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By Al-amani Mutarubukwa
The BusinessWeek Reporter
A new law to regulate mobile banking in Tanzania is in the pipeline as part of efforts by the government to enhance compliance in the business.
Since the introduction of the mobile banking services in 2008 in the country there was no proper law to guide and regulate the m-banking despite its tremendous growth and dynamism.
And analysts are questioning the strictness of the existing laws and regulations to prevent any possible illicit activity such as money laundering and terrorism financing that might engulf the mushrooming mobile phone-based transactions.
According to a senior BoT official, a national payments system bill is expected to be tabled in Parliament for debate this year. Once enacted, the law would boost mobile commerce while ensuring more security.
“The bill contains provisions that will help us enforce more compliance of the lucrative mobile banking platforms in the country,” Bank of Tanzania (BoT) National Payment Systems director Lucy Kinunda told BusinessWeek in Dar es Salaam
However, she said the bank had been regulating such transactions using the anti-money laundering law.
Last year, Tanzania enacted the Electronic and Postal Communication Act whose enforcement is expected to affect mobile phone business.
“We expect to have the regulations for the new law any time from now. What is awaited is an approval by the minister,” said Tanzania Communications Regulatory Authority (TCRA) communications manager Innocent Mungy. “The regulations are intended to curb all the security matters brought by technological development such as mobile banking.”
The Electronic and Postal Communication Act also makes it mandatory for mobile phone companies to list on the country’s stock exchange from 2013.
The mobile payment services in the country are regulated by both BoT in aspects of observing financial transactions and by the TCRA in monitoring the mobile phone operations.
And as the government initiates the mobile banking law TCRA and the BoT have signed a memorandum of understanding to regulate mobile money transfer services.
The document is aimed at providing a mechanism for regulatory and supervisory coordination between the two bodies.
While BoT will regulate financial transactions, the TCRA will focus on communications infrastructure.
Since the introduction of the mobile banking services in 2008 in the country there was no proper law to guide and regulate the m banking despite its tremendous growth and dynamism.
Tanzania has around 20 million telecom subscribers, with more than 9.2 million of them registered for mobile payment services.
Mobile payment platforms involve not only funds transfers but also payment for retail goods and services.
Mobile payment services are specifically used to top-up mobile phone credits, airtime transfers between mobile phones and corporate bill payments — water and electricity, for instance.
Vodacom, Airtel, Tigo and Zantel are currently offer mobile payment services.
Analysts say although the use of mobile banking to access financial services in developing countries is new but it is important in serving many rural poor people who have no traditional bank accounts.
Tanzania has more than six million m-payment subscribers, most of them subscribing to the Vodafone’s M-Pesa.
A recent study by CGAP, which looked at eight branchless banking providers in Brazil, Cambodia, India, Kenya, the Philippines, South Africa and Tanzania, found out that in more than half of the countries studied ‘branchless banking’ grew five times faster than the largest microcredit lenders.
Housed at the World Bank, CGAP is an independent policy and research centre dedicated to advancing financial access for the world’s poor. CGAP also studied prices at 16 branchless banking providers and 10 traditional banks across 10 countries and eight use cases and found that branchless banking is 19 per cent cheaper than traditional banking overall and 38 per cent cheaper at lower values at which poor people are likely to transact.
Customer usage is influenced not only by absolute prices but by the way a service is priced. For example, to encourage trial of money transfers, some services offer free deposits, which make branchless banking an affordable way to save. In Kenya and Tanzania, subsidiaries of the British mobile operator Vodafone now process more international wire transfers than Western Union.
Almost all of those mobile banking customers — 78 per cent, or 697 million people — are in Asia, Africa, the Middle East and Latin America, according to Berg Insight.
In Europe and North America, mobile banking remains secondary to personal computer-based Internet banking. Even so, the on-the-go convenience of mobile banking is attracting users in the West.
However, for the country like Tanzania, the experts agree that the potential is enormous, the fact that not more than 20 per cent of the people have bank accounts while the mobile market is expected to break the 50 per cent penetration barrier mainly due to arrival of the fibre cables in 2009 and 2010.
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