The growth of mobile money in Tanzania offers huge potential for MFIs

The success of mobile money in Tanzania over the last two years has been a joy to witness. You can read the full report from the Governor of the Bank of Tanzania here, but at the end of 2013, Tanzania could boast over 11m active mobile money subscribers (just under 50% of the adult population), with 74,000 mobile money agents easily dwarfing the 500 bank branches and 1,500 ATMs. This is an impressive outcome for a market that just a couple of years ago was being dismissed in mobile money terms.

Tanzanian Graph

The GSMA ‘State of the Industry 2013’ report shows that mobile money is witnessing similar successes all over the world. There are now over 60m active mobile money users worldwide, compared to 37m in June 2013. Over thirteen countries have more than 1m subscribers. While the majority of subscribers remain concentrated in SSA, we are also seeing expansion across the globe.

These successes have the potential to transform the way microfinance institutions manage their operations. From improving back-office efficiency and reducing costs, to penetrating rural areas and improving the client experience, the advantages of linking mobile money and microfinance are clear.

At Musoni Kenya for example, all repayments and disbursements are carried out over M-PESA. Each day the system automatically processes over 3,000 transactions, allocating the incoming funds to each client’s account based on the phone number. This reduces costs (fewer support and back-office staff), there is less room for fraud, and it is harder to make manual errors. It also has a positive impact on clients, who are able to spend more time at their businesses rather than in banking halls. In December last year we reached a nice milestone – 1m M-PESA transactions processed by the system.

We are now seeing more and more microfinance organisations adopting mobile money. Our system partners in Uganda, Tanzania and Uganda are all starting to accept mobile payments and demand for mobile banking from MFIs increasing. By taking care of the traditional tech challenges faced by microfinance organisations, and ensuring the system is integrated with M-PESA, Airtel and Payway already, our goal is to make it easier than ever for MFIs to take advantage of the success mobile money is witnessing across the globe.

We hope the trend we’re witnessing in Tanzania continues!

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