Rising Transaction Values and Growing USD Dependence

From 2020 to 2024, Tanzania’s payment system saw significant shifts in transaction patterns. TISS transactions in Tanzania Shillings (TZS) grew in value by 68.6% (from TZS 186,369 billion in 2020 to TZS 314,233 billion in 2024) despite a 2.92% drop in volume in 2024. Meanwhile, USD-denominated transactions surged—the volume increased by 204%, from 227,894 in 2020 to 692,271 in 2024, while the value rose by 108%, from TZS 16,440 million to TZS 34,215 million. These trends indicate a shift towards high-value transactions in TZS and a growing preference for USD in financial settlements, reflecting deeper integration with global trade and potential shifts in monetary dynamics.

The trends in both Tanzania Shilling (TZS) and United States Dollar (USD) transactions reveal important insights about Tanzania’s financial system, monetary policy, and economic activities.

1. TZS Transactions: High Value Growth Despite Volume Decline

• The volume of transactions (number of transactions) peaked in 2023 at 4.11 million but dropped slightly in 2024 to 3.98 million (a 2.92% decrease).
• However, the value of transactions continued to grow significantly, reaching TZS 314,233 billion in 2024, a 22.87% increase from 2023.

What It Means:

✅ Higher transaction values but fewer transactions indicate a shift toward larger-value transactions. This suggests:

• Increased high-value economic activities, such as major government, corporate, and infrastructure payments.
• Inflationary effects or currency depreciation, where more shillings are needed for transactions.
• Financial consolidation—fewer but higher-value transactions may indicate improved digital banking efficiency or businesses reducing transaction frequency.

2. USD Transactions: Strong and Consistent Growth

• The volume of USD transactions has increased every year, reaching 692,271 transactions in 2024, a 27.03% increase from 2023.
• The value of USD transactions also grew steadily, reaching TZS 34,215 million in 2024, a 24.48% increase from 2023.

What It Means:

✅ Increased reliance on USD transactions suggests:

• Greater use of USD for trade and financial settlements, possibly due to exchange rate volatility or confidence in the dollar.
• More foreign investment and international transactions, reflecting economic globalization and foreign trade expansion.
• Hedging against Tanzania Shilling fluctuations, as businesses might prefer USD for stability.

3. TZS vs. USD Transactions: A Shift Toward Dollarization?

• While TZS transactions showed mixed trends (declining volume but growing value), USD transactions consistently increased in both volume and value.
• This suggests a partial shift toward dollarization in Tanzania's financial system, where businesses and individuals are increasing their reliance on the USD.

Implications for Tanzania's Economy:

• Monetary Policy Challenges: If more transactions shift to USD, the Bank of Tanzania (BoT) may have less control over money supply and inflation.
• Foreign Exchange Pressure: Higher USD demand could put pressure on Tanzania’s foreign exchange reserves.
• Investment Confidence: A rising USD transaction trend could indicate more foreign investor participation, boosting the economy.

Final Thought

The trends suggest that while local currency transactions remain dominant, foreign currency transactions are growing faster. This could indicate:

• A strengthening corporate and trade sector using more USD.
• Macroeconomic adjustments due to inflation, exchange rate policies, or economic shifts.

TISS (Tanzania Interbank Settlement System) transactions from 2020 to 2024:

TISS Transactions Denominated in Tanzania Shillings (TZS)

1. Transaction Volume (Million)
   • 2020: 2.48 million
   • 2021: 3.26 million (31.37% increase)
   • 2022: 3.83 million (17.68% increase)
   • 2023: 4.11 million (7.28% increase)
   • 2024: 3.98 million (2.92% decrease)

Trend: A steady increase in volume from 2020 to 2023, but a slight decline in 2024.

2. Transaction Value (TZS billion)
   • 2020: 186,369 billion
   • 2021: 174,309 billion (6.47% decrease)
   • 2022: 207,503 billion (19.04% increase)
   • 2023: 256,028 billion (23.39% increase)
   • 2024: 314,233 billion (22.87% increase)

Trend: Despite a drop in 2021, the value of transactions has shown consistent growth from 2022 to 2024.

TISS Transactions Denominated in United States Dollars (USD)

1. Transaction Volume
   • 2020: 227,894
   • 2021: 289,979 (27.24% increase)
   • 2022: 415,752 (43.37% increase)
   • 2023: 545,161 (31.13% increase)
   • 2024: 692,271 (27.03% increase)

Trend: Continuous growth in transaction volume every year, indicating increased dollar transactions.

2. Transaction Value (TZS million)
   • 2020: 16,440
   • 2021: 25,210 (29.43% increase)
   • 2022: 25,210 (18.48% increase)
   • 2023: 27,502 (9.09% increase)
   • 2024: 34,215 (24.48% increase)

Trend: The value of USD transactions has steadily increased each year, with the highest growth rate in 2024.

Key Insights:

• TZS transactions experienced a drop in volume in 2024 but saw a significant increase in value.
• USD transactions have shown consistent growth in both volume and value, highlighting the increasing role of USD-based transactions in Tanzania’s financial system.

Tanzania’s financial transactions landscape is undergoing a significant digital transformation, with Electronic Fund Transfers (EFT) surging by 44.7% in volume from 14.57 million in 2020 to 21.08 million in 2024, while cheque transactions continue to decline. The value of EFT transactions grew by 77%, reaching TZS 16,769.88 billion in 2024, signaling a strong shift toward digital payments. Conversely, TZS cheque usage dropped by 36% in volume and 17% in value, while USD cheque transactions plummeted by 44% in volume and 35.7% in value over the same period. This trend reflects the increasing adoption of faster, more secure electronic payment methods, reducing reliance on traditional cheques in Tanzania's financial system.

