8 August 2012

Tanzania: Mobile Phones Help Spread Financial Services

THE rapid use of mobile phones in Tanzania is seen as an opportunity to expand formal financial services to the market. That is why the Tanzania Postal Bank (TPB) seeks to embrace the technology of mobile phone banking, to serve the remote rural areas.

Mr Alphonce Kihwele, the previous TPB'S Chief Executive Officer, says that nearly 25 per cent of Tanzanians have access to a mobile phone. TPB sees that as an opportunity and appropriate technology to include the rural savings into the mainstream of the economy, to enable customers access financial services for improvement of their well being and poverty reduction.

"We are delighted that the Bill & Melinda Gates Foundation will be making this contribution in making all this possible. The Bank understands the need for a financial inclusion from Regional level to the rural areas, so it has now initiated the Second

phase of the "POPOTE Project" known as Point of Sales (POS), " he says.

"That is also funded by The Bill & Melinda Foundation which has now decided to hand it over to World Savings Banks Institute (WSBI) so as to manage the fund for the project, " he said. "POS are machines that will serve as portable ATMs that will be placed in reputable agencies and customers will be able to make their financial transaction in the agent location. The POS project is expected to be ready for giving out service in 31st of August," Mr Alphonce continued explaining.

According to E-banking and TPB Popote Chief Manager Mr Mshamma Mshamma POS is different from ATM in sense that it will be controlled by a tailor who can also be the agent of Postal Bank. The customer will have to open an account first, then within 5 minutes a card will be processed and be handed to the customer for financial transactions whereby the agents that the Bank will be dealing with can be any kind of business firm that is stable financially and has the potential to control the POS.

Mr Mshamma continued by saying that the aim of this project is to increase the saving habit among people, as most people in Tanzania do not have the habit of saving money. "The Project is expected to be ready for piloting on 31st of August whereby we will begin with some few of our well-known agents here in Dar es Salaam like the post offices. It is our hope that the Project will encourage a lot of customers to join Tanzania Postal Bank through our "Popote account" and hence it will boost up our sales" He added.

Tanzania's population is estimated at 43.7 million, with 75% of people living in the rural areas whereby about 40% of the rural population lives on less than the amount needed to cover basic needs. In addition to low incomes, these rural households typically have high levels of illiteracy, low asset base and depend on agriculture for their livelihoods. The factors help to explain the minimal level of financial access with only 7% of rural people being served by banks, SACCOS and other financial institutions.

The remaining 33% are totally excluded from financial access. So obviously, banking services tend to have low penetration in rural areas as most banks establish branches in areas with high population density where there are more economic activities, however, traditional banking is often too expensive or distant for low income, rural people. That is the reason for the bank to opt for Mobile banking, which offers people lower cost transactions and the ability to perform basic banking operations "anytime and anywhere" through SMS capability.

The basic mobile banking operations include account transactions, cheque transactions, mobile phone top-up and transfer of funds. After the completion of the POS (Point Of Sales), people can get much quicker access of financial transactions from the agent terminals set in their respective areas. TPB's mission is to provide customers with modern, affordable, tailormade banking and other financial services.

The bank has 27 fledged branches country wide and it has a range of six hundred thousand and twenty customers with bank accounts at the bank also TPB has agency agreement with the Tanzania Posts Corporation to utilize 115 post offices countrywide and offer banking services to its customers. This broadens TPB's outreach and brings its services closer to the rural population since the key objective and function of TPB is to mobilize savings and to promote the savings habits of the population and it also aims to provide adequate, proper banking services and facilities throughout the country as well as to undertake any function performed by commercial banks.

Earlier this year the 2011 annually financial report indicated a historical profit of Tz Shillings 3.8/- billion before tax in 2011 which is the highest annually profit since the bank started operations in 1992. The report showed the summation of 2011 results were phenomenal as result on shareholder funds/ equity was 30% from 6 per cent in 2010 and one of the highest in banking industry where the average return on equity was around21%.

TPB Chief Executive Officer Mr Sabasaba Moshingi said the level of achievements were from positive commitment by management and staff towards transformation as well as appropriate guidance and oversight from the Board of Directors and product diversification by increasing commission and fees based products. Since then TPB aspired to continue expanding its branch network so as to reach many people especially in the rural areas where there is a call for business growth through loans and credits from financial institutions to the Medium Enterprises.

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