Bridging the 24 percent gap: BoT’s vision for inclusive finance

Dar es Salaam. The Bank of Tanzania (BoT) has outlined a clear strategy to address the 24 percent financial inclusion gap, which continues to leave a significant portion of the adult population excluded from the formal financial system.

At yesterday’s third Tanzania Bankers Association Conference on Financial Inclusion, BoT governor, Mr Emmanuel Tutuba highlighted the impressive progress made over the past few years.

Mr Tutuba emphasised that reaching the goal would require a multifaceted approach, one that leverages digital innovation, expands access through alternative banking channels, boosts financial literacy, enhances payment system interoperability, and supports regulatory measures that foster innovation.

Digital financial services have emerged as a game-changer in the Tanzanian landscape. With over 40 million registered mobile money accounts, the surge in digital transactions is undeniable.

“We have seen a transformative impact from mobile money, agent banking, and fintech solutions, all of which enhance accessibility to financial services,” Mr Tutuba remarked.

This digital revolution has made it easier for underserved populations to participate in the financial system, yet the challenge remains in ensuring that these digital tools are complemented by traditional banking services that offer a broader range of products and services.

The expansion of agent banking has also played a pivotal role in reducing geographical barriers. 

With more than 60,000 agent banking outlets now operating across the country, rural communities are increasingly finding it easier to access financial services.

“Agent banking brings services closer to people, particularly in remote areas where traditional banks may be few and far between,” noted Mr Tutuba.

Despite these promising developments, there remains a significant challenge in ensuring that every Tanzanian is financially literate.

National campaigns on budgeting, savings, and investment have been initiated to educate the public on the benefits of using formal financial services.

“Without educating people, they will keep resorting to unofficial channels for loans and other financial services,” Mr Tutuba cautioned.

Interoperability of payment systems has emerged as another critical factor. 

The recently implemented Tanzania Instant Payments System (TIPS) enables seamless fund transfers among banks, mobile money operators, and other financial service providers.

“This system enhances convenience and broadens the adoption of formal financial channels,” Mr Tutuba affirmed. By creating a unified and integrated payments landscape, TIPS not only makes transactions smoother but also builds customer confidence in using formal financial services.

He explained that this interoperability is key to reducing friction in everyday transactions and encouraging a shift away from informal methods.

In addition to these initiatives, regulatory support for innovation is vital. 

The BoT is committed to fostering an environment where financial institutions can adopt new digital technologies and expand their reach.

The Governor’s vision is closely aligned with the broader national agenda, as demonstrated by the Digital Economy Strategic Framework inaugurated in 2024.

This 10-year plan is designed to integrate digital technologies into every sector of the economy, including finance, and to ensure reliable electricity and internet connectivity in almost all villages by December this year.

“With improved connectivity, banks now have a unique opportunity to expand their digital reach,” Mr Tutuba observed. Such regulatory and infrastructural support will pave the way for more inclusive financial services and drive innovation across the sector.

Mr Tutuba noted that formal financial services adoption has surged from 65 percent in 2017 to 76 percent in 2023. This increase, he explained, is a result of collaborative efforts among policymakers, financial institutions, and technology providers.

However, a closer look reveals that only 22.2 percent of Tanzanian adults are using traditional banking services.

While mobile money services have flourished—absorbing nearly 54 percent of the market—traditional banks remain underutilised, which poses both a challenge and an opportunity for the sector. The government’s target of achieving 85 percent formal financial inclusion by 2028 is a driving force behind these efforts, he said.

TBA chair, Mr Theobald Sabi, said that the meeting highlighted issues of inclusion aimed at ensuring that they contribute to national development and that every citizen benefits through the inclusion of citizens in the financial sector to bring sustainable development.

“This is the third meeting with the primary objective of citizen inclusion in the formal financial sector, as well as the goal of protecting citizens from the challenges they face in obtaining informal services such as credit,” he said.

Financial experts agree that the combined efforts of digital innovation, alternative banking channels, improved financial literacy, seamless payment systems, and supportive regulatory frameworks will be instrumental in reaching the government’s target of 85 percent formal financial inclusion.

Financial technology expert Aisha Mkwawa from Dar es Salaam believes that digital inclusion is more than just access to a mobile phone.

“It’s about creating tailored financial products that meet the unique needs of different groups, including women, youth, and smallholder farmers,” she explained.

According to Ms Mkwawa, further investment in fintech innovation is critical for expanding the reach of formal financial institutions, particularly to those segments of the population that have been traditionally underserved.