Already, a large share of Tanzanians use digital payment systems like M-Pesa, Airtel Money, Tigo Pesa and others– precisely the types of innovative platforms that can play a pivotal role in the shift away from cash.

Attainment of the desired financial inclusion will realise the financial inclusion target that was set by The National Financial Inclusion Framework (NFIF, 2014/2017) to have 80 per cent of Tanzanian adults using formal financial services by 2017, and the financial literacy campaign set by NFIF,2016/2020 aiming to provide communities with financial education programs to promote sound financial decision-making, and is targeted to rural residents, youth and the poor.

With effective implementation of such smart strategies, Tanzania can build a cashless economy, with high levels of financial inclusion supporting economic prosperity and security. Not too long, one should be able to go to a local ‘Mangi’ shop without a cent in hand but a phone for the wallet.

So, Jones Mrusha’s #CashlessChallenge should not be taken as a mere media stunt but a solution to financial inclusion through the ever growing FinTech (Financial Technology) in Tanzania.