Bank Stocks Rise Amid Decline in Market Turnover and Capitalization in Week 34 of 2024

During the trading week ending on Friday, August 23, 2024, the Dar es Salaam Stock Exchange (DSE) experienced notable changes in stock prices, turnover, market capitalization, bond market activity, and index performance.

The trading week saw mixed performance at the DSE, with significant price gains in MBP, DCB, and KCB stocks, while overall market turnover, volume, and capitalization experienced declines. The bond market also saw reduced activity, and most indexes lost value, indicating a cautious trading environment.

Stock Price Movements

• Top Gainers:
  • MBP: The stock price rose by 9.84%, increasing from TZS 305 to TZS 335.
  • DCB: The stock price increased by 8.33%, moving from TZS 120 to TZS 130.
  • KCB: The stock price went up by 8.20%, from TZS 610 to TZS 660.
• Biggest Loser:
  • JHL: The stock price declined by 6.47%, dropping from TZS 3,400 to TZS 3,180.

Turnover and Volume

• Turnover:
  • During Week 34 of 2024, the total turnover at DSE was TZS 3.087 billion, which is a decrease of -51.55% compared to the previous week's turnover of TZS 6.372 billion.
• Volume:
  • The volume of shares traded was 3,520,771 shares, representing a -4.28% decrease from the previous week's volume of 3,678,458 shares.

Market Capitalization

• Total Market Capitalization:
  • The total market capitalization at the end of Week 34 was TZS 17,365.05 billion, reflecting a slight decrease of -0.01% from the previous week’s TZS 17,368.26 billion.
• Domestic Market Capitalization:
  • The domestic market capitalization was TZS 12,302.87 billion, which is a -0.15% decrease compared to the previous week's figure of TZS 12,321.92 billion.

Bond Market

• Bond Transactions:
  • The bond market recorded transactions worth TZS 30.16 billion in Week 34, marking a -11.26% decrease from the previous week’s transactions of TZS 33.99 billion.

Index Performance

• All Share Index (DSEI):
  • The DSEI closed at 2,080.57, a slight decrease of -0.02% from the previous week’s closing of 2,080.96.
• Tanzania Share Index (TSI):
  • The TSI dropped by -0.15%, closing at 4,644.74 compared to 4,651.93 the previous week.
• Industrial & Allied Index (IA):
  • This index was one of the few that saw an increase, rising by 0.06% to 5,072.27 from 5,069.10.
• Banks, Finance & Investment Index (BI):
  • The BI index fell by -0.48%, closing at 5,835.22 compared to 5,863.55 the previous week.
• Commercial Services Index (CS):
  • The CS index remained unchanged at 2,134.27.

Summary of Stock Performances

• AFRIPRISE (formerly TICL): No change, remained at TZS 230.
• CRDB: Decreased by -1.47%, from TZS 680 to TZS 670.
• DSE: No change, remained at TZS 2,460.
• EABL: Decreased by -4.79%, from TZS 3,130 to TZS 2,980.
• MKCB: Increased by 3.70%, from TZS 540 to TZS 560.
• NICO: Increased by 2.53%, from TZS 790 to TZS 810.
• NMG: Increased by 3.33%, from TZS 300 to TZS 310.
• TPCC: Increased by 0.52%, from TZS 3,820 to TZS 3,840.

Top 10 African Economic Hubs by 2035: Dar es Salaam and Other Cities Leading Urban GDP Growth

Dar es Salaam and Other East African Cities: 2035 Projections

1. Population Growth:
   • Dar es Salaam is projected to become a megacity by 2035, with a population exceeding 10 million. Along with Luanda, it will join the existing megacities like Cairo, Kinshasa, Lagos, and Johannesburg.
   • East Africa, including cities like Dar es Salaam, Nairobi, and Kampala, will experience one of the fastest rates of urban population growth on the continent from 2023 to 2035.
2. Economic Growth:
   • Dar es Salaam, Addis Ababa, Abidjan, and Kampala are expected to be the most dynamic city economies in Africa, with near or above double-digit compound annual growth rates (CAGR) from 2023 to 2035. This rapid economic expansion will allow these cities to rise rapidly in the rankings of Africa's largest city economies.
   • Dar es Salaam’s GDP is projected to experience a CAGR of 9.0% from 2023 to 2035, making it one of the top-performing cities in the continent.
3. Urbanization and Infrastructure:
   • East African cities like Dar es Salaam and Nairobi will continue to expand geographically and demographically. They will also experience improvements in infrastructure, including transport and utilities, which will be crucial to supporting their economic growth.
   • The emergence of city clusters, especially around the Great Lakes region (spanning Kenya and Uganda), will play a significant role in shaping the economic landscape of East Africa.
4. Challenges:
   • Cities in East Africa, including Dar es Salaam, will face significant challenges such as overcrowding, high unemployment, poor public services, and climate change impacts (e.g., rising sea levels and extreme weather conditions).
   • Dar es Salaam, being a coastal city, will be particularly vulnerable to climate change, which could potentially threaten its future growth if not adequately addressed.

Figures and Projections

• Urban Population Growth in East Africa: Expected to rise significantly, contributing to the overall increase in Africa's urban population from about 650 million in 2023 to nearly 1 billion by 2035.
• Economic Contribution: By 2035, Africa's top 100 cities, including Dar es Salaam and Nairobi, will generate more than 60% of the continent's GDP, with the collective GDP of these cities projected to more than triple from $1.4 trillion in 2023 to over $5 trillion in 2035.

Malipo ya simu yamekuwa nguzo muhimu ya ujumuishaji wa kifedha nchini Tanzania, yakifanya jukumu muhimu katika kuziba pengo lililoachwa na mifumo ya benki ya jadi. Ukuaji wa malipo ya simu mwaka 2023, kama ilivyoangaziwa kwenye ripoti, unaonyesha hatua kubwa katika maendeleo ya kiuchumi ya nchi.

