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| Prof Ndulu |
The
Bank of Tanzania has said the mobile phone money transfers do not fuel
inflation, instead increases transaction efficiency that translates to economic
growth.
The
central bank has ruled out the mobile money-inflation link despite increased
volume of money sent and received recently because the transactions do not
increase money in the system.
The
BoT Governor Prof Benno Ndulu said the monthly service of sending and receiving
money has reached 861.8bn/-as at end of last December, which has helped to
speed up money transfer services to enable citizens to engage on other
development activities.
“How
M-Pesa (mobile money transfer) is linked to inflation,” the Governor wondered,
adding, “This is pure innovation which has simplified the way bills are paid
and money transferred…but not fuelling inflation. It cannot in whatever way.”
The
trustee account for such services deposited by agents at various banks has
reached 97bn/- while transaction has hit 760,000 per day at the end of last
December, Prof Ndulu said.
However
a study carried by African Development Bank (AfDB) in Kenya claims that the
M-Pesa fuelled inflation as the service grew large enough to influence
implementation of monetary policy.
AfDB
holds that financial innovations such as M-Pesa have increased the pace of
monetary transactions while increasing cash in circulation, looping more people
into the financial sector and leading to demand for goods and services
outstripping supply.
A
University of Dar es Salaam economist, Dr Haji Semboja, said quality of life
and earnings of people have increased, pushing up the demand for money as it’s
easier to send money upcountry than before.
“Because one can now send and another receive
money at the same time, people are easily borrowing their tomorrow’s
consumption and therefore spending more,” Dr Semboja told the Business Standard
recently.
According
to Tanzania Communications regulatory Authority (TCRA) first quarter data (July
-September 2011), average spending per user on text messages per month clocked
38.85bn/- from 23,979,870 subscribers countrywide.
Inflation
was on an upward trend last year, peaking at 19.8 per cent in last December
before slightly cooling off in January to 19.7 per cent thanks to monetary
tightening by the BoT.
The
AfDB report also says that M-Pesa could affect monetary policy, but BoT ruled
that out because money on circulation are based on the senders’ income and does
not add to money supply.
Source:
Business Standard, www.dailynews.co.tz, reported by Abduel Elinaza
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