Taking Mobile Financial Services to the Next Level in Africa: Tanzanian Experience

transcript

Taking MFS to the Next Level in Africa:

Tanzanian Experience

Prof. Benno Ndulu,Governor, Bank of Tanzania

2nd Leaders’ Roundtable of the African Mobile Phone Financial Services Policy Initiative (AMPI)

NAIVASHA, KENYA, 4 - 6 FEBRUARY 2014

MFS Experiences in Tanzania

• Tanzanian MFS Landscape: Current Status• Maximizing Opportunities in Tanzania• Mitigating Challenges and Risks in MFS in

Tanzania• Pushing MFS to the next level in Tanzania• Lesson for Africa: Key Take Homes

Outline

MFS Landscape in Tanzania:Current Status

MFS Access Trends

Source: Bank of Tanzania

94% of adult Tanzanians have access to MFS as of December 2013That is: 31.8 Millionregistered accounts

Usage Trends

49% of adult Tanzanians use MFS as of December 2013That is: 11.01 Millionactive users

Comparison of Access & Usage Trends

99.9 MillionTransactions valued at

TZS 3.1 Trillion (December, 2013)

Tanzania MFS Transaction trends 2012-2013: Comparison of Half Year Periods (July-December)

Daily Average transactions:3.17 MillionTransactions valued at

TZS 97.5 Billion(December, 2013)

A Competitive Market of 4 Telco’s pushing the MFS to the next level in Tanzania No large dominant player

No exclusivity of agents

Picture source: GSMA website

Maximizing Opportunities in Tanzania

• Bank branches/agencies 500• Serving 22 Million Adults• Access to banks 17% of Adults • 50 banking institutions

Access Dimension-Banking Sector

• ATMs 1,452 concentrated in urban areas • POS 2,544 in urban and touristic areas • Internet banking: 6% internet penetration• Agent banking: 4 banks • Mobile banking

17% Access formal financial institutions (WB, 2012)22% including SACCOS (NFIF, Dec 2013)27.3% Informal financial institutions (2009, Finscope)

• Cash transactions complemented with electronic transaction via mobile banking

• Access to banked customers

Opportunities: 46% of Adults Population excluded from formal financial Services

Source: FSDT, 2012 GIS Census of Cash outlets

• Mobile Money agents (74,000 as Nov 13) out number financial institution’s access points and branches ( serve 40% of the population and occupying 19% of the landmass)

• Compared to bank presence including ATMs and MFI serve only 12% of population (FSDT, 2012 GIS Census of Cash outlets)

Access Dimension-Mobile Financial Service: Non-bank led

• Mobile Money Subscribers 30.3 Million (Accounts) or 90% of Adults (September 2013)

• Active Users of Mobile Money 9.9 Million or 44% of Adults (September 2013)

• Increased Access of financial services to unbanked• Increased formal institutions to leverage on the

technology• Improved welfare: livelihood and productivity

AGENTS

Impact

Opportunities: 90% of adult population subscribe to MFS: An impetus for Financial Inclusion

Source: FSDT, 2012 GIS Census of Cash outlets

Mitigating Challenges and Risks in MFS in Tanzania

MFS Experiences in Tanzania Risk Mitigation Framework

Reliability

Regulators

Mitigation Measures

E-money

Security

liquidity

Allow banks and no-banksto operate

Regulatory arbitrage

Service Provider’s capacityBusiness continuity

Cooperation with TelcomRegulator

Registration of SIM, proportionate KYC, trnxlimits

Monitoring and oversight

Agent float management

Effective operational/ICT security controls

Insolvency Consumer funds/trust A/c

Risk Mitigation Measures

Pushing MFS to the next level in Tanzania

• Interoperability Private sector initiative: Considering value propositions Currently the interoperability project is in good progress: BOT approved,

facilitated by neutral party IFC/BMGF involve MNOs and key banks• Partnerships and cooperation

Extension of services beyond P2P to micro insurance, NGOs links (forloans management)

• Government Uptake of Usage of MFS Revenue payments (Licenses and small taxes)

• Enabling legal and regulatory environment Bank’s supports market development and encourage innovation Proportionate regulation

• Adoption of MFS in National Financial Inclusion Framework MFS nationally adopted as one of the key-enablers to increase financial

Inclusion

Next level MFS in Tanzania

Lesson for Africa: Key Take Homes

• Create an enabling legal and regulatory environment Supports market development and encourage innovation Proportionate regulation

• Partnerships and cooperation Partner with Telco Regulator Encourage market cooperation (non-banks and banks)

• Government Uptake of Usage of MFS Revenue payments (Licenses and small taxes)

• Adoption of MFS in National Financial Inclusion Strategies Public and private sector adoption for national financial inclusion goals

• Interoperability Consider private sector initiatives enhancing or developing

interoperability

Key Lessons for Africa

Thank You

Taking Mobile Financial Services to the Next Level in Africa: Tanzanian Experience

Economy & Finance