1. Kuongezeka kwa Usajili wa Malipo ya simu na Mtandao wa Mawakala
   • Usajili wa Malipo ya simu:
     • Mwaka 2023, usajili wa Malipo ya simu uliongezeka kwa 34.89%, ukipanda kutoka milioni 38.34 mwaka 2022 hadi milioni 51.72.
     • Ukuaji huu mkubwa unaonyesha idadi inayoongezeka ya Watanzania wanaokumbatia suluhisho za malipo ya simu, kutokana na urahisi na upatikanaji wa huduma za Malipo ya simu.
   • Mawakala wa Malipo ya Simu:
     • Idadi ya mawakala wa Malipo ya simu iliongezeka kwa 19.37%, kutoka mawakala 1,038,874 mwaka 2022 hadi mawakala 1,240,052 mwaka 2023.
     • Ukuaji huu unaimarisha upatikanaji wa huduma za Malipo ya simu , na kuzifanya kupatikana hata katika maeneo ya mbali, hivyo kukuza ujumuishaji wa kifedha.
2. Ukuaji wa Miamala ya Malipo ya Simu
   • Idadi ya Miamba:
     • Idadi ya jumla ya miamala ya malipo ya simu iliongezeka kwa 41%, kutoka milioni 3,595.04 mwaka 2022 hadi milioni 5,061.20 mwaka 2023.
     • Kuongezeka kwa idadi ya miamala kunaonyesha matumizi makubwa ya malipo ya simu kwa shughuli mbalimbali za kifedha, ikiwa ni pamoja na uhamisho wa pesa binafsi, miamala ya biashara, na malipo ya serikali.
   • Thamani ya Miamba:
     • Thamani ya malipo ya simu ilikua kwa 35.33%, ikifikia TZS bilioni 154,705.77 mwaka 2023, kutoka TZS bilioni 114,315.98 mwaka 2022.
     • Ukuaji huu ulitokana na kupunguzwa kwa tozo za miamala na misamaha kwenye miamala ya kidijitali ya serikali na miamala ya wafanyabiashara, na kufanya malipo ya simu kuwa nafuu na kuvutia kwa watumiaji.
3. Miamala ya Binafsi kwa Binafsi (P2P)
   • Ukuaji wa Idadi na Thamani:
     • Idadi ya miamala ya P2P iliongezeka kwa 54.73%, ikifikia jumla ya miamala milioni 364.36 mwaka 2023.
     • Thamani ya miamala hii ilikua kwa 53.66%, ikifikia TZS bilioni 11,323.78.
     • Miamala ya P2P inaonyesha matumizi ya malipo ya simu kwa uhamisho wa pesa wa kila siku, na kuchangia kwa kiasi kikubwa katika uchumi kwa kuwezesha uhamisho wa pesa wa haraka na rahisi.
4. Miamala ya Malipo kwa Biashara (P2B)
   • Ukuaji wa Idadi na Thamani:
     • Miamala ya P2B ilikua kwa kasi, idadi ikiongezeka kwa 71.41% hadi miamala milioni 1,350.84.
     • Thamani ya miamala hii iliongezeka kwa 68.68%, ikifikia TZS bilioni 18,250.33.
     • Ukuaji huu wa miamala ya P2B unaonyesha kuongezeka kwa wafanyabiashara wanaotumia malipo ya simu, jambo ambalo ni muhimu kwa urasimishaji wa uchumi na kuongeza ufanisi wa biashara.
5. Miamala ya Kutoka Mkoba wa Simu kwenda Benki (W2B) na Kutoka Benki kwenda Mkoba wa Simu (B2W)
   • Miamala ya W2B:
     • Idadi ya miamala ya W2B iliongezeka kwa 34.15%, ikifikia jumla ya miamala milioni 6.62.
     • Thamani ilikua kwa 25.21%, ikifikia TZS bilioni 2,714.74.
     • Miamala ya W2B inaonyesha mwelekeo wa kuweka akiba, ambapo watumiaji huhamisha fedha kutoka kwenye mikoba yao ya simu kwenda kwenye akaunti za benki, na hivyo kuashiria tabia ya kifedha inayoendelea kukomaa miongoni mwa watumiaji wa Malipo ya Simu.
   • Miamala ya B2W:
     • Idadi ya miamala ya B2W iliongezeka kwa kiasi kikubwa kwa 41.08%, na miamala milioni 59.10 ilirekodiwa.
     • Thamani ya miamala hii ilipanda kwa 45.99%, ikifikia TZS bilioni 7,963.13.
     • Ukuaji wa miamala ya B2W unaonyesha muingiliano wa malipo ya simu na sekta ya benki, na hivyo kuruhusu uhamisho usio na shida kati ya benki na mikoba ya simu, na kusaidia maendeleo ya mfumo wa kifedha.

Athari za Kiuchumi

Ukuaji wa malipo ya simu mwaka 2023 unaonyesha athari kubwa za huduma za kifedha za kidijitali kwenye uchumi wa Tanzania, kukuza ujumuishaji wa kifedha, kuimarisha shughuli za kiuchumi, na kusaidia malengo mapana ya maendeleo ya kiuchumi.

• Ujumuishaji wa Kifedha: Kuongezeka kwa usajili wa Malipo ya simu  na mtandao wa mawakala kumechangia sana katika ujumuishaji wa kifedha, na kuruhusu watu wengi zaidi, hususan katika maeneo ya vijijini, kupata huduma za kifedha.
• Shughuli za Kiuchumi: Kuongezeka kwa miamala ya P2B kunaonyesha biashara nyingi zaidi zinaingiza malipo ya simu kwenye shughuli zao, jambo ambalo ni muhimu kwa ukuaji wa uchumi, kwani linasaidia kurasimisha uchumi na kuongeza ufanisi wa biashara.
• Akiba na Uwekezaji: Ukuaji wa miamala ya W2B unaonyesha mwelekeo unaokua wa kuweka akiba, jambo ambalo ni muhimu kwa kukusanya mtaji na maendeleo ya kiuchumi ya muda mrefu.
• Nafasi ya Serikali: Juhudi za serikali za kudigitalisha malipo, kupunguza tozo za miamala, na kukuza mwingiliano zimesaidia sana kuongeza matumizi ya malipo ya simu. Hatua hizi zimeongeza ufanisi na kufanya huduma za kifedha kuwa nafuu zaidi, na hivyo kunufaisha uchumi kwa ujumla.

Focuses on the Market Analysis & Intervention concerning the digital payment systems in Tanzania.

