Tanzania 2017 W5 Report...Expanded registration and ID issuance should have a positive impact on new financial account registration, given that IDs are required to open an account

TANZANIA WAVE 5 REPORTFIFTH ANNUAL FII TRACKER SURVEYConducted July-August 2017

June 2018

PUTTING THE USER FRONT AND CENTER

2

The Financial Inclusion Insights (FII) program responds to the need identified by multiple stakeholders for timely demand-side data and practical insights into digital financial services (DFS), including mobile money, and the potential for their expanded use among the poor.

The FII team implements nationally representative population surveys and qualitative research studies in Bangladesh, India, Indonesia, Kenya, Nigeria, Pakistan, Tanzania and Uganda to:

• Track access to and demand for financial services, especially DFS;

• Measure adoption and use of DFS among key underserved groups (females, poor, rural, etc.);

• Identify drivers and barriers to further adoption of DFS;

• Evaluate the agent experience and the performance of mobile money agents; and

• Produce actionable, forward-looking insights based on rigorous data to support product and service development and delivery.

The FII program is managed by InterMedia. Visit the FII Resource Center to learn more: www.finclusion.org.

TANZANIA

By InterMedia

http://www.finclusion.org/

Access to a bank – Counts individuals who use a full-service bank account either registered in their name or held by someone else.

Access to mobile money or an NBFI – Counts individuals who have ever used a mobile money service or a full-service NBFI.

Access & trial – Counts individuals who have a bank account registered in their name or use a bank account that is registered to someone else, or have ever used a mobile money service, or a full-service NBFI.

Active registered user – An individual who has an account registered in their name with a full-service financial institution and has used it in the last 90 days.

Advanced user – An active registered user who has ever used their account for saving, borrowing, insurance, investment, paying bills or receiving wages or government benefits. Buying airtime top-ups is considered an advanced use of a bank account or NBFI account but not a mobile money account.

Airtime – Minutes of talk time available on a mobile phone. Airtime top-up (adding minutes) is a basic mobile money activity, but is considered an advanced bank or NBFI activity.

Basic use – Cash-in (deposit) or cash-out (withdraw), transfer money to another individual, or conduct account maintenance.

Below the poverty line – In this particular study, adults living on less than $2.50 per day in 2005 purchasing power parity U.S. Dollars, as classified by the Poverty Probability Index.

Confidence interval (95%) – The range of values within which the observed value of a statistic will be found in 95 out of 100 repeat measurements.

Cooperative – Typically, a business or other professional organization that is owned and run jointly by its members, who share profits or benefits. Cooperatives may release some of the profits/funds as loans to its members.

Credit-only nonbank financial institutions – Financial institutions that only disburse loans to their customers and are therefore not considered full service.

Customer journey – A series of progressive stages through which individuals become more active users of more sophisticated financial services.

Digital financial inclusion – Counts individuals who have an account in their name with a full-service financial institution that offers digital services (e.g., online account access, debit/ATM card, credit card, electronic cash transfers).

Digital financial services (DFS) – Financial services provided through an electronic platform (e.g., mobile phones, debit or credit electronic cards, internet).

Digital stored-value account – A mobile money account or a full-service bank or NBFI account that offers digital services.

Financial inclusion – Individuals who hold an account with an institution that provides a full suite of financial services and comes under some form of government regulation.

Financial literacy -- Basic knowledge of four fundamental concepts in financial decision making (interest rates, interest compounding, inflation, and risk diversification) as measured by the Standard and Poor’s Rating Service’s Global Financial Literacy Survey.

Full-service financial institutions – Financial institutions that offer loans to their customers and at least one of the following additional services: savings, money transfers, insurance, or investments.

Microfinance institution (MFI) – An organization that offers financial services to low-income populations. Almost all give loans to their members, and many offer insurance, deposit and other services.

Mobile money (MM) – A service that allows a mobile phone to be used for storing and transferring money, and potentially accessing other financial services.

Nonbank financial institution (NBFI) – A financial organization that is not formally licensed as a bank or a mobile money provider, but whose activities are regulated, at least to some extent, by the central bank within the country. Such financial institutions include microfinance institutions (MFIs), cooperatives, Post Office (Savings) Banks and savings and credit cooperatives (SACCOs), etc.

