Beating financial inclusion targets

By Mnaku Mbani

Tanzania is targeting to increase financial inclusion of 80 per cent of adult population using financial access point by 2017

The country exceeded the target of 50 per cent by 2016 under the National Financial Inclusion Framework (NFIF 2014/2017), with 55 per cent financial inclusion in 2014.

According to the NFIF, the goal was beaten, thanks to the mobile telephony technology with more than 38 million subscribers, which has extended the adult population’s financial inclusion to more than 50% with 16 million people using mobile money accounts.

The Bank of Tanzania (BOT) also set targeted for the 2015/16 fiscal year aiming at 70% of the population living within five kilometres of a financial access point by enhancing access and implementing access channels such as agent banking, further mobile financial services, point-of-sales (POS), and automated teller machines (ATMs).

The BOT knew that by allowing the telecom sector to conduct mobile money payment services would be a good platform to improve financial services, therefore, the authorities concerned decided to assume a test and learn position that allowed mobile network operators to develop new services to review the risks later instead of establishing constraining regulations, explained BOT Governor, Prof. Benno Ndulu.

This approach allows the BOT to test new mobile payment services in the market, observe the kind of risks related with them and regulate to improve bank services and also help them to expand their reach using mobile platforms, Prof. Ndulu added.

The partnership between mobile network operators and financial institutions has helped Tanzania to position among the leaders in usage and access to affordable financial services in the world ranking 12th out of 21 developing countries in the world according to the last Brookings Financial and Digital Inclusion Project (FDIP).

According to the World Bank, Tanzania is the second largest country using mobile money accounts in Sub Saharan Africa (SSA) with approximately 47 per cent of its adult population and beating Uganda with which it recently shared the second position.

It is also ranked number 6th globally for providing the most conducive environment for financial inclusion as evaluated by the Intelligence Unit of the Economist through their Global Microscopic Surveys conducted in 2014 and 2015.

Global Microscopic surveys show financial inclusion depth in Tanzania has deepened as a broad spectrum of institutions including banks, businesses, non-bank financial institutions and non-governmental organisations (NGOs) have all made successful attempts to reach out to and incorporate underserved and excluded members of the public through non-traditional channels aimed at expanding financial offerings.

After surpassing financial inclusion targets of 2014, the Central Bank has set new targets of achieving usage of formal financial services under the National Financial Inclusion Framework (NFIF 2014/17) of having 80 per cent of adult population using a financial access point.

The Monetary Statement of the first half of the 2015/16 fiscal year also shows that BoT is targeting to have at least 70 per cent of the population living within five kilometres of a financial access point by 2017.

Only 12 per cent of adults have both types of accounts, she said. Mobile money accounts in Tanzania so far do not disproportionally reach adults traditionally excluded from the formal financial sector such as the poor men and women.

The data show further that slightly below 20 per cent of men and women had accounts with financial institutions. Twenty four per cent of adult males had mobile money account compared to 17 per cent only for women.

Eleven per cent of the poorest had accounts in financial institutions compared to 24 per cent of the richest by 2014, while 13 per cent of the poorest had mobile money accounts compared to 26 per cent of the richest.

The consultant said only nine per cent of Tanzanians receive wages and about half of those receive it directly into their accounts.

In Tanzania 14 per cent of adults pay utility bills and one third of them make such payments digitally with virtually all of them making the payments through mobile phones.

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