Mobile money wallets are rapidly gaining popularity as the preferred mode of payment for businesses and financial transactions in Tanzania, surpassing other electronic options and even cash.
A recent Standard Bank (Stanbic) study revealed that Tanzania stands apart from other African countries, where cash payments still dominate and mobile money adoption lags.
Stanbic's Trade Barometer report for Tanzania, analysing trade trends in 2022, highlights a noteworthy shift in the financial behaviour of traders, with a preference for mobile money over electronic bank transfers for sales payments. This shift reflects the rising popularity of mobile money, as electronic funds transfers (EFTs) lose favour for receiving payments from sales.
The findings from Stanbic's analysis align with the 2023 report from FinScope Tanzania, which indicates a significant increase in mobile money usage among adult Tanzanians. Since 2017, mobile money adoption has surged from 60% to an impressive 72%, contributing substantially to the expansion of financial inclusion in the country.
According to the FinScope report, formal financial inclusion has grown to 76% of the population, up from 65% in 2017. This increase can be attributed to the rise in mobile phone ownership, which has climbed from 63% to 75% during the same period.
Furthermore, access to commercial banking services has also grown, reaching 22% compared to 17% in 2017, mainly due to enhanced accessibility via mobile phones.
However, the report also highlights some disparities. While mobile phone ownership has increased, access to a mobile phone declined from 93% to 86%, and the gender gap persists, with 80% of men having access to mobile phones, compared to 71% of women. Additionally, around 19% of Tanzanians still remain financially excluded, a decrease from 28% in 2017.
Stanbic Bank's data further indicates that mobile money is the preferred financial service for Tanzanian traders, with a 67% adoption rate. Transactional accounts follow closely behind, rising from 59% to 66%, while online banking lags at 50%.
The report also highlights that payments made via mobile money and credit cards increased by three percentage points each, reaching 21% and 15%, respectively, while EFT/electronic payments dropped from 10% to 6%.
Regarding purchases, credit card usage rose from 15% to 18%, and mobile money payments increased from 15% to 16%, while electronic payments experienced a decline from 13% to 9%.
Despite the positive trends, Stanbic Bank's report identifies access to credit as a concern for traders in Tanzania. Only 42% of survey respondents found access to credit easy. The percentage of trading companies offering credit terms decreased from 44% to 42%, but those receiving credit advances from suppliers increased from 39% to 45%.
The reports from both Stanbic and FinScope highlight the rapid growth of mobile money wallets in Tanzania, transforming the landscape of financial transactions and significantly improving financial inclusion.
As mobile phone adoption continues to rise, efforts to bridge the gender gap and address the credit access challenges will be crucial in sustaining this positive momentum in the country's business and financial sectors.
Note: This news article is based on the analysis and reports released by Standard Bank (Stanbic) and FinScope Tanzania during June and July 2023.