Between 2019 and 2023, Tanzania's financial landscape experienced remarkable growth, with total financial access points increasing by 130%, from 609,956 in 2019 to 1,402,609 in 2023. This expansion was driven by a 116% rise in mobile money agents (from 573,444 to 1,240,106) and a 365% growth in bank agents (from 28,358 to 106,176). The country’s financial inclusion rate improved from 65% in 2017 to 76% in 2023, showcasing the success of digital innovations and policy reforms under the National Financial Inclusion Framework. This growth underscores Tanzania's commitment to bridging the financial access gap, particularly in underserved areas.

Financial Services Providers Landscape in Tanzania

Tanzania's financial services landscape is diverse and rapidly growing, driven by digital innovations and regulatory improvements. The sector comprises banking institutions, microfinance, insurance, capital markets, and payment service providers:

Access to Financial Services

• Banking Services:
  • Number of bank agents grew from 28,358 in 2019 to 106,176 in 2023.
  • Banking access points increased to 107,238 in 2023, driven by reforms in agent banking.
• Microfinance Institutions (MFIs):
  • Access points reached 51,253 in 2023, marking a 31% annual growth.
  • Community Microfinance Groups (CMGs) dominate with 48,659 access points, reflecting a formalization trend.
• Payment Services:
  • Mobile money agents grew by 19.4% to 1.24 million in 2023.
  • Mobile money accounts increased by 34.9% to 51.72 million.

Usage of Financial Services

• Savings:
  • Banking sector savings reached TZS 6.99 trillion, an 18.1% increase.
  • Savings accounts in SACCOs decreased in value to TZS 870 billion, as some members preferred borrowing.
• Credit:
  • Total bank loans grew by 24.4% to TZS 33.10 trillion.
  • SACCOs' loans amounted to TZS 1.12 trillion, a 3.7% increase.
• Insurance:
  • Policyholders increased by 94.4% to 7.68 million, mainly due to mandatory motor insurance and health coverage expansion.
• Capital Markets:
  • Investors in securities increased by 12.5% to 907,969, supported by technology-enabled platforms.

Growth Drivers

1. Digital Financial Services: The rise of mobile money and online platforms improved accessibility and efficiency.
2. Policy Frameworks: The National Financial Inclusion Framework (2023-2028) prioritized underserved populations.
3. Regulatory Enhancements: New guidelines fostered innovations, such as digital insurance platforms and microfinance formalization.
4. Government Programs: Local Government Authority loans provided TZS 24.02 billion to women and TZS 19.92 billion to youth in 2023.

Total Number of Financial Access Points in Tanzania (2019–2023)

The number of financial access points in Tanzania grew significantly between 2019 and 2023, driven by expansion across banking, microfinance, insurance, and payment systems:

Overall Growth

• In 2019, Tanzania had 609,956 financial access points.
• By 2023, this number increased to 1,402,609, representing a 130% growth over the period.

Yearly Breakdown of Access Points

Sector-wise Contribution

1. Banking Services:
   • Grew from 29,371 access points in 2019 to 107,238 in 2023.
   • Bank agents contributed most to this increase, quadrupling during the period.
2. Microfinance Services:
   • Increased from 6,241 access points in 2019 to 53,371 in 2023, driven by the formalization of Community Microfinance Groups (CMGs).
3. Insurance Services:
   • Access points rose from 795 in 2019 to 1,495 in 2023, a 88% growth, fueled by digital platforms and bancassurance agents.
4. Payment Systems (Non-Bank):
   • Dominated the landscape, growing from 573,444 access points in 2019 to 1,240,106 in 2023, representing 116% growth.
   • Mobile money agents were the largest contributors.
5. Capital Markets Services:
   • Modest growth from 91 access points in 2019 to 380 in 2023, reflecting a focus on investment advisory and fund management.
6. Social Security Services:
   • Grew slightly from 14 access points in 2019 to 19 in 2023, limited by the niche nature of this sector.

Key Drivers of Growth

• Digital Transformation: Mobile money platforms and digital payment systems rapidly increased access.
• Policy and Regulation: The implementation of the National Financial Inclusion Framework (NFIF) facilitated formalization and innovation.
• Public-Private Partnerships: Collaboration with stakeholders such as banks, microfinance institutions, and insurers expanded reach.

Implications

The steady increase in financial access points reflects Tanzania's progress in financial inclusion, ensuring more adults live within a 5 km radius of financial services (89% in 2023, up from 86% in 2017).

Insights from Tanzania's Financial Services Providers Landscape (2023) and Financial Access Points (2019–2023)

1. Strong Progress in Financial Inclusion

The rapid growth in financial access points and the diversification of financial service providers illustrate Tanzania's consistent strides in financial inclusion. The financial inclusion rate increased from 65% in 2017 to 76% in 2023, demonstrating that more Tanzanians are accessing formal financial services.

2. Dominance of Digital Financial Services

• The exponential growth in mobile money agents (from 573,444 in 2019 to 1,240,106 in 2023) highlights how digital financial services dominate the financial landscape.
• Digital innovations, such as mobile money, are bridging the gap in rural and underserved areas, making financial services more accessible and affordable.

3. Role of Policy and Regulation

• The implementation of frameworks like the National Financial Inclusion Framework (NFIF-3, 2023–2028), along with regulatory reforms for digital platforms, insurance, and microfinance, has created an enabling environment for growth.
• This alignment between public and private stakeholders reflects a focused approach to tackling barriers to financial access.

4. Significant Growth in Banking Services

• The growth in banking agents (from 28,358 in 2019 to 106,176 in 2023) shows that agent banking reforms have effectively decentralized banking, bringing services closer to people, especially in rural areas.

5. Increased Focus on Underserved Segments

• Initiatives targeting women, youth, MSMEs, and smallholder farmers have driven tailored products, like women-friendly savings accounts and micro-loans, showcasing a shift towards inclusive financial services.

6. Opportunities in Microfinance and Capital Markets

• The formalization of Community Microfinance Groups (CMGs) and the growth of capital markets (e.g., fund managers and collective investment schemes) indicate untapped potential for rural financing and investment.

7. Persistent Challenges

• Despite improvements, certain challenges persist:
  • Social security services access points remain limited (only 19 access points in 2023).
  • Urban-rural disparities still exist, as infrastructure in rural areas lags behind urban centers.
  • Low uptake of advanced financial services like pensions and insurance, indicating a need for more public awareness and tailored products.

8. Economic and Social Impacts

• Economic Growth: With credit values increasing by 24.4% in banks and 3.7% in SACCOs in 2023, the financial sector has become a key driver of economic growth by mobilizing savings and enabling trade.
• Social Benefits: Financial inclusion efforts have empowered previously underserved populations, enhancing their ability to save, invest, and access credit.

Key Takeaways

1. Growth with Innovation: The financial services landscape in Tanzania is becoming increasingly diversified, with digital financial services leading the charge.
2. Policy as a Catalyst: The alignment of policy, innovation, and private-sector initiatives ensures sustainable growth in financial inclusion.
3. Targeted Efforts are Essential: Continued focus on underserved segments like rural populations and MSMEs is crucial for equitable economic growth.