Cooperative Regulatory Framework key to Mobile Money Success in Tanzania –Central Bank Governor

MARCH 27,2014.


Prof. Benno Ndulu, Governor, Bank of Tanzania (BoT) has identified the  positive relationship between  the Tanzania Communications Regulatory Authority (TCRA) and BoT  as the major factor that  has enabled Mobile Financial Service (MFS) to thrive in the country. He disclosed that the central bank and the TCRA cooperate on the oversight of the MFS regulatory.

The central bank governor noted this in the forward he wrote for a paper published by GSM Association (GSMA) titled “Enabling mobile money policies in Tanzania, A “test and learn” approach to enabling market-led digital financial services.

According to Prof. Ndulu, Tanzania has witnessed unprecedented uptake of mobile financial services (MFS) in the span of five years. After a humble beginning, when less than 1% of the adult population had access to mobile financial services in 2008, 90% had access by September 2013 – an exponential increase. Likewise, active usage has shown similar improvement, with 43% of the adult population actively using this service in September 2013.

He noted that these encouraging results have emerged from a conducive regulatory environment, which we envisioned in the early days of mobile money services. “Our approach was to test the deployment of the service and monitor its developments, known as the “test and learn” approach. To facilitate this, we amended the Bank of Tanzania Act in 2006 to give the Central Bank powers to oversee and regulate non-bank entities in offering payment services.

“In 2007 we operationalized this by issuing Guidelines for Electronic Payment Schemes, which we used to allow Mobile Network Operators (MNOs) to offer payment services. MFS in Tanzania has subsequently become a household name and supported the Bank of Tanzania’s objective of financial inclusion.  The service has enabled the unbanked population to have convenient access to payment services. In this regard, the recently launched National Financial Inclusion Framework (NFIF) recognises MFS as one of the key technologies for facilitating financial inclusion.

“The Bank’s regulatory journey has not been a solo trip; we received a great deal of cooperation from the Tanzania Communications Regulatory Authority (TCRA ) as the regulatory counterpart Of the MNOs that are providing MFS. The positive relationship with the TCRA has enabled MFS to thrive in the country. The Central Bank and the TCRA cooperate on the oversight of the MFS regulatory framework.

“It is also worth noting that the private sector has had a significant role in facilitating the growth of MFS. From the beginning, MNOs were required to partner with banks to receive a “letter of no objection”, which enabled the Central Bank to ensure that consumer funds are protected in the banking system backed with a 100% liquidity requirement. Commercial banks have since enhanced their partnerships with the MNOs and we are seeing inroads being made with second generation MFS in Tanzania.

“We have learned that new technologies that augur well with the Central Bank’s objective need to be nurtured and monitored closely to ensure they do not cause any financial instability or reputational risk that may affect the country’s payment systems. This approach has made MFS in Tanzania a success story. With the increased uptake of the services and based on the dynamics that we see in the market, we are currently shifting the regulatory approach to a “mandate and monitor” approach, whereby mobile payments regulations will be issued to guide the market without stifling innovation or disrupting the success we have witnessed.


“Rather, the regulations will ensure that we balance financial stability and financial inclusion objectives. In doing so, we will also continue to ensure that proportionate regulation is applied to the services deployed in the market. I thank GSMA for compiling this study, which offers us the opportunity to share our experiences with MFS with the rest of the globe.”

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