Country focus

Mobile money cuts travel bills

Money transfer, electricity bills — and now fuel. The uses of M-Pesa in Tanzania are growing — as are user numbers and the revenue made from the service. It has also meant less time taken off work to travel, as Mwangi Mumero explains.

HOTEL WAITRESS ADIMU Jason sends her ailing and aged parents Tsh45,000 (US$20) weekly via the Vodacom Tanzania money transfer service M-Pesa.

She would require at least three days to travel to her parents’ home in Kigoma in western Tanzania – more than 1,370km by road. However, she works in a three-star hotel in Dar es Salaam, where, like other hotel workers, she is kept busy – often doing 12hour day shifts.

“The money transfer service has eased the way we send money: it’s quick, convenient and fast. We don’t have to seek leave from work to travel to rural areas,” said Ms Jason, reminiscing on how tedious sending money to relatives had been before the arrival of digital transfers.

She is not alone. In fact she is one of more than 10.1 million Vodacom M-Pesa subscribers. The company had 15.5 million network subscribers by the end of March 2020, giving it a market share of 32.8%. In May 2020, the company reported a 7.4% increase in MPesa revenue, contributing 35% of service revenue.

The appeal of the service to people like Ms Jason is clear. An M-Pesa subscriber can send and receive money, buy top-up airtime and pay for goods and services at outlets with just a simple phone. The service is particularly useful to users who have no bank accounts and live in remote rural areas.

According to the World Bank, the use of mobile wallets in Tanzania has increased financial inclusivity to 56% of the population. At least 43% of adult Tanzanians save, 35% of them through a mobile wallet.

Of the 44% who borrow, 4% do so via mobile money and 3% from banks, according to the 2017 Fin Scope report by the Financial Sector Deepening Trust (FSDT). FSDT adopts a market development approach toward addressing systemic constraints in the market and to contribute towards achieving pro-poor growth in the financial sector.

According to the Tanzania Communication Regulatory Authority (TCRA), six mobile operators offer mobile money services in the country. They include Vodacom with M-Pesa (39%), Tigo with Tigo Pesa (30%), Airtel with Airtel Money (20%), Halotel with Halopesa (7%) TTCL (3%) and Zantel with Ezy Pesa (1%).

The country’s mobile money penetration reached 53% – 29.7 million mobile money subscriptions – in 2020, compared to 21 million in 2018, an increase of 41%. In June 2020 alone, at least 272 million mobile money transactions took place, with a total value of US$4.6bn.

To widen their reach, service providers such as Vodacom have enabled international interoperability through partnerships with global money transfer services like MoneyGram and Western Union.

Regionally, Vodacom Tanzania also allows for operator-tooperator international money transfer interoperability through a partnership with Kenya’s Safaricom.

But that’s not all. Recognising the value digital payments can have on business processes, Oryx Oil Tanzania has signed a partnership with Vodacom which brings the M-Pesa payment service to petrol stations. Under the deal, customers are now able to use their M-Pesa platform to pay for fuel from 52 Oryx fuel stations countrywide.

“We continue to extend payment options available at all our fuel stations to increase customer convenience – but also safety,” said Chris Swart, MD, Oryx Oil Tanzania, during the signing of the partnership late last year.

According to Swart, using digital platforms such as M-Pesa in processing payments and collecting revenues can improve safety, convenience and transparency for both the customer and the business.

Vodacom officials have acknowledged the rising demand for digital payment by merchants and retail outlets and the importance of helping customers to avoid the risks and burdens of carrying cash.

“The company is driving digital payment in the retail ecosystems by extending the service to more private and public institutions,” observed Nelusigwe Mwangota, Vodacom M-Pesa’s reporting and planning head during the signing of the partnership.

And it is not going to stop there. TCRA reports indicate that more than 70% of electricity bills in the country are now paid through mobile money services. The uses of M-Pesa in Tanzania are continuing to grow and diversify. ✆

Long journeys to rural family have become less common thanks to digital money transfers.