The Bank of Tanzania is addressing a 24 percent financial inclusion gap affecting many adults by leveraging digital services, enhancing financial literacy, and supporting regulatory frameworks. Key initiatives include promoting mobile money, agent banking, and implementing the Tanzania Instant Payments System (TIPS) to enhance access. The goal is to achieve 85 percent formal financial inclusion by 2028, with a focus on tailored financial solutions for different demographics.
The Bank of Tanzania (BoT) aims to close the 24 percent financial inclusion gap affecting a considerable portion of the adult population. This initiative was discussed at the third Tanzania Bankers Association Conference on Financial Inclusion by BoT Governor Mr. Emmanuel Tutuba, who underscored the need for diverse strategies that integrate digital innovation, alternative banking methods, financial literacy improvements, and regulatory enhancements.
Over 40 million registered mobile money accounts in Tanzania signify the impact of digital financial services in broadening access. Governor Tutuba highlighted that mobile money, agent banking, and fintech solutions greatly enhance accessibility, enabling underserved populations to engage with financial services. However, there remains a need to ensure these digital tools complement traditional banking services that provide a more comprehensive array of products.
Agent banking has emerged as a vital solution, establishing over 60,000 locations nationwide and reducing geographical barriers for rural communities. Mr. Tutuba stated, “Agent banking brings services closer to people, particularly in remote areas where traditional banks may be few and far between.” This approach has notably increased access to financial services among those in underserved areas.
Despite advancements, financial literacy poses a significant challenge in achieving comprehensive inclusion. Mr. Tutuba warned against the reliance on informal services, stating, “Without educating people, they will keep resorting to unofficial channels for loans and other financial services.” National campaigns are being launched to raise awareness about budgeting, savings, and formal financial service benefits.
The introduction of the Tanzania Instant Payments System (TIPS) marks a substantial step toward payment system interoperability, allowing seamless transactions between banks and mobile money operators. Mr. Tutuba asserted that “this system enhances convenience and broadens the adoption of formal financial channels,” which is crucial for instilling trust in official financial services.
Governor Tutuba emphasized the necessity of regulatory support for fin-tech innovations, aligning with the national Digital Economy Strategic Framework aimed at integrating digital solutions across sectors. This 10-year initiative intends to ensure reliable electricity and internet access in rural areas, significantly impacting the expansion of banking services.
Reflecting on the progress made from 65 percent financial service usage in 2017 to 76 percent in 2023, Mr. Tutuba noted that only 22.2 percent of Tanzanians utilize traditional banking services. The government’s ambitious target of 85 percent formal inclusion by 2028 remains a key driver for these initiatives.
Tanzania Bankers Association chair Mr. Theobald Sabi emphasized the importance of ensuring citizens participate in the financial sector to foster sustainable development. He remarked that this meeting focused on enhancing inclusivity to safeguard citizens against the perils of informal financial services.
Financial experts concur that digital innovation, enhanced financial literacy, and supportive frameworks will be pivotal in achieving the government’s inclusion goals. Fintech expert Aisha Mkwawa of Dar es Salaam noted that true digital inclusion involves tailored financial products that cater to various demographics, emphasizing the necessity for further investment in technology to promote access among traditionally underserved groups.
The Bank of Tanzania is actively pursuing solutions to diminish the 24 percent financial inclusion gap by leveraging digital technologies and enhancing the financial literacy of its citizens. The integration of agent banking, interoperability in payment systems, and regulatory support are vital components of this strategy. While progress has been notable, more efforts are needed to ensure comprehensive access to financial services, particularly through traditional banking channels. The collaboration among financial institutions, government, and technology providers is essential to achieving the ambitious goal of 85 percent formal financial inclusion by 2028, ultimately fostering sustainable economic development across Tanzania.
Original Source: www.thecitizen.co.tz