Numeracy -- The ability to use basic math skills, including counting, addition, division, multiplication and computing short- and long-term interest rates.

Post Office (Savings) Bank – A bank that offers savings and money transfers and has branches at local post offices.

Poverty Probability Index (PPI) – A measurement tool wherein a set of country-specific survey questions are used to compute the likelihood that an individual’s income is below a specific threshold.

Registered user – Counts individuals who have a financial account registered in their name or registered jointly in their and someone else’s name.

Savings and credit cooperative (SACCO) – A self-help group owned and managed by its members. Its main purpose is to build up funds through regular contributions by each member, with the aim of providing affordable credit and collective investments.

Unregistered/over-the-counter (OTC) user – An individual who has used a financial service through someone else’s account, including a mobile money agent’s account or the account of a family member or a neighbor.

Urban/rural – Urban and rural persons are defined according to their residence in urban or rural areas as prescribed by the national bureau of statistics.

Value-added services – These are non-core financial services that go beyond the standard services provided by financial institutions.

KEY DEFINITIONS

3

TANZANIA

http://www.finclusion.org


https://www.povertyindex.org/about-ppi

CONTENTS

4

Financial Inclusion Overview 5Customer Journey 20

Nonusers 38

Unregistered Users 43Registered Inactive Users 49

Active Basic Users 51

Advanced Users 54Key Indicators Summary 64

TANZANIA

FINANCIAL INCLUSION OVERVIEW

5

TANZANIA



What is financial inclusion?Financial inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs –transactions, payments, savings, credit and insurance – delivered in a responsible and sustainable way (The World Bank). Financially included individuals are those who have an account in their name with a full-service financial institution.

How is it measured?We measure financial inclusion as the percentage of adults (15+ years old) who report having at least one account in their name with an institution that offers a full suite of financial services, and comes under some form of government regulation.

How is it created?Financial inclusion is created through the uptake and use of individual accounts with institutions that offer a full suite of financial services – savings, credit, money transfers, insurance and investment. Full-service financial institutions include banks, mobile money service providers, and nonbank financial institutions, such as deposit-taking microfinance institutions (MFIs)and financial cooperatives.

What institutions and services do not count?Individuals who own accounts with institutions that are not full service, such as credit-only microfinance institutions (MFIs), are not considered financially included. Individuals who do not have their own full-service account or use someone else’s account are not considered financially included. Individuals who only use services such as money guards, savings collectors, and digital recharge cards that are not attached to a bank or MFI account are also considered financially excluded.

UNDERSTANDING FINANCIAL INCLUSION

6

TANZANIA



• Fifth survey (Wave 5) conducted from July 8, 2017, to August 28, 2017. Surveys measure national trends on key indicators of financial inclusion since 2013.

• Target population: Adults aged 15+ residing in households.

• Sampling frame: List of wards from the 2012 Housing and Human Population Census.

• Sample design: Stratified multistage sample of 3,080 adults designed by InterMedia in collaboration with the Kyela Research Agency:

o Stratification by urban/rural within each region;

o First stage: Selection of 154 wards (104 rural and 50 urban);

o Second stage: Selection of two villages per ward;

o Third stage: Selection of 10 households per village;

o Fourth stage: Selection of one adult member per household using an automated Kish grid administered on handheld tablet computers.

• Face-to-face interviews administered at the household using handheld tablet computers.

• Sampling weights align the demographic characteristics of the sample with the 2016 national population projections produced by the Tanzania National Bureau of Statistics.

• Weighted data used to generate representative statistics at the national level, and for urban and rural populations separately. Weighted percentages are reported together with unweighted respondent counts.

• Achieved sample size: N=3,060.

ABOUT THE SURVEY

7

TANZANIA

Demographic characteristics Percentages

Male 48

Female 52

Urban 34

Rural 66

Above the $2.50/day poverty line 23

Below the $2.50/day poverty line 77

Age: 15-24 34

25-34 25

35-44 17

45-54 11

55+ 13

Basic literacy 81

Basic numeracy 94

Source: InterMedia Tanzania FII Tracker survey, Wave 5 (N=3,060, 15+), July-August 2017.

