Mobile money brings impact on lives of our people

Doing more to support the much larger, formal financial system is now critical for the growth of the country’s business sector and its ability to mobilise savings and gain access to affordable credit, according to a new World Bank Group report, “Money Within Reach: Extending Financial Inclusion in Tanzania.”

Speaking in Dar es Salaam recently at the launch of the 9th Tanzania Economic Update (TEU), World Bank Country Director for Tanzania, Somalia, Burundi, and Malawi Bella Bird said that mobile money revolution had made a tremendous impact on the lives of millions of people who could now send and receive money, thus making savings at a low cost.

“With more efforts, the remaining one-third of Tanzanians could also have access. Access to credit through the formal financial sector, however, remains a critical constraint to the growth of the domestic private sector, and thus a constraint on growth and poverty reduction,” she said.

Bird also said that Tanzania has 58 banks and a per capita reach of 2.5 bank branches and 6.4 ATMs per 100,000 adults. While most of the population lives in rural areas, bank operations are concentrated in the country’s three largest cities and mostly serve better-off city dwellers and formal businesses.

William Battaile, the World Bank Lead Economist, who authored the report said: “Financial development can make an important contribution to Tanzania’s development. Supportive government policies and access to affordable credit are necessary to crowding in private investment, especially for the micro, small, and medium size enterprises vital for inclusive growth and poverty reduction.”

The Tanzania Economic Update (TEU) is issued twice a year by the World Bank, with each edition describing the current state of the economy and providing in-depth coverage of a topic of strategic significance to the country to stimulate policy analysis and debate.

The 9th TEU shows the Tanzanian economy has continued to record relatively strong performance, with growth above regional peers and low inflation.

Real GDP growth for 2016 is estimated near 7 per cent. The short to medium term macroeconomic outlook remains stable, though emerging risks need to be carefully managed, including budget implementation and private sector development.

To maintain and increase the growth momentum, government will need to focus on three key growth enablers: continued macroeconomic stability; the effective implementation of public investments; and supportive policies to promote private sector investment and growth.

Financial Inclusion is an area of significant success, and the mobile money revolution has played a major role in. From less than 200,000 subscribers in 2008, the total number of registered mobile money user accounts grew rapidly to 53.3 million by the end of February 2016, with 17.6 million active users conducting at least one transaction within a window of 30 days.

The World Bank report shows, however, that greater efforts are needed to fully capitalise on these developments to reach the very last customers and expand access to credit to the private sector, enterprises, and entrepreneurs, including more women and young people.