Page 3 - Tanzania-Enabling-Mobile-Money-Policies
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Acknowledgements
the authors would like to express their gratitude to the Bank of t anzania for their invaluable contribu-
tion to this case study. our analysis benefited enormously from the data they shared and the inputs
provided on early drafts.
We are particularly grateful to the following reviewers: Lucy Kinunda, Kennedy Komba, and George
Sije of the national Payment System directorate at the Bank of tanzania, argwings Koyoson and
elinami mangesho of airtel, Jacques voogt of vodacom, and duncan arthur of millicom/tigo.
Authors’ note
on 26 February 2014, after this case study was finalised, the Governor of Bank of tanzania (Bot)
released Circular n. nPF/mFS/01/2014 “on utilisation of interest from the trust accounts”. the
Circular points out that interest accrued on the trust accounts should directly benefit mobile money
customers. to date, customers have not received any of the interest accrued, which so far has ac-
cumulated in the trust accounts. according to the Circular, all mobile money providers shall “submit
i
to the Bot an application for utilization of the funds held in the trust accounts representing interest
accrued, detailing the manner in which the funds shall directly benefit the mobile money cus-
tomer.” the interest could be used, for example, in the form of customer education campaigns, for
customer care, or be paid out to customers. the payment of the interest to mobile money custom-
ii
ers has been advocated by several stakeholders in the past years. this practice would not change
the nature of the trust accounts or the role of the non-bank providers (which are not permitted to
intermediate the funds) and therefore the risk associated with the business. receiving interest on
the value stored would be an incentive for mobile money customers to keep the value stored in
the system (within the existing maximum balance limits) instead of cashing out, which would have
several benefits, including: i) Unbanked people would have an incentive to join the formal financial
system via mobile money platforms; ii) Savings behaviors of tanzanians who have a mobile money
account but are still out of the reach of the banking system would be rewarded; iii) Unbanked
mobile money customers could become acquainted with the practice of storing value with a formal
financial services provider, making them more willing and prepared to open a bank accounts if the
opportunity to open a bank account is offered to them; iv) lowering the number and value of cash-
outs could ease some pressure on the liquidity management for the providers.
i. the current cumulative balance in the mobile money trust accounts hold by tanzanian commercial banks in the name of mobile money agents and customers is tZS 254.6 billion (US$ 156 million)
ii. See tilman ehrbeck and michael tarazi (2011), “Putting the Banking in Branchless Banking: regulation and the Case for interest-Bearing and insured e-money Savings accounts”, in World economic Forum’s mobile Financial
Services development report. this position was endorsed by the GSma, see Simone di Castri (2013), “mobile money: enabling regulatory Solutions”, GSma paper.
the authors would like to express their gratitude to the Bank of t anzania for their invaluable contribu-
tion to this case study. our analysis benefited enormously from the data they shared and the inputs
provided on early drafts.
We are particularly grateful to the following reviewers: Lucy Kinunda, Kennedy Komba, and George
Sije of the national Payment System directorate at the Bank of tanzania, argwings Koyoson and
elinami mangesho of airtel, Jacques voogt of vodacom, and duncan arthur of millicom/tigo.
Authors’ note
on 26 February 2014, after this case study was finalised, the Governor of Bank of tanzania (Bot)
released Circular n. nPF/mFS/01/2014 “on utilisation of interest from the trust accounts”. the
Circular points out that interest accrued on the trust accounts should directly benefit mobile money
customers. to date, customers have not received any of the interest accrued, which so far has ac-
cumulated in the trust accounts. according to the Circular, all mobile money providers shall “submit
i
to the Bot an application for utilization of the funds held in the trust accounts representing interest
accrued, detailing the manner in which the funds shall directly benefit the mobile money cus-
tomer.” the interest could be used, for example, in the form of customer education campaigns, for
customer care, or be paid out to customers. the payment of the interest to mobile money custom-
ii
ers has been advocated by several stakeholders in the past years. this practice would not change
the nature of the trust accounts or the role of the non-bank providers (which are not permitted to
intermediate the funds) and therefore the risk associated with the business. receiving interest on
the value stored would be an incentive for mobile money customers to keep the value stored in
the system (within the existing maximum balance limits) instead of cashing out, which would have
several benefits, including: i) Unbanked people would have an incentive to join the formal financial
system via mobile money platforms; ii) Savings behaviors of tanzanians who have a mobile money
account but are still out of the reach of the banking system would be rewarded; iii) Unbanked
mobile money customers could become acquainted with the practice of storing value with a formal
financial services provider, making them more willing and prepared to open a bank accounts if the
opportunity to open a bank account is offered to them; iv) lowering the number and value of cash-
outs could ease some pressure on the liquidity management for the providers.
i. the current cumulative balance in the mobile money trust accounts hold by tanzanian commercial banks in the name of mobile money agents and customers is tZS 254.6 billion (US$ 156 million)
ii. See tilman ehrbeck and michael tarazi (2011), “Putting the Banking in Branchless Banking: regulation and the Case for interest-Bearing and insured e-money Savings accounts”, in World economic Forum’s mobile Financial
Services development report. this position was endorsed by the GSma, see Simone di Castri (2013), “mobile money: enabling regulatory Solutions”, GSma paper.