2017: National demographics (Shown: Percentage of Tanzania adults, N=3,060)



COUNTRY CONTEXT

8

TANZANIA

In 2017, the Government of Tanzania and the Bank of Tanzania (BOT) continued to vigorously promote greater access to formal financial services through the implementation of the National Financial Inclusion Framework (NFIF) 2014-2016, the enforcement of new and existing laws and regulations, and the establishment of new public-private partnerships.

• The Bank of Tanzania achieved its target under the NFIF for geographic access to financial points of service. In 2016, BOT set a new financial inclusion goal of 70 percent of the population living within five kilometers of a financial access point by 2017. FII 2017 data shows 74 percent of adults lived within five kilometers of a point-of-service (POS).

• Private investment was promoted through amendments to the Electronic and Postal Communications Act and the 2017 Finance Bill that allowed regional investment in the initial public offerings (IPOs) of Tanzanian telecom companies, opening investment opportunities to all East Africans. Greater investment should promote growth in access to financial services delivered via mobile networks.

Increased efforts to issue national electronic IDs to Tanzanian citizens followed the suspension of officials from the national electronic-identification-card project over suspected corruption. Expanded registration and ID issuance should have a positive impact on new financial account registration, given that IDs are required to open an account.

Strong economic growth created a positive outlook for the expansion of financial inclusion. The economy has enjoyed high growth, averaging 6-7 percent, for a decade

as a result of infrastructure development and growing consumption. In 2017, economic growth slowed somewhat after the inflation rate rose to 6.5%.

• Innovations in digital financial services are expanding in Tanzania. A year after interoperability was fully operational, more Tanzanians now transact across different networks at no extra cost. A GSMA report shows that in the first six months of interoperability, 6 percent of Vodacom customers had sent or received a P2P transfer directly to or from a Tigo Pesa or Airtel money account. Airtel reported the total value of interoperable transactions was about $16 million, with a 10 percent increase in transactions every month.

• New partnerships are enabling electronic payment platforms such as the new electronic infrastructure for payments established by the Tanzania Postal Corporation in partnership with ICT integration firm Maxcom Africa. This initiative allows more Tanzanians to pay taxes and other bills electronically in their local post offices and facilitate revenue collection.

• Tanzania’s financial service providers continued to improve their retail payment platforms.

o Ecobank Tanzania, in partnership with Visa and MasterCard, launched two digital retail payment solutions, mVisa and Masterpass QR, in September 2017. The products allow consumers to access their accounts and make merchant and P2P payments through a smartphone, using Ecobank’s mobile application.

o In September 2017, Halotel, in partnership with FINCA Microfinance Bank, launched Halo Yako, a savings product that allows customers to save money on their phones.



https://www.afi-global.org/sites/default/files/publications/tanzania-national-financial-inclusion-framework-2014-2016.pdf

http://www.theeastafrican.co.ke/business/Tanzania-opens-telecom-IPOs-to-East-Africans/2560-3991372-69giwmz/index.html

https://www.reuters.com/article/tanzania-corruption/tanzania-suspends-officials-over-national-id-card-project-idUSL2N1591B2

http://www.worldbank.org/en/country/tanzania/overview

https://www2.deloitte.com/content/dam/Deloitte/tz/Documents/tax/tz-budget-economic-outook-2017.pdf

https://www.gsmaintelligence.com/research/?file=5176a26de119933587cb93811eb81be4&download

http://maxcomafrica.com/milestones/

http://www.thecitizen.co.tz/News/Business/Ecobank-Tanzania-unveils-two-digital-payment-systems/1840414-4104258-154c2km/index.html

http://www.finca.co.tz/news/halotel-finca-introduce-an-innovative-mobile-banking-solution-2/

NOTABLE STATISTICS

9

TANZANIA

3% have a full-service NBFI account

9% have a full-service bank account

55% have a registered mobile money account

56% Financially included

*Overlap representing those who have multiple kinds of financial accounts is not shown.

