For the government, boosting the proportion of the population with access to financial services is a strategic priority. According to a 2016 IMF report, financial inclusion rose by 42 percentage points to 58% of the population between 2009 and 2013 – a surge which the IMF attributes almost entirely to new distribution channels, such as mobile money.

However, the government has been keen to push this further, and in 2013 it launched the National Financial Inclusion Framework, which set a number of targets, including the principal ambition of having 80% of the adult population using and 70% living less than five km away from a financial access point.

In formulating this strategy, the authorities identified a number of key barriers to financial inclusion in the country. On the supply side, factors include high commercial interest rates (at nearly 16% in 2016, according to the latest World Bank data), services that do not meet customer needs and high overhead costs. On the demand side, barriers such as irregular income, poor financial literacy, misconceptions about financial services and inaccessibility were clear impediments. “One of the challenges in the financial sector relates to awareness and overall financial literacy,” Abdi Mohamed, managing director at Barclays in Tanzania, told OBG.

The authorities have established a number of key priorities centred on the idea of creating robust infrastructure capable of delivering financial services to a broad swathe of the population. The approach is a multi-channel one, built on the development of mobile technology and agent banking, as well as increased use of ancillary technologies such as standalone ATMs and point-of-sale infrastructure.

Mobile Expansion

From the perspective of Tanzania’s banks, the government’s willingness to promote the use of mobile technology is supporting efforts to broaden their client base. Two factors in particular have driven growth in this area first, the Bank of Tanzania’s (BoT) efforts to provide a suitable legislative framework for mobile banking, which includes the National Payment Systems Act, the Licensing and Approval Regulations and the Electronic Money Issuance Regulations, all from 2015. Second, the effect of these regulatory advances is multiplied by the rapid uptake of mobile phones in Tanzania. According to the Tanzania Communications Regulatory Authority, Tanzania’s mobile operators had around 40m subscribers by March 2017, resulting in a penetration rate of around 80%. Mobile handsets are playing an increasingly prominent role in the financial activity, a trend that stems from the arrival of several mobile money operators, such as Airtel Money, Tigo Pesa, M-Pesa and Ezy Pesa.

At the same time, the number of Tanzanians with mobile money accounts rose to 19.2m – more than 35% of the population – up from 18.1m at the start of the 2017. “The challenge facing us now is how to upgrade normal transactional business by introducing a range of products within the transactional space, including mobile account opening, and savings and credit services. The latter only account for around 17% of mobile business. As mobile banking convenience continues to evolve, financial literacy is expected to gain momentum,” Zainul Chandoo, head of Treasury at Stanbic Bank Tanzania, told OBG.

Agency Growth

Despite the mobile revolution, physical infrastructure remains an important part of banks’ expansion strategies. Financial inclusion when factoring usage of mobile money is considerably high; however, the rate of adults with bank accounts is still very low. Much like other markets, modern branches are becoming smaller and increasingly automated, but in Tanzania’s rural areas, an even more slimmed-down infrastructure model is being adopted. Agency banking was introduced to Tanzania with the publication of the Guidelines on Agent Banking for Banking Institutions by the BoT in 2013. The regulations allow the BoT to issue approval for banks to conduct agency banking using a set of predetermined criteria. According to the BoT, by the start of 2016 a total of 13 Tanzanian banks had 3299 agents working across the country. CRDB Bank had the largest number of agents, at 1719, followed by Equity Bank Tanzania (333), Tanzania Postal Bank (301) and DCB Commercial Bank (138).

The growth of this new channel has been rapid. In 2015 all but a handful of Tanzania’s 31 regions saw a double- or triple-digit percentage increase in the number of agents, with the Manyara region posting 4500% growth over the course of the year. Even in Dar es Salaam and Arusha, where financial infrastructure is more dense, growth rates reached as high as 67% and 58%, respectively.

For many lenders, the mobile approach, combined with growing agent networks, strikes a good balance between digitally powered cost efficiencies and the need to maintain direct contact with customers.


The BoT has also begun focusing on the question of mortgage provision, amending the Mortgage Regulations in 2015, creating a mortgage literacy programme and working with the World Bank on the Housing Finance Project, which aims to develop the mortgage finance market through the provision of medium- and long-term liquidity to mortgage lenders. This project includes the Ministry of Finance and Planning, and the Ministry of Lands, Housing and Human Settlements Development, and has resulted in the establishment of the Tanzania Mortgage Refinance Company (TMRC), a private financial institution charged with supporting banks’ mortgage lending by refinancing their portfolios.

Additionally, the cost of mortgages has been reduced, thanks in large part to the 5% discount from the World Bank funds enjoyed by the TMRC. In August 2017 the BoT licensed First Housing Finance Tanzania, a greenfield mortgage finance bank. Established in partnership with local Bank M Tanzania, the Housing Development Finance Corporation India and other local investors, the bank commenced operations in October that same year.


To offer smaller loans, savings and insurance services, with an emphasis on social development to those who do not have access to traditional banking, a further five deposit-taking microfinance banks were licensed by the BoT – including Yetu Microfinance Bank, EFC Tanzania Microfinance Bank, FINCA Microfinance Bank, Hakika Microfinance Bank and VisionFund Tanzania Microfinance Bank. The concept of microfinance was introduced in Tanzania in the 1990s. Later, in order to regulate, supervise and develop a sustainable industry, the National Microfinance Policy was outlined in May 2000 and implemented in 2001. More recently, conventional lenders such as CRDB Bank have begun to move into the microfinance space, competing directly with the segment’s specialised players.


Three financial leasing companies – Alios Finance Tanzania, Equity for Tanzania and Salute Finance – represent a new strata of financial services. While Salute Finance is restricted to the leasing of new Toyota vehicles, the other two have teamed up with a broader array of suppliers to provide equipment loans to small and medium-sized enterprises and individuals. Their funding costs are higher than commercial banks, and therefore they compete in areas such as turnaround time and, in some cases, less stringent demands regarding collateral.