The value of transactions in the national digital payment system at the end of 2016 soared to almost 119trn/-, which was about three times more the electronic payments made in 2012. During the four year period, the value of the digital money services increased tremendously by nearly 78trn/-.
New data from the Directorate of Banking Supervision (DBS) at the central bank show that the transactions increased by about 189 per cent from 40.95trn/- in 2012 to 118.61trn/- last year. In 2015, the value of electronic payments made in the country amounted to about 88.88trn/-.
By early this year, there were seven modes of electronic payment services in use in the country namely mobile payment services, automatic teller machines (ATMs), mobile banking services, point of sale (POS) devices, electronic cards, internet banking and money transfer services.
DBS says in a new report that the digital payment services have greatly contributed towards improving accessibility to financial services.
“Usage of electronic payment services, particularly mobile payment services, has recorded significant growth and contributed towards improving financial inclusion in Tanzania,” the department notes in the latest annual report that reviews the money sector in 2016.
According to it, the banking sector was resilient to internal and external shocks during the year whole of 2016 with adequate capital buffers above minimum regulatory requirements which, among other things, cushioned the industry against rising bad loans and liquidity squeeze that was experienced by the sector during the second half of the year.
BoT attributes resilience of the sector against those shocks and challenges to continued favourable and strong macro-economic performance that was well supported by sound monetary policies combined with risk focused supervision and risk management practices of banks and other financial institutions.
Outgoing BoT Governor Benno Ndulu notes in the DBS report that during the year the central bank continued to lead various projects and initiatives in collaboration with other stakeholders to increase access to financial services by the majority adult population in line with the National Financial Inclusion Framework (NFIF).
Launched in 2013, the NFIF had an ambitious goal of expanding access to more than half the country’s population by 2016. As of 2012, 17 per cent of Tanzanians had access to formal financial services accounts, compared to an average of 24 per cent for all of Sub-Saharan Africa.
BoT set a new financial inclusion target of 80 per cent by the end of this year after the country exceeded the target of 50 per cent by 2016 under NFIF 2014/2017 largely due to mobile money technology.
“During the period (2016), the Bank of Tanzania continued to implement the regulatory framework for payment systems and related payment system instruments, and electronic money products of licensed banks, financial institutions and non-bank financial institutions including subsidiary companies of mobile telecommunication companies issuing electronic money which were earlier regulated by
Tanzania Communication Regulatory Authority (TCRA),” Prof Ndulu says.
“This is to ensure promotion of financial inclusion, facilitating safe and sound retail payment services, financial innovations and ensuring protection of consumers. During the year ended 2016, notable and impressive achievement continued to be recorded in utilization and provision of financial services through mobile money, agency banking and other electronic outlets including, ATMs and POS,” he adds.
Currently there are five providers of mobile payment services, namely Vodacom M-Pesa, Airtel Money, Tigo Pesa, Ezy Pesa and Halopesa. The number of registered users of mobile payment services increased by 44.34 per cent from 49,356,465 recorded in 2015 to 71,245,336 in December 2016.
However, most of the mobile payment services users were registered in more than one mobile payment provider. During the period under review, the total value of mobile payment transactions reached nearly 60trn/- compared to about 42.9trn/- recorded in 2015, being an increase of 38.51 per cent.
The number of registered agents supporting money transfer through the mobile money platform increased five times between 2012 and 2016 from 97,613 to 495,586. During the period, trust account balances went up from 141bn/- to 665bn/-.
In the March 2017 Financial Stability Report, BoT notes that the increase in money transfer through the mobile platform both domestically and across East Africa region calls for close monitoring to enhance its performance in its operational capacity as well as control of liquidity risks.
The DBS report also show that as at December 31, 2016, the total number of ATMs reached 1,964 compared to 1,771 recorded at the end of 2015. According to it, only three banks had over 100 ATMs, namely NMB Plc (670), CRDB Bank Plc (491) and NBC (274).
The report also shows that the number of ATMs was largely concentrated in three regions with Dar es Salaam (787) leading the pack followed by Arusha (142) and then Mwanza (124). The number of POS devices increased to 8,299 from 2,713 reported in the previous year.
“The value of ATM transactions increased by 2.15 per cent from 9,230bn/- recorded in 2015 to 9,428bn/-in 2016 while POS transactions value increased to 2,119bn/- compared to 1,289bn/- in the previous year indicating an increase of 64.39 per cent,” reads the 20th edition of the DBS Annual Report 2016.
BoT attributes the increased use of ATM and points of sale to agent banking.
“Delivery of financial services through agent banking continued to increase. During the period under review, the number of registered bank agents increased to 5,676 agents from 3,298 agents reported in December 2015,” it notes in the report.
“The value of deposits through agents increased by 115.42 per cent to 1,883.29bn/- for the year ended December 2016 compared to 874.25bn/- reported during the year ended December 2015. The volume of withdrawals increased by 130.59 per cent to 427.13bn/- in December 2016 from 185.23bn/- reported at the end of December 2015,” it adds.
The report also says that the value of mobile (SMS) banking transactions increased to 2,177bn/- compared to 1,800.32bn/- recorded in the previous year being an increase of 20.94 per cent.
The value of internet banking transactions also increased to 45,468.99bn/- from 33,665.73bn/- reported in 2015, recording an annual growth rate of 35.06 per cent. The increase was attributed to increase in number of banking institutions offering mobile (SMS) and internet banking to 33 and 21 from 30 and 23 recorded in the previous year, respectively.
In 2016, the banking sector was composed of the Bank of Tanzania as a regulatory authority and 59 banking institutions consisting of 38 fully-fledged commercial banks, 12 community banks, three financial institutions, two development finance institutions and four deposit taking microfinance banks.
The ownership structure of the banking institutions at the end of 2016 comprised of seven state-owned and 52 privately owned banking institutions. In terms of local and foreign ownership, 29 banking institutions were majority-locally owned while 30 were majority-foreign owned.
The number of banking institutions’ branches increased to 810 from 728 reported in the previous year which was an increase of 82 branches or 11.26 per cent. Most of the branches were located in major cities of Dar es Salaam (273), Mwanza (58), Arusha (57), Mbeya (39) and Moshi (37).