2017: Financial inclusion*(Shown: Percentage of Tanzania adults, N=3,060)

• In 2017, 56% of Tanzania’s adult population was financially included via a registered account with a full-service financial institution. Financial inclusion is driven by mobile money; 55% of adults had mobile money accounts, versus 9% who had separate bank accounts, and 3% who had NBFI accounts.

o The mobile money market in Tanzania is in a consolidation phase; after strong growth driven by marketing and customer promotions in 2014-2015, access did not change significantly from 2015-2017.

o Registered users decreased in 2015-2016 because of the cancellation of unregistered SIM cards, widespread deactivations of “fake” phones, and new taxes that raised mobile money transaction costs. Many of the former registered users switched to over-the-counter (OTC) mobile money use. Most of these individuals remained OTC users in 2017, accounting for 13% of adults.

o While registered users of mobile money increased by 2 percentage points, from 53% of adults in 2016 to 55% in 2017, this change falls within the survey margin of error, and is, therefore, not statistically significant. The registered user indicator remained 6 percentage points below its 2015 peak of 61% of adults.

o Active registered users of mobile money (on a 90-day basis) were 42% of the population in 2017. This indicator is 11 percentage points below the 2015 peak of 53%, which reflects the switch to OTC by former registered users.

o The advanced user group grew by 4% of the adult population as more registered users progressed on the customer journey to adopt advanced services, such as savings, credit, bill pay and merchant pay.

• Digital credit is growing, and 9% of adults have taken a loan using their mobile phone. Just over half of this group (53%) reported late repayment of their loans. The most commonly reported outcomes of late repayment were an extra fee or rollover fee, and/or a reduction in future loan limits. Few respondents reported more serious consequences, such as confiscation of property or legal action against them.




http://www.bbc.com/news/world-africa-36558056

http://www.techweez.com/2016/06/13/tax-on-mobile-money-tanzania/

11 48 505

24 44 600.9 8 63 634

8 61 625

10 62 64

Nonbank financial institution Bank Mobile money NBFI, bank, and/or mobile money

2013 (N=2,997) 2014 (N=3,000) 2015 (N=3,001) 2016 (N=3,029) 2017 (N=3,060)

ACCESS & TRIAL OF FINANCIAL SERVICES

10

TANZANIA

Access & trial (Shown: Percentage of Tanzania adults, by year)

NA

95% confidence interval

• In 2017, almost two-thirds (64%) of the adult population accessed a formal financial service. While this indicator has not increased significantly since 2015, access is still 14 percentage points greater than its 2013 level.

• Growth in access to formal financial services was driven by mobile money. The proportion of adults with bank access decreased by14 percentage points below its high point in 2014, following the expiry of aggressive marketing and promotion campaigns.

• The population that accessed NBFIs remained relatively small and statistically unchanged compared to 2014.

Mobile money is by far the most popular financial service in Tanzania.

Only 1% of the population accessed bank and/or NBFI services but did not also access mobile money.

Source: InterMedia Tanzania FII Tracker surveys, Wave 1 (N=2,997, 15+), September-October 2013; Wave 2 (N=3,000, 15+), September 2014; Wave 3 (N=3,001, 15+), September 2015; Wave 4 (N=3,029, 15+), August 2016; Wave 5 (N=3,060, 15+), July-August 2017.



10 44 473 19 38 501

8

61 623

7

53 543 9 55 56


2013 (N=2,997) 2014 (N=3,000) 2015 (N=3,001) 2016 (N=3,029) 2017 (N=3,060)

REGISTERED USERS (FINANCIAL INCLUSION)

11

TANZANIA

Registered users(Shown: Percentage of Tanzania adults, by year)

NA


• After dropping by 8 percentage points from 2015 to 2016 because of phone and SIM card deactivations and new taxes that raised transaction costs, the proportion of registered mobile money users in the adult population was statistically unchanged from 2016 to 2017.

• Relative to registered mobile money users, a small proportion of adults were registered users of banks and NBFIs. The registered user indicators for banks and NBFIs did not change significantly from 2016 to 2017.

Aggressive marketing, promotions and incentives helped spur the 23 percentage-point increasein registered mobile money users from 2014 to 2015, before dropping in 2016.

Registered users consolidated at a lower level from 2016 to 2017.






• Financial inclusion in Tanzania shows persistent gender, locality, and income gaps; a smaller proportion of adults in the female, rural, and below-poverty demographics are financially included compared to the male, urban, and above-poverty groups.

