The Bank of Tanzania (BoT) is addressing a 24 percent financial inclusion gap through digital innovation, agent banking, and financial literacy initiatives. Governor Mr. Emmanuel Tutuba emphasized a multifaceted approach that includes enhancing regulatory support, integrating payment systems, and expanding access to diverse banking services. Despite progress, there is a need for increased traditional banking adoption among the population to reach the 85 percent inclusion target by 2028.
Digital financial services are transforming Tanzania’s financial landscape, with over 40 million registered mobile money accounts. The Bank of Tanzania (BoT) has launched a strategy to close the 24 percent financial inclusion gap, which excludes many adults from the formal financial system. At the Tanzania Bankers Association Conference on Financial Inclusion, BoT Governor Mr. Emmanuel Tutuba emphasized the importance of a multifaceted approach, utilizing digital innovation and various banking channels to achieve this goal.
Digital innovations, such as mobile money and agent banking, have revolutionized access to financial services. Mr. Tutuba highlighted the impact of these services in enabling underserved populations to engage with the financial system. However, the challenge lies in integrating these digital solutions with traditional banking services that offer diverse financial products.
Agent banking continues to play a vital role in overcoming geographical barriers to financial access. With over 60,000 agent outlets nationwide, rural communities can more easily access banking services. Mr. Tutuba noted, “Agent banking brings services closer to people, particularly in remote areas where traditional banks may be few and far between.”
Financial literacy poses another major challenge as many Tanzanians remain unaware of the benefits of formal financial services. The BoT has initiated nationwide campaigns focusing on budgeting and investment education. Mr. Tutuba cautioned, “Without educating people, they will keep resorting to unofficial channels for loans and other financial services.”
Interoperability in payment systems is fundamental for enhancing financial inclusion. The newly implemented Tanzania Instant Payments System (TIPS) allows for seamless transfers between banks and mobile money operators, fostering greater adoption of formal financial channels. Mr. Tutuba stated, “This system enhances convenience and broadens the adoption of formal financial channels.”
Supporting regulatory measures is crucial for fostering an environment conducive to digital innovation. The BoT aims to enable financial institutions to incorporate new technologies effectively. This goal aligns with the launch of the Digital Economy Strategic Framework, a 10-year initiative focusing on integrating digital solutions across sectors for economic growth.
The adoption rate of formal financial services has significantly increased from 65 percent in 2017 to 76 percent in 2023, a result of collaborative efforts among various stakeholders. Despite this progress, only 22.2 percent of Tanzanian adults utilize traditional banking services. The government aims for an 85 percent financial inclusion rate by 2028.
At the conference, TBA Chair Mr. Theobald Sabi stressed the importance of financial inclusion for national development, ensuring that citizens benefit from access to formal financial services. He remarked, “This is the third meeting with the primary objective of citizen inclusion in the formal financial sector.”
Experts agree that integrating digital technology, enhancing financial literacy, and providing regulatory support is essential for achieving the government’s financial inclusion targets. Financial technology expert Aisha Mkwawa emphasized the need for tailored financial products aligned with the diverse needs of different populations, such as women and smallholder farmers. She highlighted, “It’s about creating tailored financial products that meet the unique needs of different groups, including women, youth, and smallholder farmers.”
In summary, the Bank of Tanzania is making considerable efforts to enhance financial inclusion through digital services, agent banking, and financial literacy initiatives. The integration of these strategies, along with regulatory support, is essential for achieving a significant reduction in the financial inclusion gap. Continued investment in fintech innovation will further expand access to formal financial services, particularly for underserved demographics like women and youth. The goal remains to achieve 85 percent financial inclusion by 2028, ensuring sustainable development for all Tanzanians.
Original Source: www.thecitizen.co.tz