The data from Electronic Fund Transfers (EFT), Tanzanian Shilling (TZS) cheque transactions, and United States Dollar (USD) cheque transactions highlight key shifts in Tanzania's financial landscape, indicating a preference for digital payments while traditional cheque usage declines.

1. Electronic Fund Transfers (EFT): Strong and Consistent Growth

• Volume of transactions rose from 14.57 million in 2020 to 21.08 million in 2024, reflecting a 44.7% increase over five years.
• Value of transactions increased from TZS 9,479.10 billion in 2020 to TZS 16,769.88 billion in 2024, growing by 77% over the period.
• The growth rate in volume and value remained positive every year, with double-digit growth in 2023 (13%) and 2024 (11%).

What It Means:

✅ Rising preference for digital payments as more businesses and individuals shift from paper-based payments to electronic fund transfers.
✅ Higher transaction values indicate increased economic activity, financial inclusion, and confidence in digital banking infrastructure.

2. TZS Cheque Transactions: Steady Decline

• The volume of TZS cheque transactions fell by 36%, from 651,829 in 2020 to 418,388 in 2024.
• The value of transactions dropped from TZS 2,118.08 billion in 2020 to TZS 1,758.04 billion in 2024, a 17% decline.
• The rate of decline accelerated over time, with a 14% drop in cheque volume and a 7% drop in cheque value in 2024 alone.

What It Means:

✅ Paper-based payments are rapidly declining, as businesses and individuals move towards faster, more efficient digital alternatives.
✅ Reduced cheque dependency indicates financial sector modernization, possibly driven by regulatory support and increased banking efficiency.

3. USD Cheque Transactions: Sharpest Decline

• Volume of USD cheque transactions declined by 44%, from 113,643 in 2020 to 63,244 in 2024.
• Value of transactions dropped from USD 238.22 million in 2020 to USD 153.04 million in 2024, a 35.7% reduction.
• The biggest single-year drop occurred in 2024, with a 28% decline in volume and 20% decline in value.

What It Means:

✅ Foreign currency cheque usage is declining even faster than local cheque transactions, signaling an even greater shift towards electronic payments in international trade and finance.
✅ Declining USD cheque usage could indicate improved international banking channels, such as wire transfers, mobile money, and SWIFT transactions.

Final Thought: Digital Over Paper-Based Transactions

The trends in TACH transactions clearly show that Tanzania is moving towards a digital payment ecosystem. Electronic Fund Transfers (EFT) are rising, while cheque transactions (both TZS and USD) are declining. This shift suggests:

• A more efficient banking system where businesses prefer instant fund transfers over cheques.
• A likely policy push towards financial digitization, reducing reliance on paper-based transactions.
• Stronger financial inclusion, as electronic transactions make payments faster, cheaper, and more accessible to a wider population.

TACH Transactions Trends (2020–2024)

The data from Electronic Fund Transfers (EFT), Tanzanian Shilling (TZS) cheque transactions, and United States Dollar (USD) cheque transactions highlight key shifts in Tanzania's financial landscape, indicating a preference for digital payments while traditional cheque usage declines.

1. Electronic Fund Transfers (EFT): Strong and Consistent Growth

Key Takeaways:

✅ Transaction volume grew by 44.7% from 14.57 million in 2020 to 21.08 million in 2024.
✅ Transaction value surged by 77% from TZS 9,479.10 billion to TZS 16,769.88 billion.
✅ The growth rate remained positive every year, with strong double-digit increases in 2023 and 2024.

What It Means:

• Increasing adoption of electronic payments by businesses and individuals.
• Higher transaction values signal economic expansion and greater financial activity.

2. TZS Cheque Transactions: Steady Decline

Key Takeaways:

❌ Cheque volume dropped by 36% from 651,829 in 2020 to 418,388 in 2024.
❌ Cheque value declined by 17%, from TZS 2,118.08 billion to TZS 1,758.04 billion.
❌ The decline accelerated over time, with 14% fewer cheques in 2024 compared to 2023.

What It Means:

• Businesses and individuals are reducing cheque usage, shifting to faster and more secure electronic payment methods.
• Financial sector modernization is accelerating, with paper-based payments becoming obsolete.

3. USD Cheque Transactions: Sharpest Decline

Key Takeaways:

❌ USD cheque volume declined by 44% from 113,643 in 2020 to 63,244 in 2024.
❌ USD cheque value dropped by 35.7%, from USD 238.22 million to USD 153.04 million.
❌ The biggest single-year decline happened in 2024, with a 28% drop in volume and 20% drop in value.

What It Means:

• International trade and corporate transactions are shifting towards electronic alternatives like wire transfers and SWIFT payments.
• Foreign currency cheque usage is declining even faster than local cheque transactions, suggesting increased adoption of digital banking solutions.

Final Thought: The Rise of Digital Transactions

The TACH transaction trends from 2020 to 2024 clearly show Tanzania’s transition towards a digital payment ecosystem:
✅ Electronic Fund Transfers (EFT) are rapidly increasing, showing confidence in digital banking.
❌ Cheque transactions (both TZS and USD) are steadily declining, highlighting the phasing out of paper-based payments.