Tanzania’s Cashless Economy Landscape: Past, Present and Future

Meltores Professional
5 min readFeb 18, 2020


Source: Vodacom Advertisement, Digital Payment

By Alan Lwanga

Evolution of science and technology in the last 50 years has brought enormous changes in the way people live, work, interact and conduct their daily activities. New disruptive technologies that are based on digitization and system of interconnected items through cyber-physical systems and the internet of things shaped every sector of human life from medicine, politics, social and much more to the economy.

The innovation of mobile money in Africa has completed changed how transaction happened within the continent. In Tanzania, for instance, since independence the cash economy was a king in every payments aspect of Tanzanian citizens, however, with increase in banking facilities and financial systems, telecommunication facilities and more importantly introduction of mobile money services has lead to generation of a whole new ecosystem of how money moves across different phases and how it influences the country economy in the process.

Introduction of bank cards particularly visa and master cards in the early 2000s enabled people to do online shopping, pay bills by swapping bank cards all without having cash. Although this was the beginning of diversification of banking services in the country it was not significant to the economy and the cash payment still prevailed especially for lower-income individuals who did not own bank accounts. Also, there were security concerns over privacy and cybersecurity which all halt the progress of not using cash as a primary preferable option among elite communities.

However, since the introduction of mobile money services in 2008, there has been a surge in the use of cashless in payments across the country across in all different population subgroups in the country which has transcended social status, education level, regional boundaries and cultural differences of people. Currently, there are 40 million registered mobile money subscribers with, Vodacom M-Pesa services and Tigo with Tigo Pesa services are the leading mobile money telecommunications companies with a market share of 43% and 36% respectively of all mobile money users in the country according to Tanzania investment forum.

It has been estimated that the convenience offered by the mobile money services surpasses that of banking services such that the integration of the two has been necessitated so that people can benefit dual advantages of bank services and mobile services simultaneously with average transaction of 1.6 US billion dollar per month in circulation. Today, it is estimated that more than 20 government services can be paid via mobile money services through Mobile money and government electronic payment gateway mobile application (GePg) with private companies offering the same services for their products and services.

In Tanzania currently, almost all telecommunications companies offer mobile money service including TTCL (T-Pesa), Halotel (Hallo Pesa), Zantel (Z-Pesa) and Airtel (AirtelMoney). It is common practice that people transfer money from bank digitally to their mobile money accounts through their phones and use it to send to friends and relatives, pay utility bills such as water and electricity, entertainment monthly subscriptions. It has been estimated this group constitutes about 43% of Tanzanians mobile money users with 32% using exclusively mobile money as a financial service only according to Tanzania Investment forum. Also, sending and receiving money is the most common service used with cheap tariffs parallel to the amount being sent or withdrawn from has attracted large numbers of users in the country.

This has led to the evolution of a cashless economy where the small percentage of transactions are by using cash in day to day transactions with the cash in digital format becoming more ingrained and part of daily lives. Furthermore, the ability to send and receive money from any mobile money operator exacerbates the mobile money services uses among citizens making Tanzania the first country in the world to do so according to the Bank of Tanzania report in 2016. This has improved mobile money services uptake and enhances the ease of sending and receiving money without changing one’s telecommunication subscriber.

One of the benefits from non-cash in the daily transaction is the data collection and documentation which can be beneficial in making data-driven decisions and understanding the spending behaviours of people and provide service which truly enhances their purchasing experience and the way they receive their products.

The introduction of mobile money in Tanzania has inspired services like food chains retailers, fashions industry, home delivery services and e-commerce services to heavily relies on digital platforms such as Instagram and Whatsapp. And the payment is usually by mobile money through one phone number from his/her subscriber network example easy buy Africa where people can purchase items from e-commerce giants in the world such as Amazon, eBay and Walmart using Vodacom which means they don’t have to own a bank account doing so.

In capitalizing on mobile money services, the telecommunication companies have invented other services where the mobile money accounts can be used as proxy bank card such as Vodacom and Airtel Mastercard where one can pay for online purchases with money from his/her mobile money account. Also, services like Vodacom kiosk and pay using the QR code enhance customer experiences with mobile money and expected to attract even more people through its conveniences and accessibility; making the use of cash in payment phasing out.

In Tanzania, according to PEW global research, it is estimated that about 75% of the population own mobile phones with 13% of those owning smartphones which are known to enhance fully the benefits of the internet in day to day activities in their lives. With the demand for these services becoming more evident the demand for mobile money services will keep on soaring and this potential for conveniences will have a profound impact on people’s lives especially in rural areas where penetration is still at 25% compared to urban at 65% where there is still lack of financial sectors such as banks and the only alternative people have is mobile money accounts using mobile phones.

Despite its benefits, issue of security, privacy and miss-use of information pose a major challenge for the financial sector and cashless economy at large. Mobile money theft is increasing at an alarming rate in Tanzania. Mobile Money thieves coming with new technique every day this makes not only digital illiterate and elderly at high risk but every mobile money user at risk.

To track and manage this is still a tough call for the government as it requires extensive manpower skills and facilities and honest people to work on, something which authorities are still working on. Furthermore, for telecommunication companies, although digital receipts are provided, there is a need for the accounting companies to account for the cashless spending as the printed receipts are becoming obsolete.

Furthermore, innovation is still lagging with issues like tariffs where is becoming common among low and middle-income individuals using the e-services required sending with a withdrawal fee.

Cashless economy is the future of the financial sector and centre to having a circular economy as it reduces people’s carbon footprint in daily activities and lead to no or little waste generation in the country’s economic system which contributes to sustainability living which is crucial in recent times due to threats of climate change at global scale.

Alan Lwanga is Data Analyst & Researcher at Meltores Professional. Meltores Professional| We’re a group of professionals dedicated to transforming what we know into impact. Based on evidence and research, we help leaders from all spheres to have a deep understanding of people they serve, identify opportunities, build service that matter, manage relationships, and demonstrate their results.



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