Inside Tanzania’s remittance business

Wednesday January 19 2022

Tanzania was the first country in the world to implement financial interoperability. What does this mean for digital finance in the country?

It has now been seven years since Tanzania enabled interoperability of digital finance. As such, consumers of one mobile money scheme have been able to transfer cash to a client of a rival mobile money scheme. This has meant that remittance customers now find it easier to send money to a bank or to a mobile money account without much hassle.

Additionally, this has enabled digital money transfer services to work with the CRDB Bank, People’s Bank of Zanzibar and Equity Bank Tanzania, where customers can cash in and out their money at any of the banks’ branches countrywide, within minutes with 288 WorldRemit cash pickup locations across the country.

Interoperability remains vital, as it allows users to keep the transaction digital from beginning to end, eliminating the need to convert to cash on a regular basis. This has made it easier for Tanzanian innovators to create relatively affordable solutions for receiving and sending money with ease via mobile devices or via a website.

As a result, access to financial services for the unbanked has expanded dramatically. Interoperability in Tanzania has also come with the benefits of convenience, as payments are now faster, more cost effective and secure for all parties involved. Remittance services have found a conducive operating environment in Tanzania, with interoperability acting as a foundational step in boosting financial access.


What would you say is the level of penetration of cross-border remittances in Tanzania?

Remittance penetration is relatively high in Tanzania right now compared to previous years, partly fueled by the Covid-19 pandemic where families received money from their kins working overseas. For instance, over the past few years, WorldRemit has established several agent cash points, which many Tanzanians use to withdraw money sent by their families living and working abroad. The number of personal remittances received has been increasing. Tanzanians living abroad sent a total of Usd 189.13 million to their families in 2020. Most of the inflows into Tanzania are from the United States, United Kingdom, Canada, Kenya, Uganda, Burundi, South Africa, Malawi and Australia.

How has mobile money influenced the uptake of remittance services in Tanzania?

Tanzania’s interoperability has seen more players join the mobile money market which has in turn been a key factor in the uptake of remittance services in the country. Rural Tanzanians can therefore receive money from abroad via their feature phones without the need for internet connection. In 2019, for instance, WorldRemit teamed up with mobile provider Vodacom Tanzania to enable 10 million M-Pesa clients to receive money from friends and relatives living abroad directly into their M-Pesa wallets. Since then, money transfer users in Tanzania’s urban and rural areas have benefited from remittance services as they can receive transfers directly to their phones without the need for a bank account or an internet connection.

Tanzanians living in over 50 countries abroad are able to send money home in only a few taps using the WorldRemit app. This allows customers to save time and money by not having to go to a traditional money transfer agent and pay high fees to send money home.

What challenges do you think still need to be tackled to bank Tanzania’s unbanked population?

Tanzania, like many other developing economies, has a relatively low level of financial inclusion when compared to its developed counterparts. Financial inclusion should always be viewed as a tool for reducing poverty and empowering the rural economy. In Tanzania, nearly 50 per cent of the population aged 15 and above held an account with a financial institution as of January 2021. Hurdles include high costs of smartphone ownership which means low income families struggle to won a phone. But affordable internet and cost of remittance transactions have opened a path towards financial inclusion. WorldRemit is committed to working with both local and foreign financiers to help fintech players ensure their financial services reach Tanzania’s most remote zones so everyone has equitable access to these services.

What measures need to be put in place by remittance providers to protect customers against the rising threat of cyber insecurity and financial fraud in the East African region?

Digital crime is an issue remittance services proviers have always been aware of, and over the years they have taken a number of measures to help prevent cybercrime and to ensure that our platform is as secure as possible. However, there is still a lot to be done: Providers need to put up measures to protect users against financial fraud and cyberattacks. Ensuring that customers continue to have trust in the industry is key, as one successful attack on a provider can taint the image of the whole sub-sector. WorldRemit sees remittance cyber theft as a real and evolving threat that needs to be addressed. When it comes to cybersecurity and fraud risk, we work to continuously educate customers on how to stay safe and hope that other providers will follow suit. We have strict verification processes to ensure customers are correctly identified and have dedicated analysts who monitor transactions for signs of unusual activity. Beyond internal efforts to keep every transaction safe and secure, the best way to tackle online crime is to educate people on ways to stay vigilant when online.

What do you make of the regulatory environment in Tanzania in relation to innovations towards financial inclusion?

The Tanzania Communication Regulatory Authority (TCRA) created the national interoperability agreement in September 2014 to allow cross-platform money transactions, a key step in spurring the fintech growth seen in the country now. The Bank of Tanzania has provided a conducive regulatory environment for engagement with stakeholders as the bulk of the content comes from local players. Users of different mobile wallets can now transfer money from one mobile wallet to another, and this opens up opportunities for innovators to create a myriad of solutions. This direction primes the path for better, more efficient interactions with digital remittance players, which is encouraging for both local and foreign investors as well as the continued stabilization of the economy in the country.

What solutions should be fronted to help dozens of fintech startups struggling to find market grip In providing digital finance services in Tanzania?

When it comes to regulation, Tanzania has taken measures to help fintech organisations thrive. However, the importance of financial backing should not be underestimated since most startup fintechs in the country fund themselves. Beyond financial pressure and the need for subsequent backing, fintech organisations also need guidance to inform key decision makers on how and where to focus growth efforts to develop the best products for their target market.