Tanzania: Mobile Money Services Register Boom

MAY 12,2014.

TANZANIA DAILY NEWS.

It is estimated that 2.5 billion people around the world are unbanked. They lack financial services needed to invest in their livelihoods, protect their assets, and avoid falling deeper into poverty.

Traditional bricks-and mortar banking infrastructure is too expensive to serve the poor, particularly in rural areas. However, over 1 billion underserved people in these markets can access mobile phones, which offer financial services sustainably, such as payments, transfers, insurance, savings, and credit.

GSMA Director General and member of the Board, Ms Anne Bouverot said in the 'State of the Industry 2013 Mobile Financial Services for the Unbanked' report that mobile money represents a tremendous opportunity for social impact through enabling customers to access services which help them manage their daily lives and improve their livelihoods.

"Since GSMA began collecting and analysing mobile money data back in 2010, our insights from the annual 'State of the Industry' report have helped to create a better understanding of the reach and the operational performance of mobile money services around the world," she was quoted in the report.

The report highlighted that with 219 services in 84 countries at the end of 2013, mobile money services are now available in most developing and emerging markets. While the majority of services remain in Sub-Saharan Africa, mobile money has significantly expanded outside of the region in 2013.

The question is no longer whether mobile money services are available, but how to ensure that the industry continues to grow sustainably.

The number of active mobile money accounts is growing fast, and in June 2013, there were over 60 million active mobile money accounts globally. An increasing number of services are reaching scale and 13 have over 1 million active users.

Globally, only 29.9 per cent of registered mobile money accounts were active in June 2013. Similarly, ensuring adequate agent activity should be a priority in a number of markets. "With an increasing number of services, mobile money services continue to be a driver of financial inclusion.

Mobile money services extend access to payments and financial services beyond the reach of traditional financial institutions in many developing countries. "By the end of 2013, nine markets already had more mobile money accounts than bank accounts, compared to just four last year.

In these markets, the mobile money industry has made financial services accessible to more people than the traditional banking industry ever has," the report read in part. Recent evidence from another report suggests that mobile money agents in Tanzania are overwhelmingly making a profit, with 49 per cent earning of at least 100 US Dollars per month in profits, compared to only 40 per cent in Uganda.

The report entitled 'Agent Network Survey: Tanzania Country Report 2013' that surveyed over 2000 agents paints a picture of a dynamic and competitive mobile money market in Tanzania with agents focusing on the country's operational factors of success and persistent challenges.

"Over 70 per cent of agencies are 'new' (having been in operation for a year or less) are demonstrating aggressive growth in the market; however the small percentage of 'old' agencies suggests they have a short life-cycle," the report read in part.

The report showed that there is rapid growth and the non-exclusivity of agents is putting pressure on agents' liquidity, with five transactions a day being denied due to lack of float.

It also suggested that competition is resulting in better support, with 79 per cent of agents receiving training where 61 per cent is from a provider, 41 per cent from master agent and 7 per cent from an employer, but improvement are still needed in targeted areas.

"It is intriguing that outside the capital, urban and rural areas are reporting similar transaction volumes, whereas one would expect the lower population density in rural areas would result in lower volumes," the report read in part. The report also found that only about a third of agents are contributing to client growth and that this indicates a high level of agent-assisted Over the Counter Transactions.

It cited that sophisticated financial services have yet to be offered in Tanzania on any meaningful scale from the agents or through handsets. MASEMBE TAMBWE It is estimated that 2.5 billion people around the world are unbanked.

They lack financial services needed to invest in their livelihoods, protect their assets, and avoid falling deeper into poverty. Traditional bricks-andmortar banking infrastructure is too expensive to serve the poor, particularly in rural areas.

However, over 1 billion underserved people in these markets can access mobile phones, which offer financial services sustainably, such as payments, transfers, insurance, savings, and credit.