Introduction

The high transaction costs are a significant barrier to the adoption and usage of digital payment systems in Tanzania. These costs discourage consumers from using digital payments and impede the transition to a cash-lite economy. The Bank of Tanzania, in collaboration with other stakeholders, conducted a market study to understand the pricing structure of digital payment products, including costs related to operations, regulation, commissions, and interoperability.

Study Findings

Interoperable Costs

• Cost Disparity Between Providers: The study found that transferring money within the same service provider is more affordable than sending money to a different service provider. Specifically:
  • Intra-provider Transfer: Costs 1.61% of the transaction value.
  • Inter-provider Transfer: Costs 5.24% of the transaction value.
• Average Costs:
  • Digital Banking Channel: 3.82% of the transaction value.
  • Digital Mobile Channel: 2.68% of the transaction value.

These figures suggest that interoperability costs are significant, particularly when transactions occur between different service providers.

Regulatory Costs

• Impact on Transaction Costs: Regulatory costs, which include fees like transaction levies, VAT, and excise duty, have a varied impact:
  • Mobile Money Operators (MMO): Regulatory costs contribute approximately 2.44% to transaction costs.
  • Banks: The contribution is higher, at 5.85%.

While regulatory costs are a part of the transaction costs, their impact is relatively low compared to other factors.

Operational Costs

• Significant Contribution to Costs: Operational costs, which include expenses for technology infrastructure, personnel, and customer services, have the highest impact on transaction costs.
  • Banks: Operational costs contribute 82.69% of the total transaction costs.
  • Mobile Money Operators (MMO): These costs account for 68.39% of transaction costs.

This indicates that the majority of the transaction costs come from the operational side, making it a critical area for potential cost reduction.

Commission Costs

• Influence on Pricing: Commissions paid to agents and business partners also play a substantial role in the overall transaction costs.
  • Digital Banking Transactions: Commissions account for 28.02% of the total transaction cost.
  • Digital Mobile Money Channel: Commissions make up 26.49% of the transaction costs.

Commissions are a significant cost driver, particularly in the context of agent-based models used in digital payments.

Recommendations

The study recommends that financial service providers and policymakers should work together to reduce transaction costs. Lower costs would make digital services more affordable and encourage greater adoption of digital payments.

Policy Intervention

The Bank of Tanzania has responded to the findings by issuing guidance on transaction fees for large-value payments processed through various systems like TISS, EFT, TACH, and TIPS. The revised interbank transfer fees are aimed at addressing cost challenges to boost the usage of banking services, which is notably low at only 22% among Tanzania's adult population, as reported in the Finscope Survey 2023. Cost was identified as a major barrier to increased usage.

Revised Interbank Transfer Fees (Examples)

• EFT Interbank Transfer Fees:
  • Incoming Transfers: All amounts charged at TZS 0.
  • Outgoing Transfers:
    • TZS 1-50,000: TZS 0-500.
    • TZS 50,001-500,000: TZS 0-1,000.
    • TZS 500,001-5,000,000: TZS 0-1,500.
    • TZS 5,000,001-20,000,000: TZS 0-2,000.
• TISS Transaction Charges:
  • Incoming Transfers: All amounts charged at TZS 0.
  • Outgoing Transfers:
    • TZS 1-10 million: TZS 0-2,000.
    • Above TZS 10-50 million: TZS 0-5,000.

Focused on market analysis, intervention and implications for Tanzania's economic development

The focus on reducing transaction costs and promoting digital payments in Tanzania has the potential to significantly contribute to the country's economic development. It supports financial inclusion, enhances economic efficiency, and creates a more competitive and stable economic environment, all of which are critical for sustained economic growth.

Reduction in Transaction Costs

• Encouraging Digital Payment Adoption: The high transaction costs associated with digital payments are a barrier to their widespread adoption. By addressing these costs, particularly through policy interventions like reducing interbank transfer fees, the Bank of Tanzania aims to make digital payments more affordable. This, in turn, can drive greater adoption of digital financial services across the population.
• Economic Efficiency: Lower transaction costs can enhance the efficiency of financial transactions in the economy. When individuals and businesses can transfer money more affordably, it reduces friction in the economy, potentially leading to increased economic activity and growth.

Financial Inclusion

• Increased Access to Financial Services: The document highlights that only 22% of Tanzania's adult population uses banking services, with cost being a major barrier. By reducing costs, more people, particularly those in lower-income brackets, can be included in the formal financial system. Greater financial inclusion can empower individuals, foster entrepreneurship, and improve overall economic stability.
• Digital Payment Ecosystem: As more people adopt digital payments due to lower costs, the digital payment ecosystem in Tanzania can grow. This growth can lead to more innovation in financial products and services, further driving economic development.

Support for a Cash-lite Economy

• Transition to a Cash-lite Economy: The Bank of Tanzania's efforts to promote digital payments support the broader goal of transitioning to a cash-lite economy. A cash-lite economy can reduce the costs associated with handling physical cash, such as security and transportation. It also makes financial transactions faster and more transparent, which can reduce corruption and increase economic transparency.
• Increased Economic Formalization: As more transactions move to digital platforms, there is an opportunity for greater formalization of the economy. This can lead to better tax collection and more accurate economic data, which are essential for effective economic planning and development.

Boosting SME Growth

• Support for Small and Medium Enterprises (SMEs): SMEs often face higher relative transaction costs compared to larger businesses. By reducing these costs, SMEs can become more competitive, improve their cash flow, and potentially expand their operations. This growth is crucial for Tanzania's economic development, as SMEs are a significant driver of employment and economic activity in the country.
• Facilitating Trade and Commerce: Lower transaction costs can also facilitate trade and commerce, both domestically and internationally. As Tanzanian businesses find it cheaper to engage in digital transactions, they can more easily participate in global markets, potentially leading to increased exports and foreign exchange earnings.

Regulatory Reforms and Economic Stability

• Impact of Regulatory Costs: The document notes that regulatory costs contribute to transaction costs, particularly in the banking sector. By addressing these costs through policy reforms, Tanzania can create a more favorable business environment. Regulatory reforms that reduce unnecessary costs can make Tanzania more attractive to both domestic and foreign investors, leading to increased investment and economic growth.
• Stable Financial Sector: By ensuring that the digital payment system is affordable and efficient, the Bank of Tanzania is contributing to the stability of the financial sector. A stable and efficient financial sector is a cornerstone of economic development, as it provides the necessary infrastructure for savings, investments, and the efficient allocation of resources.

