Tanzania Takes Top Financial Inclusion Spot in Africa

Tanzania leads in Africa in the provision of the most conducive environment for financial inclusion, thanks to the bold policy approach by the Central Bank to allow non-banking institutions to provide financial services.

According to Bank of Tanzania (BoT) Governor, Professor Beno Ndulu, Tanzania has taken the top spot for financial inclusion in sub-Saharan Africa.

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.

“In 2005, we were ranked number six among 55 countries in the world, leading all other African countries,” he said in his opening remarks of a workshop on financial inclusion jointly organised in Dar es Salaam yesterday by the Central Bank and the World Bank.

He attributed the glowing success to a bold approach taken by the Central Bank to support innovation by allowing non-banking institutions to provide financial services in the country which boosted financial inclusion.

According to Finscope survey of 2013, financial services had reached to 76 per cent of the population by 2013 from 44 per cent in 2009 largely due to introduction of agent banking and the entry of mobile telephone companies in provision of financial services.

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.

However, a World Bank consultant said despite the impressive achievements in expanding financial inclusion in the country, there was still a challenge to bridge widening income and gender gaps.

Dorothe Singer, a consultant in the Finance and Private Sector Research Team of the Development Research Group at the World Bank said in a presentation that global findex data showed account penetration had increased in all groups but important gaps still remained, especially between men and women and the rich and the poor.

She said 40 per cent of adults had accounts by 2014 up from 17 per cent in 2011 but income gap had increased to 26 per cent by 2014 from 16 per cent in 2011. She said gender gap had increased to eleven per cent in 2014 from seven per cent in 2011.

Twenty one per cent of adults have a mobile money account, compared to seven per cent only of adults with account at a financial institution.

According to her 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 developing economies, 27 per cent of adults receive a wage and 41 per cent of those receive it through their accounts. In high income OECD countries 52 per cent of adults receive wages with 86 per cent of them receiving the wages through their accounts.

Tanzania, Kenya and Uganda are the only developing countries with a significant share of agricultural payment into an account.

About 52 per cent of adults in Tanzania receive payments for sale of agricultural products, where as 13 per cent of them receive the payments through their accounts and 12 per cent of them receive the payments through mobile money 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.

She said the data showed 57 per cent of adults send or receive domestic remittances and about half of them do so using an account and another 20 per cent send or receive domestic remittances over the counter.

It is not surprising that the most common mode of sending or receiving domestic remittances is through mobile phones, either through a mobile money account or a mobile over the counter transaction, she said.

Originally published on DailyNews Tanzania