The Bank of Tanzania aims to bridge a 24 percent financial inclusion gap by leveraging digital financial services and boosting financial literacy. With significant growth in mobile money usage and agent banking, challenges persist in traditional banking usage. Regulatory support and technological integration are vital for achieving the target of 85 percent financial inclusion by 2028, emphasizing tailored financial products for diverse populations.
Digital financial services are transforming Tanzania’s financial landscape, with over 40 million mobile money accounts highlighting their significance. The Bank of Tanzania (BoT) has developed a strategy to resolve the 24 percent financial inclusion gap affecting a large segment of the adult population. During the Tanzania Bankers Association Conference, Mr. Emmanuel Tutuba, the BoT governor, stressed the need for a multifaceted approach that incorporates digital innovation, expands alternative banking channels, enhances financial literacy, improves payment system interoperability, and implements supportive regulations.
The rise of digital financial services, including mobile money, agent banking, and fintech solutions, has significantly increased access to financial services, particularly for underserved populations. Mr. Tutuba remarked on the transformative impact of these innovations, emphasizing that while they ease access, traditional banking services must also be enhanced to provide a wider array of products. The growth of agent banking, with more than 60,000 outlets nationwide, has also effectively bridged geographical gaps, offering rural communities better access.
Despite progress, financial literacy remains a critical challenge in Tanzania. To address this, national campaigns focused on budgeting, savings, and investments have been launched to encourage the use of formal financial services. Mr. Tutuba warned that without sufficient education, many individuals will continue to rely on informal channels for financial products. The integration of products must therefore be accompanied by efforts to improve understanding and trust in formal finance systems.
The introduction of the Tanzania Instant Payments System (TIPS) has facilitated seamless fund transfers across banks, mobile money operators, and other financial entities. This significant advancement in payment system interoperability enhances convenience and encourages the adoption of formal financial channels. Mr. Tutuba stated that such systems play a vital role in simplifying transactions and fostering customer confidence in formal services.
Regulatory support is paramount for fostering innovation within the sector. The BoT aims to cultivate an environment conducive to the adoption of new digital technologies by financial institutions, aligned with the national Digital Economy Strategic Framework. This 10-year plan seeks to integrate digital technologies across various sectors, enhancing connectivity and access to formal financial services. Mr. Tutuba expressed optimism that improved connectivity provides an unparalleled opportunity for banks to broaden their services digitally.
Formal financial services use has risen from 65 percent in 2017 to 76 percent in 2023 due to collaborative efforts between policymakers, financial institutions, and technology providers. However, traditional banking services still have low participation, with only 22.2 percent of adults utilizing them, presenting both challenges and opportunities in reaching a government target of 85 percent financial inclusion by 2028. Mr. Theobald Sabi, chair of the TBA, noted the conference’s focus on ensuring inclusive financial access for citizens is crucial for national development.
Financial experts advocate that combining digital innovation, alternative banking methods, enhanced financial literacy, integrated payment systems, and regulatory support will be critical to achieving the financial inclusion target. Ms. Aisha Mkwawa, a fintech expert, underscored that digital inclusion extends beyond mere access to mobile technology, advocating for tailored financial products that meet the needs of diverse groups such as women, youth, and smallholder farmers.
In summary, the Bank of Tanzania is actively working to enhance financial inclusion through digital innovations, improved infrastructure, and educational initiatives. The emphasis on agent banking, payment interoperability, and regulatory support is pivotal to bridging the financial gap in the country. Attaining the goal of 85 percent financial inclusion by 2028 requires collaboration among various stakeholders and focusing on the unique needs of underserved demographics.
Original Source: www.thecitizen.co.tz