Potential for Economic Growth

• Multiplier Effect: The reduction in transaction costs and the resulting increase in digital payment adoption can have a multiplier effect on the economy. As more people and businesses engage in the digital economy, there can be increased productivity, higher levels of investment, and ultimately, stronger economic growth.
• Innovation and Competitiveness: By fostering a more competitive and innovative financial services sector, Tanzania can better integrate into the global economy. This can lead to increased economic resilience and the ability to compete on a global stage.

Mobile payments have been a cornerstone of financial inclusion in Tanzania, playing a crucial role in bridging the gap left by traditional banking systems. The growth of mobile payments in 2023, as highlighted in the report, reflects significant strides in the country’s economic development.

Surge in Mobile Money Subscriptions and Agent Network

• Mobile Money Subscriptions:
  • In 2023, mobile money subscriptions increased by 34.89%, rising from 38.34 million in 2022 to 51.72 million.
  • This substantial growth indicates an increasing number of Tanzanians are embracing mobile payment solutions, driven by the simplicity and accessibility of mobile money services.
• Mobile Money Agents:
  • The number of mobile money agents expanded by 19.37%, from 1,038,874 agents in 2022 to 1,240,052 agents in 2023.
  • This growth enhances the accessibility of mobile money services, making them available even in remote areas, further promoting financial inclusion.

Growth in Mobile Payment Transactions

• Volume of Transactions:
  • The total number of mobile payment transactions increased by 41%, from 3,595.04 million in 2022 to 5,061.20 million in 2023.
  • This surge in transaction volume reflects the widespread adoption of mobile payments for a variety of financial activities, including personal transfers, business transactions, and government payments.
• Value of Transactions:
  • The value of mobile payments grew by 35.33%, reaching TZS 154,705.77 billion in 2023, up from TZS 114,315.98 billion in 2022.
  • This growth was fueled by the reduction in transaction levies and exemptions on digital government transactions and merchant transactions, making mobile payments more affordable and attractive to users.

Personal to Personal (P2P) Transactions

• Volume and Value Growth:
  • The volume of P2P transactions increased by 54.73%, totaling 364.36 million transactions in 2023.
  • The value of these transactions grew by 53.66%, reaching TZS 11,323.78 billion.
  • P2P transactions highlight the use of mobile payments for everyday personal transfers, contributing significantly to the economy by enabling quick and convenient money transfers.

Payment to Business (P2B) Transactions

• Volume and Value Growth:
  • P2B transactions experienced exponential growth, with the volume rising by 71.41% to 1,350.84 million transactions.
  • The value of these transactions increased by 68.68%, amounting to TZS 18,250.33 billion.
  • This growth in P2B transactions reflects the increasing merchant adoption of mobile payments, which is crucial for the formalization of the economy and enhancing business efficiency.

Wallet to Bank (W2B) and Bank to Wallet (B2W) Transactions

• W2B Transactions:
  • The volume of W2B transactions increased by 34.15%, totaling 6.62 million transactions.
  • The value grew by 25.21%, reaching TZS 2,714.74 billion.
  • W2B transactions indicate a pattern of saving, where users transfer funds from their mobile wallets to bank accounts, signifying a maturing financial behavior among mobile money users.
• B2W Transactions:
  • The volume of B2W transactions saw a significant increase of 41.08%, with 59.10 million transactions recorded.
  • The value of these transactions surged by 45.99%, amounting to TZS 7,963.13 billion.
  • The growth in B2W transactions demonstrates the integration of mobile payments with the banking sector, allowing for seamless transfers between banks and mobile wallets, further supporting the financial ecosystem's development.

Economic Implications

The growth in mobile payments in 2023 underscores the transformative impact of digital financial services on Tanzania's economy, driving financial inclusion, boosting economic activity, and supporting broader economic development goals.

• Financial Inclusion: The rise in mobile money subscriptions and the agent network has significantly contributed to financial inclusion, allowing more people, particularly in rural areas, to access financial services.
• Economic Activity: The increase in P2B transactions suggests more businesses are integrating mobile payments into their operations, which is crucial for economic growth, as it helps formalize the economy and increases business efficiency.
• Savings and Investment: The growth in W2B transactions reflects a growing trend in savings, which is essential for capital accumulation and long-term economic development.
• Government’s Role: The government's efforts to digitalize payments, reduce transaction levies, and promote interoperability have been key drivers of mobile payment adoption. These measures have not only enhanced efficiency but also made financial services more affordable, benefiting the economy at large.

The ongoing shift towards digital payment methods in Tanzania, with significant growth in electronic transactions and a decline in traditional cheque usage. The increased adoption of systems like TISS, EFT, and TIPS underscores the country's move towards a more digital and inclusive financial ecosystem.

Overview of Payment System Performance:

1. Tanzania Interbank Settlement System (TISS):
   • TZS Transactions: In 2023, transactions processed through TISS in local currency increased significantly. The volume rose by 7.28% to 4.11 million transactions, while the value surged by 23.39% to TZS 256,028 billion.
   • USD Transactions: The volume of transactions in USD also saw a substantial rise of 31.13%, with 545,161 transactions processed. However, the value of these transactions increased by 9.09%, amounting to USD 27,501.77 million.
2. Electronic Fund Transfers (EFT):
   • EFTs grew by 13% in volume, reaching 19.10 million transactions.
   • The value of these transactions rose by 19% to TZS 14,422.41 billion.
3. Cheque Transactions:
   • There was a decline in cheque usage, with the volume of local cheques dropping by 11% to 485,972 transactions. The value also decreased by 4% to TZS 1,893.47 billion.
   • USD-denominated cheque transactions similarly declined, with an 18% decrease in volume to 88,041 transactions and a 19% reduction in value to USD 192.41 million.
4. Tanzania Instant Payment System (TIPS):
   • TIPS facilitated 235.04 million transactions, valued at TZS 12,270.47 billion.
   • The number of financial service providers registered on TIPS increased from 34 in 2022 to 45 in 2023.
5. Merchant Payments:
   • There was a significant increase in merchant payments. The number of registered merchants grew by 68% to 657,346.
   • Transaction volumes increased by 80.98% to 301.21 million, and the value of these transactions rose by 48.04% to TZS 17,918.12 billion. The growth was supported by regulatory changes, including the elimination of transaction levies on merchant payments.
6. Cross-Border Fund Transfers:
   • Fund transfers via SWIFT decreased, with a 53.03% drop in volume and a 44.73% decrease in value.
   • In contrast, transfers facilitated by Electronic Money Issuers (EMIs) to the EAC and SADC regions saw significant growth. Inflow volumes increased by 42.17%, with a 68.03% rise in value. Outflow volumes grew by 61.58%, and the value surged by 78.92%.
7. Remittances:
   • Remittances via mobile phones declined, with a 10.50% drop in volume and a 6.39% decrease in value. Total inflow transactions were 3.6 million, valued at TZS 980.46 billion.
   • However, incoming remittances to bank accounts saw substantial growth, with a 67.66% increase.

