Tanzanian banks partner with telcos to reach unbanked masses

Tuesday October 31 2017

A mobile money transfer agent in Dar es Salaam, Tanzania.

A mobile money transfer agent in Dar es Salaam, Tanzania. PHOTO FILE | NATION 

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As the number of people using mobile money grows, commercial banks in Tanzania are partnering with telecom companies to reach the unbanked as well as allowing mobile money subscribers with bank accounts to transfer cash between the two services.

“The integration gives room for more people to use either mobile money, bank accounts or both, and makes it easier for a bank to reach a large market, particularly rural areas which are financially underserved,” said Ineke Bussemaker, chief executive officer of NMB Bank.

Telecoms with their networks allow banks to exploit their existing client base, and in turn, telecoms are able to offer banking products to their existing customers.

“It is not competition… as banks we are looking for ways to co-operate and work with telecom companies to extend financial services to a larger population,” said Junaita Mramba, head of corporate affairs at Standard Chartered Plc.

Financial inclusion

A Financial Inclusion Tracker survey shows that 85 per cent of adults with mobile money accounts use mobile money services exclusively while the remaining 15 per cent transact through either a bank account, or a non-bank financial institution, commonly known as Vicoba, or both.

“Nearly all adults who used banks also used mobile money services. Mobile money increasingly caters to the needs of most customers, including demand for some advanced services,” says the report.

According to the survey, access to bank accounts in Tanzania remained at eight per cent year-on-year.

“The use of banks remained stable on year-on-year data, but is low compared with mobile money. Most bank and non-bank financial institutions (NBFI) users also use mobile money. Moreover, many people use mobile money accounts more actively than banks and NBFIs,” said Bank of Tanzania.

On financial inclusion, bank accounts play an important role in starting and expanding businesses, making transactions more efficient, secure and transparent and for managing savings.

Common uses for mobile money among Tanzanians are receiving and sending money and buying airtime. Just under half of users mentioned that they had also used mobile money to save their earnings.

The Bank of Tanzania aims to ensure that 80 per cent of Tanzanian adults use a financial access platform by the end of this year, and 70 per cent of the population get to live within five kilometers of a financial access point.