Leading Tanzanian lender CRDB Bank is leveraging state-run Tanzania Posts Corporation’s nationwide network of 100-plus outlets for expanded agent banking in a move seen as geared to cash in new levy on mobile money transactions.
The relaunch of CRDB’s ‘Wakala’ service through TPC will boost Tanzania’s financial inclusion rate which stands at 16.7 percent of the close to 60 million population, according to a recent report published by Finscope.
Under the new deal, CRDB customers can open bank accounts, make cash deposits and withdrawals, pay insurance premiums and utility bills, and pay government tax and levies through TPC branches.
TPC acting Postmaster-General Macrice Mbodo said the bank will pay the postal agency commissions on transactions.
Information and Communications Technology Minister Faustine Ndungulile said the deal was in line with the government’s goal of using alternative channels to extend financial services to marginalised segments of the population.
CRDB, which is Tanzania’s second-biggest bank in terms of assets and deposits after NMB, has more than 20,000 private agents across the country. According to chief executive officer Abdulmajid Nsekela, more than 40 percent of the bank’s business is conducted via these agencies rather than through its 260 branches and 550 automated teller machines.
The new levy that came into force on July 1 was introduced to boost internal revenue collections by at least Tsh1.25 trillion ($538.8 million) to partly finance the $15.6 billion budget for 2021/22.
The levy increased charges on mobile money transactions by up to $4, depending on amounts sent and withdrawn.
Sending Tsh1 million ($430) now costs Tsh31,000 ($13) if the service charge and government levy are added.
Tanzania Mobile Network Operators Association chairman Hisham Hendi, said telecom companies have seen a sharp decline in revenues, as regular customers stopped using the service.
“The situation is not good,” Mr Hendi, the outgoing CEO of Vodacom Tanzania, said late July.
Finance Minister Mwigulu Nchemba, who announced the new levy in his 2021/22 budget presentation in June, said July 19 that President Samia Hassan had ordered its review after public complaints.
President Samia told the BBC in an interview in Dar es Salaam on Monday this week that she felt the criticism was “not aimed at the levy itself but at the amounts charged per transaction and the manner it was being administered.”
She described the levy as for “the people’s own good” as it would help facilitate much-needed water and health service reforms in rural Tanzania.
Global business data platform Statista, says more than 54 percent of Tanzania’s population, particularly those in rural areas where formal banking is generally inaccessible, had become increasingly dependent on mobile money for cash flow and various public service payments before the new levy.
Figures show that a total of Tsh9.5 trillion ($4 billion) was transacted through this system in 2019 alone, and the first quarter of 2020 saw a total transaction value of around $11.5 billion.
The total mobile money market size for the country has been valued at $45.5 billion.
Statista forecasts that the figure, along with the overall value of mobile money transactions, would grow further as the number of cellular subscriptions in country continued its upward trend.
The new tax is also likely to have what one critic described as “unintended consequences” for value-added business services like microinsurance and pay-as-you-go which have traditionally depended on mobile money wallets.