The Bank of Tanzania aims to bridge a 24 percent financial inclusion gap through a multifaceted strategy involving digital innovation, agent banking, financial literacy initiatives, and supportive regulations. With significant growth in mobile money usage and a focus on interoperability in payment systems, inclusivity efforts are showing promise. The goal is to achieve an 85 percent inclusion rate by 2028, with emphasis on tailored financial products for underserved populations.
The Bank of Tanzania (BoT) has delineated an effective strategy to bridge the 24 percent gap in financial inclusion, as highlighted during the recent Tanzania Bankers Association Conference on Financial Inclusion in Dar es Salaam. BoT Governor Mr. Emmanuel Tutuba commended the advancements made, noting that achieving financial inclusion necessitates a multifaceted approach that incorporates digital innovation, alternative banking channels, financial literacy, enhanced interoperability of payment systems, and supportive regulatory frameworks.
Digital financial services have revolutionized Tanzania’s financial landscape, with over 40 million registered mobile money accounts reflecting significant growth. Mr. Tutuba remarked on the positive transformations brought about by mobile money, agent banking, and fintech solutions, which have notably improved accessibility to formal financial services, particularly for marginalized groups. However, the challenge lies in ensuring these digital solutions complement traditional banking services that offer a diverse range of financial products.
The expansion of agent banking has substantially mitigated geographical barriers, facilitating easier access for rural communities to financial services. The establishment of over 60,000 agent banking outlets nationwide has been pivotal in enhancing service availability. Mr. Tutuba noted, “Agent banking brings services closer to people, particularly in remote areas where traditional banks may be few and far between.”
Despite the advancements in digital services, financial literacy remains a critical hurdle to broader inclusion. National campaigns promoting budgeting, saving, and investment aim to educate the populace about formal financial services advantages. Citing the necessity of financial education, Mr. Tutuba stated, “Without educating people, they will keep resorting to unofficial channels for loans and other financial services.”
An important element of the financial inclusion strategy is the interoperability of payment systems, exemplified by the recently launched Tanzania Instant Payments System (TIPS). This system facilitates seamless transactions across various financial platforms, thus encouraging the adoption of formal financial services. Mr. Tutuba affirmed, “This system enhances convenience and broadens the adoption of formal financial channels.”
To foster innovation, regulatory support is indispensable. The BoT aims to create an environment where financial institutions can embrace technological advancements to reach more customers. This vision aligns with Tanzania’s Digital Economy Strategic Framework of 2024, a ten-year plan aimed at integrating digital technology across all economic sectors, ensuring broader connectivity by December.
The adoption of formal financial services in Tanzania has risen significantly, from 65 percent in 2017 to 76 percent in 2023. Notably, however, only 22.2 percent of Tanzanian adults utilize traditional banking services, with mobile money commanding nearly 54 percent of the financial services market. The government is striving to achieve 85 percent formal financial inclusion by the year 2028.
The chairperson of the Tanzania Bankers Association, Mr. Theobald Sabi, emphasized the importance of financial inclusion for national development. He affirmed that the third conference aims to ensure that all citizens benefit from being incorporated into the formal financial sector, addressing the challenges of accessing informal financial services. Together, financial experts agree that a combination of digital innovations, alternative banking channels, improved literacy programs, efficient payment systems, and robust regulatory frameworks will be instrumental in achieving this goal.
Financial technology expert Aisha Mkwawa emphasized that digital inclusion transcends mere access to technology. She asserts it is crucial to develop tailored financial products addressing the needs of diverse demographics, such as women, youth, and smallholder farmers, underscoring the necessity for continued investment in fintech innovation.
The Bank of Tanzania’s concerted efforts to enhance financial inclusion aim to bridge the significant 24 percent gap among the adult population. By leveraging digital technology, expanding agent banking, improving financial literacy, and promoting regulatory support, the country aspires to achieve 85 percent formal financial inclusion by 2028. The collaborative initiatives between various stakeholders signify a strong commitment to transforming Tanzania’s financial landscape, ensuring that all citizens can access essential financial services.
Original Source: www.thecitizen.co.tz
