How mobile money transfer simplifies

THE use of Information and Communication Technology (ICT) solutions, e-services, to reach various groups of society, including the poor in remote areas and other disadvantaged, is transforming the development landscape.

For a modern society, living without interaction with ICT solutions--internet, mobile phones and computers--is unconceivable. Mobile telecom networks have emerged as the major providers of financial services, bypassing the sparse retail networks of traditional banks.

The use of mobile phones for instance has brought about rapid transformation of urban and rural societies, putting Tanzania at the top in the region’s provision of mobile financial services. Mobile banking achievements in Tanzania are vivid in delivery of mobile saving, loan and interest bearing products through mobile money accounts.

In the developed world, according to KPMG, the rapid increase of smartphones and recently tablets has fueled the mobile banking fire, with the 2014 Juniper Research putting the total global mobile banking users at 0.8 billion.

The findings show that the impressive level of adoption is set to continually grow rapidly over the coming years, with Juniper predicting a global mobile banking user base of some 1.8 billion people by 2019.

The use of underlying mobile technologies like smartphones that support the internet have changed the course of people’s life, supporting economic growth and human development. The registered users of mobile banking services in Tanzania currently accounts for about five per cent of the global total of 800 million as of 2014.

The mobile money technology is becoming the powerful weapon that supports efforts to lift the masses, particularly the financially underserved, from abject poverty. The mobile money development is the first of its kind in Africa and demonstrates how the system is becoming the essential means of offering financial services, especially to those who do not have access to the traditional banking system.

Regarding poverty reduction, mobile phone technology plays a critical role in enhancing the activities of the poor and increasing their productivity through increased access to market information or lowering the transaction costs of poor farmers and traders.

It provides governments, businesses and citizens with access to better information for more informed decisions. It enables more efficient processes. And it gives a voice to traditionally unheard peoples.

Mobile phone technologies are used to increase efficiency, competitiveness and market access for firms in developing countries. The mobile financial services include depositing, withdrawing, sending, saving and transferring money as well as making payments.

The available figures show that 4.5trn/- is transacted in Tanzania through mobile phones, monthly. At the three-days fourth Annual Mobile360 Africa conference in Dar es Salaam recently, Tanzania emerged among few countries in the continent with exemplary mobile financial services.

The mobile money services that all telecommunication companies provide in the country are instrumental in bringing financial services closer to the public, especially the rural dwellers who lack the traditional banking services.

The use of mobile money services reduces theft, saves time of physical visits to banks as well as the risk of carrying a lot of paper money. The significant percentage of transactions on the network do not involve transfers, but are deposits and withdrawals by the same users, despite high cashout fees.

The network is also used for storage, despite a zero interest rate. Surprisingly, the network is used extensively for very short term to even less than two hours short-distance transportation of cash due to extremely high crime.

Mobile money provides consumers with access to relatively inexpensive and reliable way of performing financial transactions. Mobile banking has significant adoption, that is, almost 35 percent of households have at least one mobile money account.

Some 32 percent of the population use exclusively mobile money as a provider of financial services and only two per cent have an active traditional bank account.

Tanzania has the second largest telecom market in East Africa, behind Kenya and currently has a mobile penetration level of 67 per cent which slightly below the Sub Saharan region’s average of 71.1 per cent, according to the World Bank.

Mobile banking is at the heart of economic changes and plays an important role, notably by contributing to rapid technological progress and growth of productivity.

It’s therefore not surprising that most common mode of sending or receiving domestic remittances is through mobile phones, either through a mobile money account or a mobile over the counter transaction.