• The biggest drops in financial inclusion from 2015 to 2016 took place among female, rural, and below-poverty adults. Financial inclusion rebounded in these groups from 2016 to 2017, but remained below 2015 levels.

• The urban demographic – where the market was most overheated by promotions and incentives for registering mobile money accounts – shows a statistically significant downtrend from 2015 to 2017.

FINANCIAL INCLUSION TREND, BY DEMOGRAPHIC GROUPTANZANIA

50 62 54 56

Total population

45 5658 6744 6550 63

Female Male

46 5955 8143 7548 72

Rural Urban

48 6659 8147 7650 77

Below poverty Above poverty

n 2014: Total population (N=3,000); Female (n=1,585); Male (n=1,415); Rural (n=2,069); Urban (n=931); Below poverty (n=2,633); Above poverty (n=367)


n 2016: Total population (N=3,029); Female (n=1,818); Male (n=1,211); Rural (n=2,027); Urban (n=1,002); Below poverty (n=2,338); Above poverty (n=691)


Registered users, by demographic group(Shown: Percentage of each demographic group who are registered users, by year)

Source: InterMedia Tanzania FII Tracker surveys, Wave 2 (N=3,000, 15+), September 2014; Wave 3 (N=3,001, 15+), September 2015; Wave 4 (N=3,029, 15+), August 2016; Wave 5 (N=3,060, 15+), July-August 2017.

6 percentage-point rebound in financial inclusion among women from 2016 to 2017.


12



ACTIVE REGISTERED USERS

13

TANZANIA

Active registered users(Shown: Percentage of Tanzania adults, by year)

NA


8

38 402 16 34 4515

53 5425

40 412

6

42 43


2013 (N=2,997) 2014 (N=3,000) 2015 (N=3,001) 2016 (N=3,029) 2017 (N=3,060)

• In 2017, over two in five adults were active registered users, having performed at least one financial transaction within the past 90 days using a mobile money, NBFI and/or bank account.

• Mobile money is the financial service of choice; nearly all active users used a registered mobile money account in the 90 days prior to the survey, either solely or in addition to a bank and/or an NBFI account.

9% of adults were inactive users of mobile money (had an account but did not use it in the last 90 days).

5% held dormant (never used) accounts.




2

7

21 260.95

28 291

523 252

6

27 29


2014 (N=3,000) 2015 (N=3,001) 2016 (N=3,029) 2017 (N=3,060)

ADVANCED USERS

14

TANZANIA

Advanced active registered users(Shown: Percentage of Tanzania adults, by year)


• Advanced users (active in the 90 days before the survey and used their account to perform an advanced financial activity) grew strongly from 2016 to 2017, rebounding to the 2015 level of 29% of adults.

• Advanced users of mobile money used their accounts primarily for saving and bill payment. The expanding uptake of mobile credit services also contributed to growth in the size of advanced user group.

13 percentage-point gender gap between 34% of men versus 21% of women who are advanced mobile money users.


*2013 definition of advanced users is not comparable with later years



6453 46

10 10 1126

12 9

10

1210

12 11 11

8

10 9

811

12

39 35 30 1221 22

18 2431 39 44 49

53 57 60

Any POS MM agent Retail store with MMkiosk

Bank branch ATM Banking agent Informalsaving/lending group

MFI SACCO

Less than 1 km from home 1-5 km from home More than 5 km from home Don't know

GEOGRAPHICAL ACCESS TO FINANCIAL SERVICES

15

TANZANIA

2017: Proximity to points-of-service (POS) for financial institutions(Shown: Percentage of Tanzania adults, N=3,060)

74% of adults knew of a point of service within five kilometers of their household.

• Financial (mainly mobile money) points of service are widespread in Tanzania; nearly two-thirds (64%) of adults knew of a financial service access point within one kilometer of their household, and 74% knew of one within five kilometers.

• Less than a quarter (22%) of adults knew of a bank branch within a five-kilometer radius of a bank branch or an ATM (21%).

• Nearly half of adults (49%) did not know the distance from their homes to the nearest banking agent, and 57% did not know thedistance to a microfinance institution (MFI).




