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THE BUSINESS OF FINANCIAL TECHNOLOGY IN TANZANIA - FINANCIAL-24

Tanzania is one of the world leaders in mobile money transfers (mobile phone-based money transfer), with 44 per cent of adults having access to the platform.

Mobile money penetration rates in Tanzania have reached 65 per cent in urban areas and about 25 per cent in rural areas.

There are four mobile money providers in Tanzania namely Vodacom with M-Pesa (42% market share), Tigo with Tigo Pesa (31%), Airtel with Airtel Money (24%), Zantel with Ezy Pesa (2.5%) and Halotel with Halopesa.

As of 2016 these operators had 280,675 agents across Tanzania.

We carried out random interviews on the streets and this is what Tanzanians had to say about Mobile money in Tanzania:

In early 2016, Tanzania was the first country to achieve full Interoperability; the ability of users of different mobile money services to transact directly with each other.

International interoperability is also a reality in Tanzania thanks to the partnerships of mobile money operators with international money transfer services like MoneyGram, Western Union and Mpesa whereby Vodacom Tanzania also allows operator-to-operator international money transfer interoperability through its partnerships with Safaricom in Kenya.

However, one of the main challenges to Tanzania’s mobile money growth is taxation. A mobile money tax was first introduced in Tanzania in 2013 when an excise duty of 0.15 per cent was charged on transfers exceeding Sh30,000.

The tax was then replaced in 2014 with the current m-money fee excise tax of 10 per cent.

Since the mobile money excise is charged on transfer fees, the tax is a larger share of the cost for smaller transfers. Therefore this tax is regressive and imposes a larger burden on low-income consumers, which could potentially reverse financial inclusion gains made in Tanzania, according to the GSMA.

“Removing the tax on mobile money charges could improve the affordability of these services, enhancing financial inclusion.” the GSMA notes.

The Citizen

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