Tanzania's payment system reflects a broader narrative of economic modernization

Tanzania's payment system reflects a broader narrative of economic modernization, improved financial inclusion, and growing integration into regional and global economies. These developments are pivotal for sustaining and accelerating Tanzania's economic growth and development.

1. Digital Transformation and Financial Inclusion:
   • The significant growth in electronic fund transfers (EFT), the Tanzania Instant Payment System (TIPS), and mobile money transactions highlights the rapid digitalization of Tanzania's economy. The increase in the volume and value of these transactions suggests a growing acceptance of digital payment methods, which is a critical driver of financial inclusion. This trend indicates that more Tanzanians are participating in the formal economy, which is essential for sustainable economic development.
2. Reduction in Cash Dependency:
   • The decline in cheque transactions and the simultaneous rise in electronic payments reflect a shift away from cash-based transactions towards a more formalized and traceable financial system. This reduction in cash dependency can lead to improved tax collection, better financial management, and a decrease in the informal economy, all of which contribute positively to economic development.
3. Efficiency in Financial Transactions:
   • The growth in transactions processed through the Tanzania Interbank Settlement System (TISS) in both Tanzanian Shillings (TZS) and USD demonstrates improved efficiency in the country's financial infrastructure. Efficient and secure payment systems are vital for economic stability, facilitating smoother business operations, both domestically and internationally. This efficiency also helps attract foreign investment, as investors seek stable and reliable financial systems.
4. Expansion of Merchant Payment Systems:
   • The significant increase in merchant payments, with more businesses adopting digital payment systems, indicates the expansion of the formal retail sector. This growth suggests that more small and medium-sized enterprises (SMEs) are integrating into the formal economy, which is crucial for job creation and economic diversification. The removal of transaction levies on merchant payments further stimulates this growth by making digital payments more attractive to businesses and consumers alike.
5. Cross-Border Economic Integration:
   • The rise in cross-border fund transfers within the East African Community (EAC) and Southern African Development Community (SADC) regions reflects Tanzania's increasing integration into regional economies. This integration is vital for trade, investment, and economic cooperation, fostering regional economic growth and development. The growth in cross-border transactions facilitated by Electronic Money Issuers (EMIs) underscores Tanzania's active participation in regional economic activities, which can enhance the country's trade balance and economic resilience.
6. Investment in Financial Infrastructure:
   • The development and adoption of new payment systems like TIPS, and the increased number of financial service providers, show a commitment to investing in financial infrastructure. This investment is crucial for supporting the country's economic growth by providing the necessary tools for a modern, digital economy. A robust payment infrastructure also enables the government and private sector to implement more efficient financial policies and strategies, which can drive further economic development.

Implications for Tanzania’s Economic Development

• Economic Growth: The increase in digital payments and the overall modernization of the payment system contribute to higher economic productivity and growth. By facilitating quicker, more secure, and more efficient transactions, these systems help businesses operate more smoothly and efficiently, which is crucial for economic growth.
• Job Creation and SME Growth: The expansion of digital payment systems, especially among merchants, supports the growth of SMEs, which are critical for job creation in Tanzania. As more businesses enter the formal economy, they can access financing, expand operations, and hire more employees.
• Increased Tax Revenue: With more transactions moving into the formal financial system, the government can better track economic activity, leading to improved tax collection. This increased revenue can be reinvested into public services, infrastructure, and other development projects.
• Financial Inclusion: As digital payments become more widespread, financial services become more accessible to the unbanked and underbanked populations, driving financial inclusion and reducing poverty.
• Resilience to Economic Shocks: A diversified and modern payment system makes the economy more resilient to shocks, such as those caused by pandemics or financial crises. Digital systems can continue to operate under various circumstances, ensuring economic continuity.

The data from TIC's H1 2024 report highlights significant growth in Tanzania’s investment landscape, with strong performances across various sectors. The manufacturing sector, in particular, has emerged as a key driver of investment and job creation, followed by transportation, agriculture, and commercial building. The robust growth in foreign investment and joint ventures underscores Tanzania's appeal as a lucrative investment destination.

This table summarizes the Figures, making it easier to analyze the investment and job creation distribution across different sectors and investment types

Annual Performance (July 2023 - June 2024):

Tanzania Investment Centre's (TIC) performance for the first half of 2024, as well as the July 2023 to June 2024 annual performance

Tanzania is experiencing robust economic development, characterized by significant investment inflows, job creation, and sectoral diversification. The focus on manufacturing, infrastructure, and agriculture reflects a strategic approach to building a resilient economy that can support sustained growth and improve the livelihoods of Tanzanians. The balanced participation of local, foreign, and joint venture investments further underscores the confidence in Tanzania’s economic policies and growth prospects.

1. Strong Economic Growth Potential:

• High Capital Investment: The total capital investment of $3.09 billion in H1 2024 and $6.56 billion from July 2023 to June 2024 shows a strong influx of funds into the Tanzanian economy. This indicates investor confidence in Tanzania's economic stability and growth potential.
• Diverse Sectoral Contributions: The spread of investments across various sectors, with significant contributions from manufacturing, transportation, and commercial building, highlights a broad-based economic development. This diversification reduces the risk of over-reliance on any single sector, promoting long-term sustainability.

