Tanzania has seen remarkable gains on mobile phone service uses; there had been rapid uptake of various services key among them the mobile phone based solution for money transfer.
Mobile phone banking is mainly used for money transfer and information sharing, this system frees up consumer from traditional banking system, mobile phone money transfer needs customer to register with service provider once, set up user ID/password hence allowing a customer send, receive money, and pay bills while on-the-move and anywhere in Tanzania anytime s/he pleases.
Mobile money banking started with the creation of services by the banks which could enable bank account holder to access certain information through his/her mobile phone. These facilities aimed to enable customers to access information relating to their accounts or transfer money.
According to Financial Sector Deepening Trust for Tanzania (FSDT), the most recent data available indicates that less than 10% of adult Tanzanians reported having access to a formal banking such as having a bank account; this leaves a percentage of more than 90% outside the bracket out of reach for mainstream banking such as conventional tellers or ATM networks of banks.
So to say mobile phone money transfer such as NBC mobile service, Zap for Zain and M-Pesa for Vodacom are essential opportunities for consumers to narrow down the gaps left by traditional banking systems. This service already reaches unbanked persons in rural and urban areas in Tanzania, most agents happen to be air time distributors or retail outlets for handsets that manage cash transactions during money transfer.
Availability of multiple outlets across the country implies more points of contact with customers as opposed to the traditional banking hall set up. Additionally, the flexible operating hours of the mobile phone agents leaves them with greater opportunities to satisfy banking requirements that may arise at any time. On the contrary banks operate for an average of eight hours per day. The supplementary Automated Teller Machines (ATMs) do not have a sufficient outreach since they are only available in major towns.
While the fees charged for transactions are largely below those levied by traditional banks for similar services, low incomes amongst the vast proportions of the population tends to reduce the levels of affordability, I presume that prices are expected to decline over time as competition intensifies.
Observably population categories with lower levels of education happen to be the larger user category. The capacity for unschooled and semi illiterate persons to quickly capture the skills of manipulating the considerably sophisticated mobile phone menu items is still questionable.
Though not seriously impaired, the capacity of a wider population of Tanzania users is fairly curtailed by not being fully conversant with all that they can accomplish through the mobile. Deliberate interventions must be undertaken to successfully ensure that the targeted persons particularly the rural residents and females are empowered not only with technology but with skills and finance as well.
To prevent these communities from lagging behind they must be familiarized with the benefits and opportunities of mobile banking. Calculated strategies to overcome hindrances require exploration so that these groupings can be converted into meaningful participants who will utilize this technology for economic take off. Mobile phone money transfer signifies is the fact that M-banking has created a formidable avenue for income redistribution.
Other challenge is, rural areas are faced with numerous challenges including how to manage the float (Cash) in light of prospected demand. Operators have tended to focus mainly on the densely populated economic zones; more so increase in local and international money transfers services with maximum consumer protection; against risks of fraud, loss of privacy and even loss of service is extremely critical for growth of m-banking.
The fair and transparent treatment of customers is not always ensured and the lack of financial capability is still being exploited negatively. The providers of financial services need to understand that they stand to gain themselves from an informed customer decision.
This sort of service revolution should led to make finance work for Tanzania, we should ask ourselves ‘’did we set the right priorities in financial literacy and consumer protection?’’ “What do we need to do (better) right now to make finance work for Tanzania and Africa as a whole?”, things such as to empower people to be capable of managing their financial assets and liabilities by better understanding their rights and responsibilities.
In order to protect consumers it is inevitably not to do; awareness creation and social marketing to behavioral change, increasing consumers’ financial capability which aims at empowering consumer. The government thorough sectoral regulatory authorities (in this case Bank of Tanzania and Tanzania Communication Regulatory Authority) also have a role to play in protecting consumers by ensuring that financial institutions, business firms, fund raiser through mobile phone and mobile phone service providers; provide regular reliable information and apply recognized standards and suitable codes of conducts.
We need to develop a national strategy on consumer education and financial capability. These strategies aim, among other things, at including financial capability into schools, to educate the public on financial capability and to design training programmes for financial service providers.
We need to prepare a clear money transfer laws to clarify the responsibility of service provider in order to strengthen consumer protection in Tanzania as well as establishing appropriate safety net procedures which immediately provide remedies if consumer involved into controversial deal. Failing to plan today is planning to fail in future, it is now or never.
We are making a special request to strengthen collaboration among relevant organizations through establishment of a liaison committee on a regular and on-going basis consisting of banks, service provider, regulatory authorities, consumer groups, lawyers, Tanzania private Sector Foundation, Tanzania National Business Council, Confederation of Tanzania Industries, Tanzania Chamber of Commerce and others to join us to prepare joint operations for consumer protection.
Only when there is knowledgeable consumer in place and thereby strengthening institutions and building capacity for sound decision making, proper progress can be made in the other areas of democratic governance, including agriculture, economic and social development, welfare, and many others.