READINESS TO ADOPT DIGITAL FINANCIAL SERVICES

16

TANZANIA

2016 83% 88% 67% 66% 19% 95%

2015 91% 96% 79% 78% NA 96%

2014 61% 89% 64% 61% NA 93%

94%

Basic numeracy

79%

Necessary ID

22%

Financial literacy

71%

Own a SIM card

83%

Mobile phone access

(own/borrow)

74%

Ability to send and receive text

messages

2017: Key indicators of readiness to adopt digital financial services (Shown: Percentage of Tanzania adults, N=3,060)

• Tanzania’s population shows high capacity for using mobile technology. In 2017, 64% of adults owned a mobile phone, 19% used a borrowed phone, and 74% were able to send and receive text messages – the key proxy indicator of ability to use digital financial services (DFS) unassisted.

• The percentage of the adult population with the ID necessary for registering an account by complying with know your customer (KYC) laws fell from 83% in 2016, to 79% in 2017, amid challenges surrounding the rollout of national identity cards.

• SIM card ownership rebounded to 71% after deactivations due to enforcement of registration requirements in 2016.

19% of adults used a borrowed phone in 2017, down from 27% in 2016, contributing to the decline in phone access.




http://www.ippmedia.com/en/news/govt-makes-u-turn-over-national-identity-cards

• In 2017, over half of adults were financially included through an account with a full-service digital financial institution offering digital services. Almost all were mobile money account holders.

• Digital financial services are typically delivered through mobile phones in Tanzania. Therefore, ownership of a personal mobile phone is a key enabler of progress on the customer journey to advanced use of a registered account. In 2017, 64% of adults owned a mobile phone, mainly feature phones and basic phones.

DIGITAL FINANCIAL INCLUSION

17

TANZANIA

56%

of the population is financially included via a digitally enabled

account

2017: Digital financial inclusion by service type(Shown: Percentage of Tanzania adults, N=3,060)

2

9

55

NBFI

Bank

Mobile money

21 38 12 64

Basic phone

Feature phone

Smartphone Any mobile phone

2017: Mobile phone ownership (Shown: Percentage of Tanzania adults, N=3,060)




• Women, rural residents, and adults with incomes below the poverty line are disadvantaged in taking up digital financial services by a lower prevalence of phone ownership relative to the male, urban, and above-poverty demographics.

• Lack of money was the most commonly cited reason for not owning a mobile phone (71%). About half of adults (46%) reported having had a mobile phone previously, but had not replaced it.

MOBILE PHONE OWNERS — DEMOGRAPHICS & ATTITUDES

18

TANZANIA

14

18

22

24

46

71

No mobile phone network where I live

Not allowed to use a phone

Don't need to have my own phone

Don't know how to use mobile phone

Had a phone but it's lost/broken/stoppedworking

Don't have enough money to buy amobile phone

2017: Top reasons for not owning a mobile phone(Shown: Percentage of Tanzania adults who do not own a mobile phone reporting

somewhat/strongly agree, n=1,115)

64

Total population(N=3,060)

57 72

Female(n=1,891)

Male(n=1,169)

59 81

Below poverty

(n=2,392)

Above poverty(n=668)

58 75

Rural(n=2,070)

Urban(n=990)

2017: Mobile phone ownership, by demographic(Shown: Percentage of each demographic group who are phone owners)




MOBILE PHONE USE

19

TANZANIA

• Many adults in Tanzania rely on others for assistance using mobile phones. While the large majority (81%) reported using a mobile phone to call someone, only 69% reported “complete ability” to make or receive a call.

• Both unregistered and registered users rely on agents or other people to assist them with transactions; 52% have used a phone to make a financial transaction, but only 42% report having complete or some ability to perform such a transaction.

2017: Phone user capability(Shown: Percentage of Tanzania adults, N=3,060)

Dependent use of mobile technology is widespread.