GSMA Director General and member of the Board, Ms Anne Bouverot said in the 'State of the Industry 2013 Mobile Financial Services for the Unbanked' report that mobile money represents a tremendous opportunity for social impact through enabling customers to access services which help them manage their daily lives and improve their livelihoods.

"Since GSMA began collecting and analysing mobile money data back in 2010, our insights from the annual 'State of the Industry' report have helped to create a better understanding of the reach and the operational performance of mobile money services around the world," she was quoted in the report.

The report highlighted that with 219 services in 84 countries at the end of 2013, mobile money services are now available in most developing and emerging markets. While the majority of services remain in Sub-Saharan Africa, mobile money has significantly expanded outside of the region in 2013.

The question is no longer whether mobile money services are available, but how to ensure that the industry continues to grow sustainably. The number of active mobile money accounts is growing fast, and in June 2013, there were over 60 million active mobile money accounts globally.

An increasing number of services are reaching scale and 13 have over 1 million active users. Globally, only 29.9 per cent of registered mobile money accounts were active in June 2013. Similarly, ensuring adequate agent activity should be a priority in a number of markets.

"With an increasing number of services, mobile money services continue to be a driver of financial inclusion. Mobile money services extend access to payments and financial services beyond the reach of traditional financial institutions in many developing countries.

"By the end of 2013, nine markets already had more mobile money accounts than bank accounts, compared to just four last year. In these markets, the mobile money industry has made financial services accessible to more people than the traditional banking industry ever has," the report read in part.

Recent evidence from another report suggests that mobile money agents in Tanzania are overwhelmingly making a profit, with 49 per cent earning of at least 100 US Dollars per month in profits, compared to only 40 per cent in Uganda.

The report entitled 'Agent Network Survey: Tanzania Country Report 2013' that surveyed over 2000 agents paints a picture of a dynamic and competitive mobile money market in Tanzania with agents focusing on the country's operational factors of success and persistent challenges.

"Over 70 per cent of agencies are 'new' (having been in operation for a year or less) are demonstrating aggressive growth in the market; however the small percentage of 'old' agencies suggests they have a short life-cycle," the report read in part. The report showed that there is rapid growth and the non-exclusivity of agents is putting pressure on agents' liquidity, with five transactions a day being denied due to lack of float.

It also suggested that competition is resulting in better support, with 79 per cent of agents receiving training where 61 per cent is from a provider, 41 per cent from master agent and 7 per cent from an employer, but improvement are still needed in targeted areas.

"It is intriguing that outside the capital, urban and rural areas are reporting similar transaction volumes, whereas one would expect the lower population density in rural areas would result in lower volumes," the report read in part. The report also found that only about a third of agents are contributing to client growth and that this indicates a high level of agent-assisted Over the Counter Transactions.

It cited that sophisticated financial services have yet to be offered in Tanzania on any meaningful scale from the agents or through handsets.

It found that only 4 per cent agents making losses as compared to 11 per cent in Uganda, that 49 per cent of agents are earning at least 100 USD per month in profits, compared to only 40 per cent in Uganda and Tanzania actually has a lower median revenue than Uganda, but higher overall profitability due to low operational expenses.

Risk of fraud was identified as the most burdensome to agents' business and Tanzanians were found to have a high amount of awareness about digital finance, but need more support to understand it. Tanzania has certainly crafted a unique and impressively successful ecosystem for mobile money services.

It is much more developed than Uganda in terms of the quality of agent support, and the profitability of agents. It is even leading Kenya by pioneering the non-exclusive agent network model. "Tanzania is full of potential, yet really still in its infancy with product development.

While agents in Tanzania mainly only provide cash in/out services for people's mobile wallets, there is a lot of talk about deeper integration with banks to offer services like savings and loans, and there is already the beginnings of a merchant network being built where people can use mobile money to pay at retail outlets," the report read.

It cited that however, that these frontier innovations will continually be stifled by some fundamental operational issues in the agent network that need to be addressed in order to support these and other more sophisticated services to be offered across the country.