Digital banking vital in scaling up financial inclusion

07May 2019
The Guardian Reporter
The Guardian
Digital banking vital in scaling up financial inclusion

TANZANIA’S vast geographical boundaries and mobile phone penetration among its demographics have attributed to a shift of many Tanzanians from traditional cash transactions to emerging mobile payment solutions,-

whether it is to send money home, facilitate informal business transactions, pay bills, or buy pre-paid electricity.

Notably, low-income people, especially in the rural areas, find value in remote digital payment solutions.

According to the second National Financial Inclusion Framework 2018-2022 (NFIF2), mobile payment solutions have contributed to an increasing number of adults in the formal financial systems, from 58percent - 2013 to 65percent - 2017.

The framework further asserts that the combined efforts between the government and the private sector are a main factor for the upsurge in financial inclusion.

The World Bank also maintains that the inclusion of people in the formal financial system will enable communities, especially businessmen to access financial services at ease, at an affordable cost and according to their needs to achieve their goals.

The first phase of the National Financial Inclusion Framework (NFIF1)plan focused on improving accessibility of financial products and services that meet the needs of individuals. Whereas the current framework focuses on achieving the financial inclusion vision through the usage of financial products and services that address different business and individual needs.

One of the key drivers of usage is relevance of financial products and services that are being offered to the customers. Digital financial services providers like Vodacom Tanzania are driving unprecedented changes in the country’s fiscal system; by creating point solutions to very specific problems in the community that enable people to manage their money tensions. New digital financial products are being rolled out to provide customers with new methods of using the existing services in the formal financial system.

Recently, Vodacom Tanzania in partnership with TPB bank launched a new and unique service called M-Koba, an innovative solution tailor made to offer a sustainable digitized platform for the estimated 16% of the Tanzania adult population (over 4.4 million people), majority of them women, that are registered in over 50,000 village savings and loans groups (VICOBAs) and other informal groups estimated to be over 50,000 that are involved in peer group savings and lending ecosystems.

According to M-Commerce Director Epimack Mbeteni, this service is a new way of saving that will enable these groups to not only keep records but also increase ease of transactions by shifting savings from cash to digital making use of the security and transparency offered by M-Pesa.

“The Group wallet will also allow women, especially those in rural areas - who are the main members of the local saving groups, to benefit from M-Koba and in turn, springboard their family's income,” he said while adding that most of the groups lacked transparency, which can no longer be a problem when using M-Koba.

While speaking at the M-Koba launch event, Mama Mariam, a chairperson of one of the VICOBA groups said; “We are so happy M-Koba is here, now we are assured of the safety and security of our savings unlike in the past where we sometimes had to hide our money under our mattresses or a banana tree.”

TPB Bank Director of Marketing and Business Development Deo Kwiyukwa revealed that through such collaboration with mobile service providers like Vodacom,the government is able to ensure that an increasing number of its citizens have access to financial services. Mobile service providers continue to serve groups in remote parts of Tanzania through innovative financialsolutions that are sustainable, easily adaptable and scalable.