Another factor for GDP increase is the contribution by a strong local market whereby there is exchange of goods and services.
Statistics by the National Bureau of Statistics indicate that Tanzania’s GDP keeps on increasing at an annual rate of between six and seven per cent.
This moderate rate is an indication that the country needs to put more effort in developing its own resources and achieve more in order to cater for the need of local demand.
In addition to that, the country needs to strengthen its economic status and solidify major financial bases in order to reduce the gap that still exists between the poor and the rich.
It is from this point of view that, mobile phone communication companies established “Money Transfer Technology (MTT)” systems with a major focus on boosting the national economy, among other reasons.
With the introduction of MTT in Tanzania, commercial banks which form a bulk of country’s economy have been flourishing as customers make regular transactions to cater for their daily business needs.
The technology, which is widely used, is currently being dominated by four mobile phone companies operating in the country with the help of their potential customers who use their mobile phone handsets for easy facilitation.
The companies are MIC Tanzania Ltd via Tigo Pesa, Vodacom Tanzania via M-Pesa, Bhati Ltd via Airtel Money and Zantel via Ezy-Pesa respectively.
Among these companies, Tigo has become the only operator in Tanzania to offer interoperability with the rest of other operating companies with being the latest entrant into the Tigo interoperability juggernaut that creates the largest mobile financial ecosystem in Tanzania.
The interoperable network already set up by Tigo Tanzania aims at contributing to the country’s economic growth by unifying financial systems, which eases banking activities for the promotion of national economic development activities.
According to Tigo Tanzania Head of Mobile Financial Services, Ruan Swanepoel, customers of Tigo Pesa mobile money service will now be able to move funds between any of the country’s mobile money operators, making Tigo Pesa the largest mobile financial service ecosystem in Tanzania.
He says that “Tigo believes interoperability is crucial to the success of mobile money and the wider goal of increasing financial inclusion.
It is also a fundamental building block towards constructing a digital economy, enabling merchants and other start-ups to participate in the financial services ecosystem”.
Tigo, Airtel and Zantel announced the pioneering interoperability agreement in June 2014. Since then, their customers have enjoyed interoperability between their mobile money accounts which has accounted for an increase of 3.5 times the value of total offline transactions.
“Thanks to this growing network, Tanzania is now the leading place for mobile money in East Africa, overtaking Kenya”, remarked one financial expert who preferred anonymity recently.
This model, which has the approval of Tanzania’s central bank, the Bank of Tanzania (BoT), allows Tigo and other Tanzanian mobile money operators to create powerful new loyalty incentives for customers.
BoT says that with the on-going technology, the total balance of trust accounts held in commercial banks in the country which banks through mobile payment services has amounted to 448.3bn/- as at the end of January 2015.
BoT’s Director of National Payment Systems, Bernard Dadi, says that the number of registered active mobile payment services users for mobile phone companies who facilitated such financial transaction reached 14.2 million out of 38.8 million registered accounts.
According to him, “such meteoric rise has caused a tremendous development impact on the conventional banking services by enhancing their operations which in turn is a boost to the national economy”.
This is contrary to the beliefs of many business stakeholders in the country who think that the mobile money transfer technology would kill banking services as most customers divert their transactions and prefer the use of mobile money transfer services.
However, BoT says that such services in the country have also improved liquidity in the banking system as the money which is circulating electronically is backed by funds deposited in trust accounts held by commercial banks.
According to Dadi, the system platform has enabled some banks to partner with the mobile payment service providers where the banks act as agents for providing cash out services.