Why financial inclusion in Tanzania has soared in five years

Dar es Salaam. Seventy-six percent of adults in Tanzania now have access to formal financial services, up from 65 per cent five years ago, according to a new report.

The FinScope Tanzania 2023 Survey attributes the rise to the widespread adoption of mobile money services and increased access to formal banking.

FinScope is a national representative demand-side survey of adults (people aged 16 years or older) living in Tanzania.

The size of the adult population in Tanzania is currently estimated at 34.1 million, equivalent to 55 percent of the country’s total population of 61.7 million, according to the 2022 National Population and Housing Census.

According to the report, the adoption of mobile money to access financial services showed the highest growth from 2017 to 2023 compared to other formal financial services.

The use of mobile money services by Tanzanian adults reached 72 percent in 2023, marking a significant increase of 12 percentage points from the 2017 figure of 60 percent.

The number of adults utilising traditional banking services stands at 22 percent, being an increase of five percentage points from 17 percent in 2017. This growth is attributed mainly to the availability of banking services through mobile phones.

Speaking during the report’s launch in Dar es Salaam yesterday, Finance permanent secretary Natu Mwamba said mobile money operators have played a key role in developing innovations that support and drive financial inclusion.

“I would also like to commend financial institutions for providing financial education and literacy, innovative technology and solutions that address the need of customers.

“The report has shown the need for concerted efforts among policymakers, regulators as well as financial service providers and innovators to address challenges within the sector. It underscores the need for innovative solutions and risk mitigation strategies that can effectively meet the needs of users,” she said.

Bank of Tanzania governor Emmanuel Tutuba said the current number of 76 percent of adults in Tanzania with access to financial inclusion exceeds the government’s target of 75 percent as cited in the National Financial Inclusion Framework II (NFIF II 2018-2022).

Mr Tutuba added that the data also shows good prospects for the Financial Sector Development Master Plan 2020/21-2029/30.

“It also points to more opportunities in increasing investment and expanding businesses here in Tanzania,” he said.

According to the FinScope report, the number of people excluded from the formal financial sector system has also decreased from 28 percent to 18.7 percent in five years.

“Since 2017, the number of adults excluded financially has fallen to 6.4 million in 2023 from 7.8 million,” the report says in part.

Key reasons for a section of the population being excluded from the formal financial system include proximity to access points, lack of national identification numbers and low mobile phone ownership.

Currently, 89 percent of the population lives within five kilometres of formal financial inclusion access points.

“The national identification number (NIN) roll-out shows a significant increase, although many younger Tanzanians are still to receive NINs. There is also an increase in mobile phone ownership, but younger Tanzanians and women lag when it comes to mobile phone ownership,” the report says.

BoT director of financial deepening and inclusion Kennedy Komba said the Finscope report provides an understanding of the financial services uptake landscape across the country, as well as an assessment of the policies that were put in place.