How interoperable networks impacts Tanzania’s economy

In any country in the world, its unified national economy becomes stronger to a certain extent due to the circulation of local currency which among other tasks is to regulate the high rising inflation rates in order to build up stronger economies of the people and the community at large. The growth of the national economy is always determined by the rate at which Gross Domestic Product (GDP) increases, and this is being contributed by all sectors of the economy in the country including communication sector. Another factor about the GDP increase in the country is determined by a strong local market whereby there is exchange of goods, and Tanzania as an example has no way to evade bearing in mind the fact that the country has lower economic capacity compared with other nations. Statistics by National Bureau of Statistics indicates that, Tanzania’s GDP keeps on increasing at an annual rate of between 6 and 7 percent, this slowly moving rate is an indication that the country needs to put much effort into developing its own resources and achieve more in order to cater for the need of local demand. In addition to that, the country needs to strengthen its economic and solidify major financial bases in order to widen the gap that still exists between the poor and the rich. It is from this point of view that, mobile phone communication companies operating in the country established ‘Money Transfer Technology (MTT) systems whose major focus is to boost national economy. With the introduction of MTT interoperable network in Tanzania, commercial banks which forms part of country’s economy have been flourishing as customers make regular transactions to cater for their daily business needs.Interoperability refers to the ability of different information technology systems and software that permit the transfer of funds from one mobile account to the mobile account of yet another telecommunication company. The mobile telecommunication companies are MIC Tanzania Ltd via Tigo Pesa, Vodacom Company via M-Pesa,  Bhati Ltd via Airtel Money and Zantel  via Ezy-Pesa respectively. With all these companies, Tigo has become the only operator in Tanzania to offer interoperability with the rest of other operating companies, and Vodacom which joined the system in late 2015 has created the largest mobile financial eco-system in Tanzania.Tigo Pesa services being the most acknowledged innovative technology has enabled its customers to enjoy a greater variety of the company’s services, now have access to Africa’s first universal mobile money exchange system. Interoperability can help businesses manage costs, increase efficiencies through shared infrastructure and increase transaction volumes. The technology is among the last to seek a solution in industry wide standards for data management. According to financial experts, the technology has highly advanced and widely used although its is currently being dominated by four mobile phone companies operating in the country. The system has proved successful with the help of their potential customers who use their mobile phone handsets for easy facilitation. It is now clear from the working systems that, “all cell phone companies operating in the country have merged with the main objectives of expanding the interoperability eco-systems in Tanzania’s mobile financial inclusion”. An interoperable network already set up by mobile phone communication companies, aims at increasing the country’s economy by unifying financial systems which eases banking activities for the promotion of national economic development activities. According to a Dar es Salaam based financial expert Mr. Ruan Swanepoel the MTT service technology is able to move funds in customers’ mobile wallets to boost mobile financial service ecosystem in Tanzania. He believes that the interoperability is crucial to the success of mobile money and the wider goal of increasing financial inclusion. It is also a fundamental building block towards constructing a digital economy, enabling merchants and other start-ups to participate in the financial services ecosystem”. 

Interoparability in Tanzania today is not exclusive to mobile operators, and also includes more than 25 banks. The country’s 16 million mobile financial users transact the equivalent of more than 50 percent of Tanzania’s GDP each month. “Thanks to this growing network, Tanzania is now the leading place for mobile money in east Africa, overtaking Kenya This model, which has the approval of Tanzania’s central bank, the Bank of Tanzania (BOT), allows all Tanzanian mobile money operators to create powerful new loyalty incentives for customers. The Bank of Tanzania (BOT) says that, with the on-going technology the total balance of trust accounts held in commercial banks in the country which backs through mobile payment services has amounted to Sh. 448.3 billion as at the end of January 2015. BOT’s Director of National Payment Systems Bernard Dadi says that the number of registered active mobile payment services users for mobile phone companies who facilitated such financial transaction reached 14.2 million out of 38.8 million registered accounts. According to him, “such meteoric rise has caused a tremendous development impact on the conventional banking services by enhancing their operations which in turn is a boost to national economy ”.This is contrary to the beliefs of many business stakeholders in the country who think that the persisting mobile money transfer technology would kill banking services as most customers divert their transactions and prefer the use of mobile money transfer services. However, the BOT says that such services in the country has also improved liquidity in the banking system as the money which is circulating electronically are backed by funds deposited in trust accounts held by commercial banks operating in the country. According to BOT officer, the system platform has enabled some banks to partner with the mobile payment service providers where the banks acts as agents for providing  cash out services. East Africa regional economic integration is a major development strategy that without mobile money transfer technology, to a certain extent trade across the border is rendered inefficient and ineffective as well.  According to Dadi, with the cross-border mobile money transactions currently in place, more opportunities for business will be created for Tanzanian small-scale entrepreneurs.  In addition, the interoperability systems among mobile phone companies is expected to go at a higher scale and hence bring down transaction costs and fair competition to service providers which will result in better quality services, he said. Statistics from the Bank of Tanzania (BOT) shows that, Tanzania is among the leading countries in the world in using mobile phones to pay and receive money. Official records show that there are more than 25 million subscribers with access to mobile money transfer technology which is accommodated by all mobile phone companies operating in the country, of which nine million are active users of the accounts undertaking at least a transaction per month.  In just four years, from 2009 to 2013, the usage of non-bank formal financial services, mainly mobile financial services, increased from just under 7 percent to almost 44 percent, bringing the rate of financial inclusion from around 16 percent to close to 58 percent as per Financial Sector Deepening Trust.