Mobile transaction boost 1.5trn/- into formal economy

Mr Mafuru
Mobile banking has succeeded in bringing about 1.5trn/- into the formal economy, indicating the potential of mobile phone-based financial transactions to bridge the gap left by the mainstream banking system.

Tanzania has about 2.3trn/- in circulation at any given time, the formal banking and financial system holds about 13trn/-, but experts say most of the liquidity is in the informal circulation.

“For every 100/- out there, only about 25/- is in the formal economy, the rest is buried somewhere in the informal economy,” Lawrence Mafuru, the chairman of the Tanzania Bankers Association told reporters on Wednesday.

He added: “At any given moment of the day about 1.5trn/- is transacted in the mobile banking systems, and more could come in as the services reach more people.”

There are about three million subscribers using mobile banking system out of 20 million subscriptions, according to latest data compiled last December. This shows that mobile banking as a bigger potential in the country.
M-Pesa, Tigo Pesa, Airtel Money and Ezy Pesa are the most prominent mobile banking providers with M-Pesa having about 2.7 million subscribers, according to a financial statement from released recently by the Vodacom Group.

The report says M-Pesa Tanzania recorded about $400 million (640bn/-) transactions in December.
“M-Pesa now accounts for 8.5 per cent of Vodacom Tanzania’s service revenue, compared to 3.1 per cent a year ago,” the report said.Mr Mafuru said the increase of activity of mobile money transactions is not a threat to the traditional banking system.

“Mobile banking cannot exist without mainstream banking. Banks add value to mobile transactions, that is why mobile phone firms have to have trust accounts in banks to be able to discharge their services,” Mr Mafuru said.

He noted that too much liquidity in the informal sector has made BoT’s monetary action to control inflation difficult.
Source: The Citizen,

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