Sunday, January 24, 2016

How Tigo-Tanzania values its customers on financial inclusion

Mid this week, financial stakeholders in the country witnessed a mobile operator Tigo announcing the first quarterly payment for 2016 of 4.4bn Tshs (US$ 2.1 million) to be shared among its 4.6 million Tigo Pesa users. This is a new year’s development to the beneficiaries of this lump sum money who includes individual customers, retail agents and company’s business partners each based on the e-value they have stored in their Tigo Pesa wallets. The dividends has been distributed by the company to millions of users of Tigo Pesa, making it the first telecom company in the world to share its Trust Account profit in the form of a quarterly distribution. Clearly this is an encouragement that shows how the mobile phone operator values its customers in a business oriented operation aimed at promoting the development of financial inclusion in the country. “The objective of this dividend is to offer all Tigo Pesa stakeholders an opportunity to share in this return on their investment depending on the e-value they have stored in their Tigo Pesa wallets”, says Tigo Head of Finance and Risk for Mobile Financial Services, Obedi Laiser when he announced the offer. According to him, such a transaction is an expression of the company’s continuing commitment to support economic and financial inclusion in Tanzania by extending the use of Tigo Pesa across the country. It has become a trend of normal circumstances as this is the seventh time in a row that the company is distributing profit to its mobile financial services users since 2014 when Tigo Tanzania first started to pay profit share to its mobile phone users. Tigo Tanzania started to effectively engage in money transfer technology in 2009 and five years later the company began to distribute its share profits as dividends among its customers in the country. Tigo sees this as the next logical step in financial inclusion, with important customer and agent benefits, and hopes to be able to replicate this in other markets. The revenue share model has the approval of the Bank of Tanzania (BOT), allowing Tanzania’s leading digital lifestyle company, to increase e-money deposits and mobile money transactions via new loyalty incentives. The Tigo Pesa profit share distribution scheme is in line with the Central Bank Circular issued in February 2014 whereby the company’s financial statistics shows that Tigo has so far paid a total of 35.5bn/- to Tigo Pesa users in seven quarterly disbursements since the launch of the service in July 2014.  Within the said trading period, the Tigo Pesa Trust account has been accumulating returns at rates between 5 and 20 percent respectively. 

With the notion to improve financial inclusion in the country, the company has launched over 500 new network sites between 2103 and 2014 and plans to double its investment by 2017 in terms of coverage and additional capacity networks for deeper penetration in rural areas. Such development initiative is a milestone bearing in mind the fact that with the introduction of mobile money transfer technology in Tanzania, commercial banks have been flourishing as customers make regular transactions to cater for their daily business needs. Users of Tigo mobile money transfer have praised this technology since it was introduced in the country in early 2010, with Tigo pesa being among the leading money transfer technologies that opened up the Tanzania market. Laiser further says that, “Tigo Tanzania launched a new campaign dubbed ‘Choose Tigopesa, It pays’ that aims at bridging the unbanked gap and increase financial inclusion. The aim of this initiative campaign is to increase availability of Tigopesa services all over the country. “Tigo now covers 90 per cent of Tanzanians who own cell phones and our main objective is to provide a trusted service ensuring that Tigopesa continues to be the most preferred mobile financial service,” he said. According to him, Tigopesa is convenient, more secure and profitable to their customers, thus making it the easiest way to store, send, grow, pay or borrow money especially for unbanked customers in the country. Tanzanians transferred more cash more via their mobile phones than the entire banking system in 2013, with official data showing that mobile transactions reached almost Sh29 trillion – equivalent to 54 per cent of the country’s Gross Domestic Product (GDP). Transactions through mobile phones totaled Tshs. 28.8 trillion in 2014 to consolidate the position of mobile transfer as an increasingly important player in the country’s financial system, Bank of Tanzania (BoT) figures show. That was a 65 per cent growth from transactions worth Sh17.4 trillion conducted in 2012, according to the BoT’s Directorate of Banking Supervision Annual Report, 2013. To put this into perspective, the value of mobile transactions in 2013 was equivalent to 54 per cent of the total market value of all goods and services produced in Tanzania. The BoT figures show that mobile transfer is fast becoming the most widely used medium of cash transactions, overtaking traditional systems such as automated teller machines (ATMs) and points of sale (PoS).

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