2. Job Creation and Employment Opportunities:

• High Job Creation: The projects registered in H1 2024 are expected to create over 121,000 jobs, and those from July 2023 to June 2024 over 226,000 jobs. This is crucial for a country like Tanzania, where reducing unemployment and improving livelihoods are central to economic development.
• Agriculture's Role in Employment: Despite contributing only 1.7% of the total capital in H1 2024, the agriculture sector is responsible for creating a significant number of jobs (78,779 in H1 2024 and 103,453 from July 2023 to June 2024). This reflects agriculture's vital role in the Tanzanian economy, particularly in rural employment and poverty reduction.

3. Manufacturing as a Key Driver:

• Manufacturing Sector Dominance: With 45.8% of the total capital investment in H1 2024 and a substantial share in job creation (24,628 jobs), the manufacturing sector is a key driver of industrialization and economic growth. The focus on manufacturing indicates efforts to move the economy from a primarily agrarian base to a more industrialized one, which is essential for sustainable development.
• Foreign and Joint Venture Participation: The dominance of foreign and joint venture projects in the manufacturing sector suggests Tanzania's growing integration into global value chains and the importance of partnerships in driving industrial growth.

4. Infrastructure Development:

• Investment in Economic Infrastructure: Although a smaller share of total investment (1.1%), the focus on economic infrastructure projects is critical. Infrastructure is foundational for economic growth, enabling better transportation, connectivity, and energy supply, which in turn supports all other sectors.
• Commercial Building: Significant investment in commercial buildings (16.2% of capital in H1 2024) reflects urbanization and the expansion of business activities, particularly in major cities like Dar es Salaam.

5. Growing Foreign and Domestic Investor Confidence:

• Balanced Investment Composition: The relatively balanced distribution of projects between foreign, local, and joint ventures indicates growing confidence from both domestic and international investors. This balance is crucial for maintaining economic sovereignty while benefiting from global expertise and capital.
• Strong Growth Trends: The 81.90% increase in project registrations and the 73.61% rise in capital investment from the previous year demonstrate an upward trajectory in economic activity, reflecting positive economic reforms and a conducive investment climate.

6. Strategic Sectoral Focus:

• Targeted Investment in Strategic Sectors: The prioritization of sectors like manufacturing, transportation, and agriculture aligns with Tanzania’s broader economic goals of industrialization, improving transportation networks, and enhancing food security. These sectors are critical for both immediate job creation and long-term economic stability.

Tanzania's broadband pricing places it in a moderate position within both Sub-Saharan Africa and East Africa. While it offers some value for the cost, there is still a need for more affordable options to improve accessibility across different segments of the population.

Overview of Tanzania's Broadband Position in Sub-Saharan Africa:

• Rank in Sub-Saharan Africa: Tanzania is ranked 113th out of 223 countries globally, placing it in the lower mid-range of Sub-Saharan Africa broadband pricing.
• Average Monthly Cost: The average cost of broadband in Tanzania is $43.44 per month.
• Cheapest Package: The cheapest broadband package available in Tanzania costs $19.31.
• Most Expensive Package: The most expensive package in Tanzania is priced at $102.57.
• Cost per Megabit per Month: The cost per megabit per month in Tanzania is $1.00, which reflects the efficiency and value of broadband packages in terms of speed.

Within Sub-Saharan Africa

• Tanzania's broadband cost places it in a similar range to countries like Rwanda (111th, $43.22) and Cape Verde (115th, $44.20).
• While Tanzania's average broadband cost is moderate, it is significantly higher than countries like Sudan (1st, $2.40), which has the cheapest broadband in Sub-Saharan Africa.
• However, it is much more affordable compared to countries like Burundi (222nd, $304.57), where broadband costs are among the highest in the region.

Position in East Africa

• Regional Rank: Within East Africa, Tanzania's broadband pricing is on the higher side. When compared to its neighbors:
  • Uganda has an average cost of $52.59, ranking 131st globally, slightly more expensive than Tanzania.
  • Kenya has a slightly lower average cost at $47.73, ranking 125th globally.
  • Rwanda is more affordable with an average cost of $43.22, placing it very close to Tanzania in the ranking.
• Cost Efficiency: In terms of cost per megabit, Tanzania is relatively efficient at $1.00 per megabit per month, which is more economical compared to Uganda (2.81) and Rwanda (0.36).

Broadband Pricing Insights for Tanzania

• Affordability: Although Tanzania's broadband is not among the cheapest in Sub-Saharan Africa, it offers a balance between price and service, with a decent cost per megabit that indicates value for the speed provided.
• Market Diversity: The range from the cheapest to the most expensive packages suggests a diverse market with options catering to different consumer needs.
• East African Context: Compared to other East African countries, Tanzania's broadband market is competitive, but there is room for improvement in reducing costs to make internet access more affordable.

The broadband pricing and its relative position in Sub-Saharan Africa and East Africa

Tanzania's broadband pricing and infrastructure development are indicative of a country in transition, making strides in digital development but still facing challenges in ensuring widespread access and affordability. Continued investment in digital infrastructure, coupled with policies aimed at reducing costs and improving access in rural areas, will be key to leveraging broadband as a catalyst for economic growth, innovation, and inclusivity in Tanzania.

Digital Infrastructure Development:

• Moderate Pricing: Tanzania's broadband pricing, while not the cheapest, indicates a growing investment in digital infrastructure. The presence of a range of broadband packages from affordable to high-end suggests an expanding telecommunications sector that is responding to different market demands.
• Cost Efficiency: The cost per megabit of $1.00 reflects a reasonably efficient use of infrastructure, which is crucial for supporting businesses, education, and other sectors dependent on reliable internet access.

Access to Technology:

• Challenges in Affordability: The average monthly cost of $43.44 for broadband may still be prohibitive for many Tanzanians, especially in rural areas where income levels are lower. This suggests that while internet access is available, it may not yet be fully inclusive, potentially limiting digital literacy and the ability of all citizens to participate in the digital economy.
• Urban vs. Rural Divide: The disparity in broadband costs and the variety of packages could also highlight a digital divide between urban and rural areas. In urban centers, more competitive pricing and higher demand likely lead to better access, while rural areas may face higher costs and limited options, impacting overall economic inclusivity.