2017: Mobile phone functions ever used(Shown: Percentage of Tanzania adults, N=3,060)

69

36

54

31

15

14

16

12

11

10

10

14

8

10

8

6

2821

39

50

2

6 5 1016

Make/receive calls Navigate phone menu Send/receive textmessages

Perform a financialtransaction

Use internet

Complete ability Some ability Little ability No ability Don't know

14

16

19

20

21

22

52

67

81

Used other mobile application

Sent/received photo messages (MMS)

Downloaded music, video or games

Took a color picture

Used/browsed the internet

Used social networking sites

Made a financial transaction

Sent or received text messages

Called someone




CUSTOMER JOURNEY

20

NONUSERSUNREGISTERED

USERSREGISTERED

INACTIVE USERSACTIVE BASIC

USERS ADVANCED

USERS

TANZANIA



• Financial inclusion may be conceived as a process through which an individual’s needs are met by advancing step-by-step towards increasingly active engagement with a growing range of financial services. The customer journey theory of change posits that advancement on the journey leads to gains in human welfare.

• Understanding how individuals and groups advance on the customer journey is useful for developing strategies and interventions to assist more individuals to become users of the financial services that best meet their needs.

• Five major segments of the population on the customer journey are described below. Each group is mutually exclusive of the others. The population shifts between these groups as more individuals make progress on the customer journey.

CUSTOMER JOURNEY THEORY OF CHANGE

21

TANZANIA

Nonusers are adults who have no access to or have never used a full-service financial institution. Nonusers have not started the customer journey.

Unregistered users are adults who do not have an account registered in their name but use a bank, mobile money, and/or NBFI service via another person’s account, especially over-the-counter mobile money services accessed via an agent.

Registered inactive users are adults who have a bank, mobile money, or NBFI account registered in their name but have not used it in the last 90 days.

Active basic users are adults who used their registered bank, NBFI, or mobile money account to transfer money to another person, deposit or withdraw cash, and/or check their balance in the previous 90 days ONLY. Buying airtime using mobile money is also a basic use case.

Advanced users are adults who have used their registered bank, NBFI, or mobile money account in the previous 90 days and have ever used their account for saving, borrowing, investment, insurance, bill payment, merchant payment, receiving wages, and/or receiving government payments.

NONUSERS UNREGISTERED USERS REGISTERED INACTIVE USERS ACTIVE BASIC USERS ADVANCED USERS

Financially excluded (no registered account) Financially included (registered account holders)



40 10

5

19 2637

5

7 24 2938 14 8 16 2536 12 9 13 29

CUSTOMER JOURNEY TREND

22

TANZANIA

Change over time in each segment of the customer journey for all financial institutions(Shown: Percentage of Tanzania adults, by year)

n 2014 (N=3,000) n 2015 (N=3,001) n 2016 (N =3,029) n 2017 (N=3,060) 95% confidence interval

Since 2014, mobile money has driven a 4 percentage-point decline in the proportion of nonusers of formal financial services, from 40% in 2014 to 36% in 2017. Unregistered users, nearly all of whom access mobile money over the counter (OTC) at agent locations, were 12% of the population in 2017, up from 5% in 2015 – the result of former active basic users turning back to OTC use after legal and regulatoryactions in 2016. Registered inactive users have increased steadily since 2014 as adoption of registered accounts outpaced relevant use cases for some users. The proportion of adults who are active basic users is trending downward and the advanced user group is growing with increased adoption of advanced use cases, such as saving or securely storing money using a registered mobile money account.








• The customer journey in Tanzania is gendered such that women have consistently outnumbered men in the first two, financially excluded segments.

• Women were most affected by legal and regulatory actions in 2016, causing them to fall back from the advanced, to the unregistered user group.

• While men have consistently outnumbered women among advanced users, the growth of this group in 2016-2017 was driven by female adoption of advanced services, such as mobile credit.

CUSTOMER JOURNEY TREND, BY GENDER

23

TANZANIA

Change over time in each segment of the customer journey, by gender(Shown: Percentage of Tanzania adults, by year and by gender)

g Male 2014 (n=1,415), 2015 (n=1,479), 2016 (n=1,211), 2017 (n=1,169)

g Female 2014 (n=1,585), 2015 (n=1,522), 2016 (n=1,818), 2017 (n=1,891)

23 20 23 22

1716

15 14

2014 2015 2016 2017

6 39 7

4 25 6

2014 2015 2016 20172 3 4 53 3

45

2014 2015 2016 2017

10 12 8 7

1012

8 6

2014 2015 2016 2017

11 13 9 12

1516

1617

2014 2015 2016 2017







• In 2017, about 3 in 4 adults (77%) in Tanzania lived below the $2.50/day poverty line. Over half (55%) of the above-poverty population are advanced users. Only 4% of the population was above the poverty line and a nonuser in 2017.

