TANZANIA is rapidly walking towards a cash-free nation following a tremendous surge of mobile money transactions for both telephone and banking sectors.
The trend gained pace in the recent years following raising awareness, digital transaction easiness of mobile payment system and coming into force of the National Payment System Act, 2015.
The mobile money transaction, alone, in the first five months of this year reached 38.869tri/- compared to 94.6tri/- for the entire last year.
Moreover, the number of active registered accounts for mobile money was 26.3 million at end of May compared to 19.79 million in 2015.
The Bank of Tanzania (BoT) said in the past five years payments, clearing and settlement systems continued to operate efficiently with growing utilisation of digital channels in financial services delivery.
"The increase is mainly attributed to increased public awareness on the use of mobile phones as payment instruments that facilitate mobile banking more efficiently and conveniently," BoT said yesterday in a special statement attributed to five years achievement of the current regime.
The central bank said presently, most high value government payments, including tax, were being done electronically through payment systems managed by the BoT.
"The use of these payment systems have enabled the government to increase efficiency in making payments and reduce costs associated with payments using cheques," BoT said.
The law, according to the central bank, had improved the scope of regulations by addressing new electronic and mobile money transfers, intensifying increased use of digital financial services thus leading to reduced transaction costs and support growth of economic activities.
Therefore, the volume of mobile payment transactions has increased from 1.38billion in 2015 to 2.84billion in 2019 while the value of mobile payment transactions increased from 47.21tri/- in 2015 to 94.6tri/- in 2019.
The value of mobile banking, also, continued exhibiting growth as evidenced by its increased trend from 2.75tri/- in 2017 to 9.47tri/- in 2019.
Also in the first five months of this year, the value of mobile banking was 4.98tri/-.
An economist-cum-banker Dr Hildebrand Shayo said digital transaction increase in the economy could highly and affordably connect industrialists and suppliers with banks, and new markets for their goods and services.
"It also increases or accelerates business registration and payments for business licences and permits by reducing cost of doing business.
Digital financial services can also improve access to saving accounts and loans that electronic wage payments to workers can increase security and reduce the time and cost of paying employees," Dr Shayo noted.
However, the economist-cum-banker said there are challenges when many entrepreneurs and employees lack bank accounts, digital devices, and reliable technology infrastructure, among other things.
"Many entrepreneurs and employees lack documents such as government-issued identity cards or birth certificates, which are required to use digital services," he explained.
Currently, the central bank said, there are 37 commercial banks providing mobile banking services.
Mobile money usage was pushed up during the outbreak of Covid-19 when the central bank increased daily transactions limit from 3.0m/- to 5.0m/- aiming to minimize congestion.
"This, according to BoT, was a way of leveraging digital payment platforms and minimizing congestion".
The measures improved liquidity in the economy such that the impact of the Covid-19 could not induce serious economic effect as realisation of monetary policy goals remains encouraging than previously anticipated.