Innovation and Compliance

Mobile money operators have emerged as major financial services providers in the sub-Saharan African nations. As the impact of the pandemic eased, mobile money services grew faster than during pre-COVID times. Eastern Africa has exhibited the highest concentration of active mobile money users compared to other African regions. Tanzania has witnessed a remarkable surge in mobile money usage.

According to data from the Tanzania Communications Regulatory Authority (TCRA) for the quarter ending March 2024, mobile money service subscriptions in the country have reached 53 million, marking a twofold increase from 25 million subscriptions recorded in 2019. The market is largely dominated by three major players: M-Pesa, Tigo Pesa, and Airtel Money, collectively commanding 89% of the market share. M-PESA leads with the highest market share, capturing 38% of the market.

Mobile money penetration

Mobile money penetration Tanzania’s financial services registry highlights the significant penetration of mobile money compared to other forms of financial services. With 8,011 agents, mobile money boasts the highest penetration,  surpassing the 6,581 bank agents. Other financial services provider statistics from the registry include 2,093 bank merchants (POS), 1,183 ATMs, and 554 mobile money merchants, all of whom contribute to the industry’s inclusion initiatives. The primary distinction between merchants and agents is that merchants are typically businesses or entities that accept card/mobile money payments from customers for goods or services they provide, whereas agents act as intermediaries for financial institutions to provide financial services to customers.

Innovation in the mobile money ecosystem

Mobile money operators have been instrumental in extending financial services to unbanked and underbanked populations in Africa. Through innovative mobile platforms, these operators facilitate seamless and convenient access to financial services, including payments, transfers, savings, and microloans. Such innovations exemplified below, have played a pivotal role in bridging the gap between traditional banking services and the unbanked population:
 

– Savings: Mobile money has become a key savings tool, particularly in Sub-Saharan Africa. For example, Airtel and Letshego Bank Tanzania partnered with financial technology company Jumo in 2018 to introduce the first fee-free, interest-bearing mobile money savings account called Timiza Akiba. Later in 2021, Tigo Pesa in partnership with the Bank of Africa, launched Tigo Pesa’s Kibubu savings account in Tanzania, which saw rapid uptake by hundreds of thousands of users within a year of launch.

– Digital payments: Mobile money has fostered digital payments for goods and services. For example, in 2018 Mastercard partnered with Vodacom and Banc ABC to introduce the first online card in Tanzania, the M-Pesa virtual card, enabling millions of M-PESA users to make digital payments globally. Afterwards in 2019, Airtel Tanzania in partnership with Mastercard also launched a virtual card that enables customers to pay for services, goods, and digital content through any online merchants globally that accept payments from Mastercard. Later in 2023 Tigo Tanzania, Selcom and Mastercard Inc. also launched the Tigo Mastercard virtual service via the Selcom’s card-as-a-service (CaaS) platform, enabling convenient online payments globally. Innovation and Compliance: Navigating Balance for Mobile Money Operators


– Microloans: Mobile money platforms also offer innovative lending schemes for subscribers. Recently, Tigo Tanzania announced partnership with CRDB Bank Plc to expand access to funds for customers through the revamped loan marketplace service “NivushePlus”. Under this partnership, eligible customers can access loans up to TZS 2,000,000, tailored to their requirements and eligibility. Airtel Money and I&M Bank Tanzania launched a digital lending service – Kamilisha, an overdraft mobile money service that enables customers to complete their transactions seamlessly without sufficient funds in their Airtel Money wallets. Vodacom as well in partnership with FINCA Microfinance Bank launched songesha, a unique service which is designed to help customers complete M-Pesa transactions even with insufficient balance.

Continuous innovation is essential for mobile money operators to stay competitive in a rapidly evolving market. By staying at the forefront of technological advancements, mobile money operators can attract new customers, retain existing ones, and expand their market reach.

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