Page 12 - Tanzania-Enabling-Mobile-Money-Policies
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enaBLinG moBiLe moneY PoLiCieS in tanZania
2
‘test and learn’:
Developing regulations
that meet market and
customer needs
i n tanzania, the regulator made a progressive decision: to let regulation follow innovation and support financial inclusion while
managing risks. this approach has enabled the country’s mobile money market to flourish. By engaging closely with mnos (and their
respective partner banks), the Bot has been able to offer the private sector a degree of freedom in rolling out new products, respond-
ing with sufficient safeguards where necessary. the Bot has applied the lessons from the oversight of service providers to develop more
comprehensive regulations.
When vodacom and Zantel approached the nPSd at the Bot in 2008, the regulators had to determine how to regulate these newly
proposed payments services.
a 2003 amendment to the Bank of tanzania act (Section 6) granted the Bot the power to regulate, monitor, and supervise the national
15
16
Payments System, including payments products and clearing and settlement systems products. however, the existing regulations
provided limited guidance for the private sector. tanzania lacked broader legislation for payment systems, and the electronic Payment
Scheme Guidelines of 2007 only covered risk management for banks and other financial institutions.
even in the absence of regulation, the Bot was inclined to progress. according to the Bot, “the mobile money deployments offered great
opportunity to leverage on enhancing financial inclusion given the high mobile penetration rates compared to bank penetration, it was
17
thus seen imperative within the Bot’s objective of financial inclusion that it be allowed and monitored effectively.” the Bot was familiar
with the regulatory approach taken by the Central Bank of Kenya, and intended to take a similar path: allowing mobile money services
18
to launch while applying sufficient safeguards and carefully monitoring developments. meanwhile, the Bot became acquainted with the
market to determine the appropriate regulatory framework for mobile money.
in this context, the Bot advised mnos to partner with one commercial bank to offer mobile money services. having a commercial bank
partner allowed the Bot to issue ‘letters of no objection’ to the partner bank (already under the purview of the Bot) that granted the
mnos the legitimacy to implement mobile money services. the no objection letters specified that mobile money deployments were
19
subject to Bot oversight and the (prudential and non-prudential) regulatory requirements for the provision of the services, including:
• Presentation to the Bot before approval
• obtaining a tanzanian Communication regulatory authority (tCra) licence for the provision of value added services
• Providing a risk management plan to the Bot
• establishing safeguards for customer funds
15. See Section 6 of the Bank of tanzania act, 2006, available at: http://www.bot-tz.org/aboutBot/Botact2006.pdf
16. Bank of tanzania (2003), “Payment Systems in the Southern african development Community - tanzania Chapter”. available at: http://www.bot-tz.org/paymentsystem/Green%20book%20draft%2003dec-final.pdf
17. interview with the national Payments System directorate, Bank of tanzania, January 2013.
18. alliance for Financial inclusion (2010), enabling mobile money transfer: the Central Bank of Kenya’s treatment of m-Pesa”, Case study. available at http://www.afi-global.org
19. note that in Kenya the central bank had issued the ‘letter of no objection’ to the mno. See alliance for Financial inclusion (2010), cit.
6
2
‘test and learn’:
Developing regulations
that meet market and
customer needs
i n tanzania, the regulator made a progressive decision: to let regulation follow innovation and support financial inclusion while
managing risks. this approach has enabled the country’s mobile money market to flourish. By engaging closely with mnos (and their
respective partner banks), the Bot has been able to offer the private sector a degree of freedom in rolling out new products, respond-
ing with sufficient safeguards where necessary. the Bot has applied the lessons from the oversight of service providers to develop more
comprehensive regulations.
When vodacom and Zantel approached the nPSd at the Bot in 2008, the regulators had to determine how to regulate these newly
proposed payments services.
a 2003 amendment to the Bank of tanzania act (Section 6) granted the Bot the power to regulate, monitor, and supervise the national
15
16
Payments System, including payments products and clearing and settlement systems products. however, the existing regulations
provided limited guidance for the private sector. tanzania lacked broader legislation for payment systems, and the electronic Payment
Scheme Guidelines of 2007 only covered risk management for banks and other financial institutions.
even in the absence of regulation, the Bot was inclined to progress. according to the Bot, “the mobile money deployments offered great
opportunity to leverage on enhancing financial inclusion given the high mobile penetration rates compared to bank penetration, it was
17
thus seen imperative within the Bot’s objective of financial inclusion that it be allowed and monitored effectively.” the Bot was familiar
with the regulatory approach taken by the Central Bank of Kenya, and intended to take a similar path: allowing mobile money services
18
to launch while applying sufficient safeguards and carefully monitoring developments. meanwhile, the Bot became acquainted with the
market to determine the appropriate regulatory framework for mobile money.
in this context, the Bot advised mnos to partner with one commercial bank to offer mobile money services. having a commercial bank
partner allowed the Bot to issue ‘letters of no objection’ to the partner bank (already under the purview of the Bot) that granted the
mnos the legitimacy to implement mobile money services. the no objection letters specified that mobile money deployments were
19
subject to Bot oversight and the (prudential and non-prudential) regulatory requirements for the provision of the services, including:
• Presentation to the Bot before approval
• obtaining a tanzanian Communication regulatory authority (tCra) licence for the provision of value added services
• Providing a risk management plan to the Bot
• establishing safeguards for customer funds
15. See Section 6 of the Bank of tanzania act, 2006, available at: http://www.bot-tz.org/aboutBot/Botact2006.pdf
16. Bank of tanzania (2003), “Payment Systems in the Southern african development Community - tanzania Chapter”. available at: http://www.bot-tz.org/paymentsystem/Green%20book%20draft%2003dec-final.pdf
17. interview with the national Payments System directorate, Bank of tanzania, January 2013.
18. alliance for Financial inclusion (2010), enabling mobile money transfer: the Central Bank of Kenya’s treatment of m-Pesa”, Case study. available at http://www.afi-global.org
19. note that in Kenya the central bank had issued the ‘letter of no objection’ to the mno. See alliance for Financial inclusion (2010), cit.
6
