Tanzania: Strengthening of Electronic Contracts Laws Vital to Protect Customers' Rights

Recently, the Minister for Higher Education, Science and Technology, Prof Makame Mbarawa, gave a shocking revelation regarding what is described as mobile banking transactions involving M-Pesa, Tigo Pesa and Airtel Money.

He said that in every month, members of the public are transacting about 4.4 trillion/- through the said three mobile banking. Meaning that each year, the money transaction picks at 50 trillion/-.

This is a big amount of money involved in the transactions through the three mobile service provider companies. However, sad enough, there is no mechanism that protects customers involved in the matter.

There is no security in terms of laws which protect the customers in case one of the three mobile service provider companies shuts its services and disappear with deposits of money for its clients.

There are always messages that are given to ensure customers about the safety of their deposits in either M-Pesa, Tigo Pesa or Airtel Money where there is a problem of networking.

This kind of assurance is not recognized under the Law of Contract of Tanzania and cannot act as a safe shield for the clients to come forward any day to demand back their deposits, anywhere if one of these companies packs its business and disappears or in case of any financial crisis.

Unlike what could be taken by the Bank of Tanzania (BoT) in case where a banking institution goes bankrupt or faces operational challenges as happened with Greenland Bank and more recently the FBME Bank Limited, in order to protect customers and clients.

There are no such mechanisms for mobile banking M-Pesa, Tigo Pesa and Airtel Money that could be taken by BoT. The FBME Bank Limited has been placed under Management of the Central Bank after it was linked with money laundering and sponsoring terrorism.

In mid-July last year, the Central Bank of Cyprus (CBC), took control of FBME's operations in Cyprus, following a report from the US Treasury describing the bank as a "primary money laundering concern." Irate customers of the Cyprus branch of FBME were quoted as saying that they were being held hostage.

The CBC took further steps of selling the bank, a move that prompted shareholders of the lender in Cyprus turning to international arbitration aimed to halt the action.

All these moves taken have only one primary purpose, which is to protect customers. In Tanzania, when one joins one of the mobile companies and make any kinds of transactions, enters what is called electronic contract.

Electronic contract is a contract which is concluded by using electronic devices or means where the parties to that contract settle the terms of that contract by being assisted by a third party, who is International Service Provider (ISP).

SOURCE:TANZANIA DAILY NEWS