High cost of mobile money services: Who has ordinary citizens in mind?

Saturday July 31 2021
mobil maoney pic
By Epiphania Kimaro

A debate ensued in Tanzania recently, following the increase of costs for using mobile money services, which was effective from July 15, 2021. After complaints from the public, the government is now considering reviewing the tariffs; encouraging, but the question about “who has the citizen in mind” in these discussions is unclear.

The justification to increase tariffs is great, noble; to support the government’s budgetary goals, to grow our country. But again, at what cost on the normal citizen? Or is the approach taken that of ‘Punda afe, lakini mzigo ufike?’ The changes were of course met with different reaction from the public, where many people expressed their disappointment and aired their voices to get the attention of the government, fruitfully, as President Samia Suluhu Hassan responded that they had heard and were now working on the issue.

However, for the public, together with expressing concerns, people also go to a great length to protect their earnings from drowning in bottomless pits of fees. They explore other options such as banks and physical cash exchanges. But, does a normal citizen in a remote village really have an alternative? In addition, what a giant backward step in terms of financial inclusion that would be!

The world is now moving towards cashless economies, which can be achieved through cheaper, effective and accessible digital financial services. This is to remind us that achievement of national revenue collection goals must be done in consideration of other factors such as financial inclusion and the burden/load that small businesses and individuals can shoulder. For example, in these new charges, the cost of transacting Sh1 million over mobile money is Sh31,000 in total. This is high not only for ordinary Tanzanians, but also for small businesses.

To keep the citizen in mind and reduce their burden, a potential area to explore for both the government and telecom companies is promoting retail payment methods on mobile money platforms, which will reduce cash withdrawal expenses on the consumer. Some efforts to introduce such services have been made by telecom companies, such as the ‘Lipa kwa Mpesa’ product, but their spread remains at a minimal, relative to a comparable market in Kenya.

Tanzania and Kenya have a unique distinction from other countries in the Africa and globally, for being markets where mobile money has gained the most traction. However, the penetration of services is much broader in Kenya compared to Tanzania. For example, in Kenya a majority of retail payments can be done by using mobile money, through the Lipa na M-pesa product: for mama ntilies, hair salons, petrol stations, supermarkets... You name it: the service is almost ubiquitous.


The same goes for other services such as commuter bus rides; one can easily pay for these services by sending money to the individual mobile money accounts without being asked to include withdrawal fees, because they don’t have to withdraw the money, they can use it to pay for different services or products for free.

As such, some of the key questions here are: what makes it hard for retail payment services to catch speed in Tanzania’s mobile money platforms? Does the government know about those challenges? Have they been discussed in conjunction with telecom companies to try and unburden citizens from excessive fees?

Worth acknowledging is that, across countries, high electronic transfer costs have been cited as a barrier to leveraging mobile money platforms, as well as enabling retail payments and other financial services for people with low incomes. However, even when decisions like increasing fees must be made, it doesn’t have to feel as though citizens are the grass in the idiom: ‘when bulls fight, it is the grass under their hooves that gets hurt.’ This feeling grows from the snowballing effect where one charge in one sector triggers another charge in another sector - because, of course, the sectors are interconnected and no one is in business to make losses. So, who has the citizen in mind here?

The government, as the cheerleader and protector of citizens’ welfare, should mediate the tension between profit making and cost of public services, which is typical of mobile money services because, as much as they are offered by profit-oriented institutions, they are also a necessary public service.

Ms Kimaro writes about careers, leadership, personal development, and issues affecting youth and women