Financial Technology in Tanzania: Assessment of Growth Drivers

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Macha, Deogratias Philip
Massawe, Nangi Mosses
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African Economic Research Consortium
This paper provides an in-depth insight of existing fintech environment in Tanzania, focusing on growth-driving and retarding factors and bringing up opportunities for scaling up fintech solutions to a broad range of the population. The analysis is descriptive, based on information gathered from various institutions, open data sources and interviews from key informants in the market. The analysis incorporates both fintech start-ups and incumbent fintech companies, including mobile money. The findings show that most of the fintech innovations in Tanzania are in payments and lending—drivenby mobilemoney providers, ofwhich most have integrated with banks and financial institutions to facilitate delivery of banking services. Gaps have been established in the legal framework governing nano-credit (mostly offered by mobile money operators) and the protection of fintech innovations in nascent stage. A ‘test and learn’ institutional set-up is also missing, making it challenging to nurture and/or support fintech innovations from the initial stages. Although there is improvement in support infrastructure, there is slow adoption and use of smartphones capable of supporting most digital transactions. Also observed from the analysis is absence of a coordination platform for fintech players. To address these challenges, the paper recommends a review of the legal framework to accommodate new fintech innovations and products from the market, including nano-credit; institutionalizing ‘test and learn’ approach to facilitate engagement with fintech innovators; and facilitate establishment of a platform for coordinating fintech ecosystem, including a fintech association for self-regulation and capacity building.