Digital payment: Is Tanzania ready for cash-lite economy?

Presenting the 2026/27 national budget in Parliament on June 11, 2026, the minister for Finance, Khamis Mussa Omar, said the reforms are aimed at deepening digital transformation, improving transaction efficiency, curbing financial crime, strengthening transparency, and reducing the cost of handling cash.

“The improvements made in payment systems will contribute to the government’s efforts to discourage cash transactions in the economy to enhance efficiency and prevent criminal activities and unnecessary costs,” Mr Omar told Parliament.

Under the plan, digital payments will become mandatory in key sectors, including public transport such as the Bus Rapid Transit (BRT), ferries, railways, air transport and ride-hailing services, as well as parking systems.

Other affected areas include shopping malls, fuel stations, gyms, cinemas, hotels, restaurants, conference facilities, sports arenas and major exhibitions such as Sabasaba and Nanenane.

Educational institutions from pre-primary to university level will also be required to adopt electronic payments, alongside agricultural marketing systems under cooperative unions and Agricultural Marketing Cooperative Societies (Amcos) handling strategic crops such as coffee, cotton, cashew nuts, tea, tobacco and sisal.

Real estate transactions will also be covered, with proof of electronic payment becoming mandatory for land, buildings and motor vehicle transfers from July 1, 2026.

Key institutions, including the Ministry of Lands, the Tanzania Revenue Authority (TRA), and the Business Registration and Licensing Agency (Brela), will be required to verify digital payment records before approving transfers.

To support the transition, authorities will expand digital tools such as Lipa Namba and QR codes for small traders, including food vendors, bodaboda operators, and market sellers.

Those adopting digital systems will be prioritised for access to loans from government programmes and financial institutions.

Mobile scratch cards for airtime are also expected to be phased out in urban areas by the Tanzania Communications Regulatory Authority (TCRA), with a shift towards fully electronic top-ups.

The National Identification Authority (Nida) will roll out the Jamii Namba system under the 2024–2034 Digital Economy Strategy to strengthen identity verification and service delivery.

Reactions

Experts in Tanzania’s financial sector have welcomed the government’s push towards a cash-lite economy, saying it will enhance efficiency, transparency, and financial oversight.

However, they warned that high transaction costs, fragmentation, cybersecurity risks, and low financial inclusion could slow the transition if not addressed.

Senior lecturer in finance at the University of Dar es Salaam Business School, Dr Tobias Swai, said the transition was positive, noting Tanzania has been moving towards digital payments for nearly a decade and many citizens already use electronic payment systems.

He said electronic payment systems reduce reliance on cash, improve tracking, lower the need to print money, and make it easier to trace capital accumulation in the formal economy.

However, he warned that transaction costs remain a major barrier, citing disparities between bank-to-bank transfers and mobile money charges, and called for stronger integration through the Tanzania Instant Payment System (TIPS) to improve efficiency.

Associate professor of development economics at the University of Dar es Salaam (UDSM–DUCE), Abel Kinyondo, supported the shift.

“It would improve transparency and help curb financial crimes, including money laundering and corruption,” he said.

Prof Kinyondo, however, said that financial inclusion remained a major challenge, noting that many citizens still lacked bank accounts and access to digital payment tools.

He called for reforms to remove outdated administrative requirements, arguing that digital identity systems such as Nida should replace manual procedures.

“Transition should begin in the formal sector, particularly government institutions, large companies, and traders,” he recommended.

Independent financial analyst, Mr Oscar Mkude, said while digital payments were expanding, system fragmentation remained a concern.

“The systems need to communicate with each other, but there are gaps in interoperability, causing transaction failures when networks are not fully interconnected,” said Mr Mkude, also raising concerns over cybersecurity risks and public trust in the system.

If someone manages to hack the system, he said, questions remain over how secure it truly is, noting that some platforms are robust while others require improvement.

High transaction fees continue to discourage users, as charges by banks, mobile operators, and service providers reduce affordability and trust.

Tanzania Communications Regulatory Authority (TCRA)'s recent report says fraud attempts increased by 3.9 percent in the quarter ending March 2026, rising from 9,450 in December 2025 to 9,816.

TTCL recorded the highest number of reported fraud cases, followed by Yas, Vodacom, and Airtel, reflecting uneven performance in fraud prevention across networks.

According to the report, despite awareness campaigns, reporting tools, and spam alerts, fraud remains persistent across the telecom sector.

Regional data shows Rukwa, Morogoro, Dar es Salaam, Mbeya, and Songwe report high fraud cases, with Rukwa recording the highest.

Rukwa accounted for 5,422 cases, followed by Morogoro (2,137), Dar es Salaam (1,655), and Mbeya (880).

Despite the challenges, Minister Omar said digital payments continue to grow rapidly, with transactions processed through the Tanzania Instant Payment System (TIPS) rising significantly.

He said transactions reached 651 million in 2025, worth Sh54.95 trillion, compared with 453 million transactions worth Sh29.82 trillion in 2024.

Officials said continued investment in infrastructure and regulation will be essential to sustain the shift nationwide going forward effectively.