The Business of Financial Technology in Tanzania

Friday July 21 2017


I was talking to my dad recently and asked him how often he goes to the bank nowadays and how often he used to go to the bank. He said chances are that he might not go to the bank for months these days, thanks to the digital era as opposed to at least once every week in the past.

I also asked him what he thought of the people in the rural areas who have become so proactive with mobile money unlike with traditional banking. The answer is – Financial Technology (Fintech) which has made money accessible and transferable from any part of the world on the touch of a button.

Financial technology (FinTech) is the new applications, processes, products or business models in the financial services industry, composed of one or more complementary financial services and provided as an end-to-end process via the Internet. A new form of technology and innovation that aims to compete with traditional financial methods in the delivery of financial services.

Tanzania today has over 50 licenced banks but only 15 per cent of the population are subscribed to these banks whilst the number of users subscribed to mobile banking is 60.4 million, out of which 19.5 million are active users as of June 2016.
The volume of mobile banking transactions in Tanzania is 4.4 million to date with a value of Sh194.2 million.

 This is what Ms Ineke Bussemaker, Managing Director and CEO of National Microfinance Bank (NMB) was reported as saying: “Today, in Tanzania about 15 per cent of the population has a bank account, which is 7.5 million people out of 50 million. However, 60 per cent have a mobile phone and use mobile financial services, which equals to 28 million new customers."

Tanzania is one of the world leaders in mobile money transfers (mobile phone-based money transfer), with 44 per cent of adults having access to the platform.


Mobile money penetration rates in Tanzania have reached 65 per cent in urban areas and about 25 per cent in rural areas.

There are four mobile money providers in Tanzania namely Vodacom with M-Pesa (42% market share), Tigo with Tigo Pesa (31%), Airtel with Airtel Money (24%), Zantel with Ezy Pesa (2.5%) and Halotel with Halopesa.

As of 2016 these operators had 280,675 agents across Tanzania.

We carried out random interviews on the streets and this is what Tanzanians had to say about Mobile money in Tanzania:

In early 2016, Tanzania was the first country to achieve full Interoperability; the ability of users of different mobile money services to transact directly with each other.

International interoperability is also a reality in Tanzania thanks to the partnerships of mobile money operators with international money transfer services like MoneyGram, Western Union and Mpesa whereby Vodacom Tanzania also allows operator-to-operator international money transfer interoperability through its partnerships with Safaricom in Kenya.

However, one of the main challenges to Tanzania’s mobile money growth is taxation. A mobile money tax was first introduced in Tanzania in 2013 when an excise duty of 0.15 per cent was charged on transfers exceeding Sh30,000. The tax was then replaced in 2014 with the current m-money fee excise tax of 10 per cent.

Since the mobile money excise is charged on transfer fees, the tax is a larger share of the cost for smaller transfers. Therefore this tax is regressive and imposes a larger burden on low-income consumers, which could potentially reverse financial inclusion gains made in Tanzania, according to the GSMA. “Removing the tax on mobile money charges could improve the affordability of these services, enhancing financial inclusion.” the GSMA notes.