Tanzania is making strides towards a cashless economy, with 84% of surveyed SMEs adopting digital payments in recent years. Challenges persist, including a prevalent preference for cash, inadequate infrastructure, and security concerns. The Bank of Tanzania is promoting cashless initiatives, while Visa aims to leverage its expertise to bolster digital payment adoption. Experts agree that addressing these challenges is critical for realizing Tanzania’s digital economy potential.
Tanzania is actively advancing towards a digital economy, with a significant uptick in small and medium enterprises (SMEs) adopting digital payments. A Visa study highlights that 84% of surveyed SMEs began accepting digital payments within the last two years. However, challenges such as a strong preference for cash, limited infrastructure, and security concerns persist, hindering the transition towards a fully cashless society.
Visa’s Vice President for East Africa, Chad Pollock, emphasized the country’s potential, citing progressive actions by the Bank of Tanzania (BoT) to facilitate cashless transactions. Despite this, 76% of consumers report a continued preference for cash during in-store purchases, indicating the need for improved digital payment solutions that rival the convenience and security of cash.
Infrastructure issues hinder the growth of digital payments, with 40% of cash-only SMEs lacking necessary setups for accepting digital transactions. To boost adoption, Pollock stresses the importance of innovative solutions like mobile POS systems and simple onboarding processes.
Security is another major concern, as 93% of businesses worry about risks associated with cash handling, such as robbery and employee theft. These insights reflect a clear demand for more secure digital payment methods in response to prevalent cash-related risks.
Tanzania’s digital economy strategy focuses on financial inclusion and innovation. The BoT has implemented policies promoting mobile money interoperability and reducing transaction costs, fostering a more inclusive financial environment. A government official from the Ministry of Finance supports this initiative, recognizing digital payments as crucial for economic development.
Visa aims to enhance Tanzania’s digital infrastructure by using its global expertise, offering solutions like Tap to Phone and Contactless Payments. Pollock believes that collaborating with Visa will provide Tanzanian businesses access to advanced resources and technologies necessary for embracing digital transactions effectively.
Experts affirm that Visa’s involvement can significantly boost local efforts, highlighting how its investments could facilitate rapid growth in digital payment systems. Financial technology consultant Patrick Mmbaga noted Visa’s presence as a vote of confidence in Tanzania’s digital potential.
Economist Asha Njove reinforced that digital payments minimize transaction costs and enhance business efficiency, promoting greater transparency. The promise of a digital economy in Tanzania hinges on addressing existing barriers such as cash preference, infrastructure, and security concerns that need proactive solutions.
To successfully transition to a cashless economy, Tanzania must address key challenges such as the entrenched preference for cash, lack of adequate infrastructure for digital payments, and pressing security concerns. The proactive strategies of the Bank of Tanzania, combined with Visa’s commitment to enhancing digital payment solutions, offer considerable potential for driving this transition, positioning Tanzania to thrive as a digital economy in Africa.
Original Source: www.thecitizen.co.tz