Economic Growth and Innovation:

• Support for Emerging Sectors: The development of broadband infrastructure is essential for sectors like fintech, e-commerce, and digital services, which are increasingly important for economic diversification. The availability of broadband at various price points supports the growth of small and medium enterprises (SMEs) and start-ups, driving innovation and job creation.
• Attractiveness to Investors: Reasonably competitive broadband costs make Tanzania more attractive to foreign investors looking to establish or expand operations in East Africa. Reliable and affordable internet is a critical factor for investors in sectors such as manufacturing, services, and technology.

Human Capital Development:

• Education and Skills Development: Access to affordable broadband is crucial for education, particularly in the context of online learning and remote education. As Tanzania continues to develop its human capital, improving access to affordable internet can enhance educational outcomes and equip the workforce with the necessary skills for the digital economy.
• Youth Empowerment: With a large youth population, affordable broadband can empower young Tanzanians by providing access to information, online courses, and opportunities for remote work, thus contributing to reducing youth unemployment and fostering entrepreneurship.

Economic Inclusivity and Social Development:

• Digital Inclusion: While Tanzania's broadband pricing is moderate, efforts to lower costs and expand access, particularly in underserved areas, will be crucial for ensuring that all citizens benefit from digital services. This is important for achieving broader economic inclusivity and reducing inequality.
• Social Impact: Improved access to broadband can have a significant social impact, enabling better access to healthcare information, government services, and social networks, thus improving overall quality of life and contributing to social stability.

The broadband pricing data for East African countries:

Strengthening Financial Reserves and Expanding Government Financing

1. Assets

• Total Assets: TZS 24,383,497,509 (July 2024) vs. TZS 24,053,944,299 (June 2024)
• Cash and Cash Equivalent: TZS 5,757,525,936 (July 2024) down from TZS 6,134,001,974 (June 2024)
• Holdings of Special Drawing Rights (SDRs): Significant increase to TZS 24,351,879 (July 2024) from TZS 3,128,172 (June 2024)
• Gold: TZS 76,146,910 (July 2024) up from TZS 72,500,972 (June 2024)
• Foreign Currency Marketable Securities: TZS 7,972,789,612 (July 2024) up from TZS 7,786,633,780 (June 2024)
• Advances to Government: TZS 4,881,173,693 (July 2024) up from TZS 4,339,144,564 (June 2024)
• Equity Investments: TZS 139,716,050 (July 2024) slightly up from TZS 137,636,976 (June 2024)

2. Liabilities

• Total Liabilities: TZS 21,838,324,567 (July 2024) vs. TZS 21,680,428,229 (June 2024)
• Currency in Circulation: TZS 8,232,834,306 (July 2024) up from TZS 8,039,712,115 (June 2024)
• Deposits - Banks and Non-Bank Financial Institutions: TZS 2,663,665,800 (July 2024) down from TZS 2,886,546,472 (June 2024)
• Deposits - Others: TZS 1,880,606,846 (July 2024) up from TZS 1,676,983,773 (June 2024)
• Foreign Currency Financial Liabilities: TZS 5,169,465,636 (July 2024) down from TZS 5,297,148,931 (June 2024)
• IMF Related Liabilities: TZS 1,169,639,527 (July 2024) slightly up from TZS 1,152,242,790 (June 2024)
• Allocation of Special Drawing Rights (SDRs): TZS 2,022,413,379 (July 2024) up from TZS 1,977,704,094 (June 2024)

3. Equity

• Total Equity: TZS 2,545,172,942 (July 2024) up from TZS 2,373,516,070 (June 2024)
• Reserves: TZS 2,445,172,942 (July 2024) up from TZS 2,273,516,070 (June 2024)

Overall Summary

• The Bank of Tanzania's financial position shows an increase in total assets and equity from June to July 2024.
• Key changes include increases in holdings of SDRs, gold reserves, foreign currency marketable securities, and advances to the government.
• Liabilities also increased, primarily due to the growth in currency circulation and deposits from non-banking institutions.

Bank of Tanzania as of July 2024 provides insights into various aspects of Tanzania's economic development. Here's what the data suggests

Tanzania appears to be on a path of economic growth, supported by increased financial reserves, active government financing, and rising economic activity. However, careful management of inflation, debt, and reliance on international financial support will be crucial to ensure sustainable economic development.

1. Increased Foreign Reserves and SDR Holdings

• Foreign Currency Marketable Securities and Holdings of Special Drawing Rights (SDRs) have increased.
• The rise in foreign reserves and SDR holdings indicates that Tanzania is bolstering its financial buffers against external shocks, which is a positive sign for economic stability and confidence in the Tanzanian economy. It may also reflect successful export performance or increased foreign investment, which contributes to a healthier balance of payments.

2. Growth in Government Financing

• Advances to Government have increased significantly.
• The government is borrowing more from the central bank, which could be aimed at financing development projects, infrastructure, or other critical public expenditures. While this can drive economic growth by stimulating investment, it also suggests that the government is relying more on domestic financing, which may increase domestic debt if not managed carefully.

3. Higher Currency in Circulation

• The Currency in Circulation has increased.
• An increase in currency circulation is often linked to higher economic activity, as businesses and consumers engage in more transactions. This could signal a growing economy with rising demand for goods and services. However, it might also point to inflationary pressures if the increase in currency supply outpaces economic growth.

4. Increased Equity and Reserves

• Total Equity and Reserves have grown.
• The increase in reserves and equity indicates that the Bank of Tanzania is strengthening its financial position, possibly to support monetary policy initiatives or to ensure stability in the financial system. This is crucial for maintaining investor confidence and managing inflation, which are important for sustainable economic development.

5. Mixed Signals in Liabilities

• While there is a decrease in Foreign Currency Financial Liabilities and Deposits from Banks and Non-Bank Financial Institutions, there is an increase in Deposits from Others and IMF Related Liabilities.
• The reduction in foreign currency liabilities could imply an improved external debt position or successful repayments, which is positive. However, the increased reliance on IMF-related liabilities suggests that Tanzania might be depending more on international financial support, which could be a double-edged sword depending on how the funds are utilized.

