Tanzania's Mobile Money Dilemma: Government Initiatives to Lower Transaction Costs

Sending and withdrawing 10,000 Tanzanian Shillings, the total cost varies depending on whether you are sending money within the same mobile network or to a different mobile network. For same-network transfers (M-Pesa to M-Pesa), the total cost is approximately 20.04% of the amount sent, while for cross-network transfers (M-Pesa to Tigopesa), the total cost is approximately 21.49% of the amount sent. These costs include both transaction fees and government levies.

Sending Money:

1. Same Mobile Network (M-Pesa to M-Pesa):
2. Total Fee: 350 Tanzanian Shillings
3. Government Levy: None
4. Different Mobile Network (M-Pesa to Tigopesa):
5. Total Fee: 495 Tanzanian Shillings
6. Government Levy: None

Withdrawing Cash:

Total Fee for Withdrawal: 1,552 Tanzanian Shillings

• M-Pesa Fee: 1,450 Tanzanian Shillings
• Government Levy: 102 Tanzanian Shillings

Total Cost for Sending and Withdrawing 10,000 Tanzanian Shillings:

Same Mobile Network (M-Pesa to M-Pesa):

• Sending Cost: 350 Tanzanian Shillings
• Withdrawal Cost: 1,552 Tanzanian Shillings
• Government Levy: 102 Tanzanian Shillings
• Total Cost: 2,004 Tanzanian Shillings

Different Mobile Network (M-Pesa to Tigopesa):

• Sending Cost: 495 Tanzanian Shillings
• Withdrawal Cost: 1,552 Tanzanian Shillings
• Government Levy: 102 Tanzanian Shillings
• Total Cost: 2,149 Tanzanian Shillings

Percentage of Total Amount Sent:

Same Mobile Network (M-Pesa to M-Pesa):

• Total Cost as a Percentage of 10,000 Tanzanian Shillings: (2,004 / 10,000) * 100% ≈ 20.04%

Different Mobile Network (M-Pesa to Tigopesa):

• Total Cost as a Percentage of 10,000 Tanzanian Shillings: (2,149 / 10,000) * 100% ≈ 21.49%Top of Form

It's essential for governments to strike a balance between ensuring the sustainability of mobile money operators and protecting the interests of consumers, particularly those with lower incomes. By implementing these strategies and policies, governments can help reduce the costs of sending and receiving money through mobile networks, ultimately fostering economic growth and financial inclusion.

Reducing the costs of sending and receiving money through mobile networks is crucial for financial inclusion and economic growth, especially in regions where these costs are relatively high. To address this issue, governments can consider implementing various strategies and policies:

Regulation and Oversight:

• Governments can regulate and oversee mobile money operators to ensure fair pricing practices and to prevent monopolistic behavior that can lead to high costs.
• Implementing price ceilings or caps on transaction fees can help control costs for consumers.

Competition Enhancement:

• Encourage healthy competition among mobile network operators by facilitating the entry of new players into the market. More competition often leads to lower prices.
• Promote interoperability between different mobile money services to allow customers to send money across networks easily.

Taxation and Levies:

• Reevaluate and potentially reduce government levies and taxes imposed on mobile money transactions. High taxes can significantly increase the cost of using these services.
• Consider alternative revenue sources for the government to compensate for the reduction in mobile money transaction taxes.

Consumer Education:

• Invest in consumer education campaigns to ensure that people are aware of the costs associated with mobile money transactions and the most cost-effective ways to use these services.

Infrastructure Investment:

• Invest in improving digital infrastructure, including network coverage and reliability, which can help reduce operational costs for mobile network operators, potentially leading to lower fees for consumers.

Partnerships and Collaboration:

• Facilitate partnerships between mobile network operators and financial institutions to create innovative financial products and services that can reduce costs while expanding access to financial services.

Incentives for Cost Reduction:

• Provide incentives or subsidies to mobile network operators that demonstrate efforts to reduce the costs of their services, especially for low-income customers.

Transparent Pricing:

• Mandate transparent pricing practices, ensuring that customers are fully aware of all fees and charges associated with mobile money transactions.

Research and Data Analysis:

• Conduct regular research and data analysis to monitor the cost structures of mobile money services and identify areas where costs can be reduced without compromising service quality or security.

Financial Inclusion Policies:

• Develop and implement comprehensive financial inclusion policies that prioritize affordable and accessible financial services for all citizens.