Overall Implications for Economic Development

• Strengthened Financial Position: The data suggests that Tanzania is building a more robust financial system with increased reserves and equity, which is vital for long-term economic stability.
• Active Government Financing: The rise in government advances indicates ongoing investments in development projects, which are crucial for economic growth. However, it also highlights the need for prudent fiscal management to avoid excessive domestic debt.
• Rising Economic Activity: Increased currency circulation points to growing economic activity, which is a positive sign of development. However, inflation management will be key to sustaining this growth.

Tanzania's position in the list of African countries with the weakest currencies, as of August 2024, highlights certain economic challenges the country faces. The Tanzania Shilling (TZS) ranks 8th among the weakest currencies in Africa, with an exchange rate of approximately 2,699.92 TZS per US dollar.

Economic Implications for Tanzania:

1. Inflationary Pressure: A weak Tanzania Shilling can lead to inflation, particularly in an economy that relies heavily on imports. Essential goods like fuel, medicine, and food, which are often imported, become more expensive as the currency weakens. This results in higher costs for consumers, reducing their purchasing power.
2. Impact on Local Commerce: The depreciation of the shilling could make imported goods prohibitively expensive, potentially benefiting local producers by making their goods more competitive domestically. However, if local industries rely on imported raw materials, their production costs could rise, leading to higher prices even for locally produced goods.
3. Investment Ecosystem: A weak currency can deter foreign investment, as investors may perceive the economy as unstable. This can lead to reduced capital inflows, slowing economic growth. Moreover, the cost of repaying foreign-denominated debt increases, placing additional strain on the national budget.
4. Exports and Trade Balance: On the positive side, a weaker shilling can make Tanzania's exports cheaper and more competitive on the global market. This could improve the trade balance if the country can increase its export volumes. However, if the global demand for Tanzania's exports is low, this advantage might not fully materialize.
5. Social Impact: The depreciation of the currency and the resultant inflation could exacerbate poverty and inequality, particularly in rural areas where people are more vulnerable to price changes. This could lead to increased social tensions and potentially destabilize the country.

Comparative Context:

• São Tomé & Príncipe and Sierra Leone top the list with extremely high exchange rates, indicating severe economic challenges, far greater than Tanzania's.
• Nigeria, the largest economy in Africa, also appears on the list, suggesting that even larger economies can face significant currency depreciation.

The ranking of the top 10 African countries with the weakest currencies as of August 2024 provides insight into the economic challenges faced by these nations

These exchange rates reflect a combination of inflation, economic mismanagement, and external factors affecting these countries' economies. While weaker currencies can sometimes benefit export-driven growth, the overall impact tends to increase the cost of living, reduce purchasing power, and hinder economic development. For Tanzania, ranked 8th on this list, the key challenge is managing inflation and stabilizing the economy to prevent further currency depreciation.

1. São Tomé & Príncipe (Dobra - STD)

• Exchange Rate: 22,281.8 STD per USD
  • Context: The Dobra’s extremely high exchange rate indicates severe depreciation, reflecting the small island nation's economic instability. With such a weak currency, the cost of imports becomes prohibitively expensive, straining the economy and making essential goods less accessible to the population.

2. Sierra Leone (Leone - SSL)

• Exchange Rate: 20,969.5 SSL per USD
  • Context: Sierra Leone’s economy is heavily reliant on natural resources, and the Leone’s weakness suggests significant economic stress. The high exchange rate exacerbates inflation, increasing the cost of living and putting pressure on local businesses that depend on imported goods.

3. Guinea (Guinean Franc - GNF)

• Exchange Rate: 8,630 GNF per USD
  • Context: Guinea’s currency reflects challenges in managing inflation and economic stability. Despite the country’s rich natural resources, including bauxite, the Guinean Franc's weakness limits economic growth and makes it difficult for the government to control rising prices.

4. Madagascar (Malagasy Ariary - MGA)

• Exchange Rate: 4,600 MGA per USD
  • Context: Madagascar’s economy is primarily agrarian, and the depreciation of the Ariary makes importing machinery and fuel expensive, hindering economic development. The currency's weakness also affects the purchasing power of consumers, particularly in urban areas.

5. Uganda (Ugandan Shilling - UGX)

• Exchange Rate: 3,725.10 UGX per USD
  • Context: Uganda’s economy, which has been growing steadily, is still vulnerable to currency fluctuations. The depreciation of the Ugandan Shilling impacts inflation rates and increases the cost of imported goods, though it may benefit export sectors like agriculture.

6. Burundi (Burundian Franc - BIF)

• Exchange Rate: 2,878 BIF per USD
  • Context: Burundi’s economic challenges, including political instability and limited access to international markets, are reflected in the weak Burundian Franc. The high exchange rate increases the cost of imports, which are essential for development, and adds to the economic burden on the population.

7. Democratic Republic of Congo (Congolese Franc - CDF)

• Exchange Rate: 2,871 CDF per USD
  • Context: The Congolese Franc’s depreciation is a result of ongoing political instability and economic mismanagement. The weak currency increases the cost of living, especially in urban centers, and hinders the country’s ability to leverage its vast natural resources effectively.

8. Tanzania (Tanzania Shilling - TZS)

• Exchange Rate: 2,699.92 TZS per USD
  • Context: Tanzania's relatively high exchange rate compared to stronger African currencies points to inflationary pressures and economic challenges. While the weaker Shilling could make Tanzania exports more competitive, it also raises the cost of imports, affecting both consumers and businesses.

9. Malawi (Kwacha - MWK)

• Exchange Rate: 1,734.5 MWK per USD
  • Context: Malawi’s Kwacha reflects the country’s struggles with economic diversification and reliance on agriculture. The weak currency leads to higher costs for imported goods, which are critical for both consumers and the agricultural sector.

10. Nigeria (Naira - NGN)

• Exchange Rate: 1,590 NGN per USD
  • Context: Despite being Africa’s largest economy, Nigeria’s Naira has weakened significantly due to inflation, reliance on oil exports, and economic mismanagement. The high exchange rate affects the cost of living and puts pressure on businesses reliant on imported goods.