• In 2016, the Tanzania PPI methodology was revised, and 7% more of the population rose above the $2.50/day poverty line compared to 2015. Most of the population affected by this change were advanced users. The remaining below-poverty advanced users, especially the women among them, were the worst affected by legal and regulatory actions in 2016 that pushed them into the unregistered user group. In 2016-2017 the advanced user group rebounded, driven by the progress of mainly female users with below-poverty incomes.

CUSTOMER JOURNEY TREND, BY POVERTY STATUS

24

TANZANIA

Change over time in each segment of the customer journey, by above/below $2.50 (2005 PPP USD) poverty line(Shown: Percentage of Tanzania adults, by year and by poverty status)

37 34 34 32

33 3 4

2014 2015 2016 2017

8 411 10

1*0.6*

3 2

2014 2015 2016 2017

4 6 6 80.7*

0.7* 22*

2014 2015 2016 2017

17 1912 10

2 4

43

2014 2015 2016 2017

20 2013 17

6 812

12

2014 2015 2016 2017

g Above poverty 2014 (n=367), 2015 (n=517), 2016 (n=691), 2017 (n=668)

g Below poverty 2014 (n=2,633), 2015 (n=2,484), 2016 (n=2,338), 2017 (n=2,392)


*Fewer than 50 observations



https://www.povertyindex.org/country/tanzania




• Two-thirds of Tanzania’s population (66%) live in rural areas, and rural adults outnumber urbanites among nonusers and the othercustomer journey segments, except advanced users. Rural residents showed renewed progress on the customer journey from 2016 to 2017; 3% of the adult population were rural residents who left the nonuser group.

• Rural adults – mainly women with below-poverty incomes – were the source of the growth of the advanced user group in 2017, after legal and regulatory actions in 2016 temporarily set them back on the customer journey.

CUSTOMER JOURNEY TREND, BY LOCALE

25

TANZANIA

Change over time in each segment of the customer journey, by urban/rural locale(Shown: Percentage of Tanzania adults, by year and by locale)

30 32 32 29

10 4 68

2014 2015 2016 2017

6 310 9

32

43

2014 2015 2016 2017

4 4 4 6

1* 2 3 3

2014 2015 2016 2017

13 1710 8

76

65

2014 2015 2016 2017

14 14 10 14

12 1515

15

2014 2015 2016 2017

g Urban 2014 (n=931), 2015 (n=854), 2016 (n=1,002), 2017 (n=990)

g Rural 2014 (n=2,069), 2015 (n=2,147), 2016 (n=2,027), 2017 (n=2,070)







NONUSERS(n=1,135)

UNREGISTERED USERS (n=366)

REGISTERED INACTIVE USERS(n=289)

ACTIVE BASIC USERS(n=416)

ADVANCED USERS(n=854)

• In each successive customer journey segment, there is a decrease in the percentage of female, rural, and below-poverty adults, and an increase in the percentage of men, urbanites, and above-poverty adults. The female majority in the active basic user segment is the exception to this overall finding, suggesting that women face particular barriers that constrain them from joining the advanced user group. The large majority of advanced users are men; only 40% are women.

• Below-poverty adults are the majority in every segment of the customer journey, demonstrating the value of mobile money services for the population as a whole.

DEMOGRAPHICS OF EACH CUSTOMER SEGMENT

26

TANZANIA

2017: Demographic groups, by customer journey segment(Shown: Percentage of Tanzania adults in each segment)

Male 39% 46% 50% 45% 60%

Female 61% 54% 50% 55% 40%

Above poverty 11% 16% 17%* 22% 43%

Below poverty 89% 84% 83% 78% 57%

Rural 79% 74% 67% 62% 49%

Urban 21% 26% 33% 38% 51%

DEMOGRAPHICS





3845

28 25 30

2023

2922

32

14

1524

18

2011

10* 11*

17

1017

7* 8*17

8

15-24 years old 25-34 years old 35-44 years old 45-54 years old 55 years and older

NONUSERS(n=1,135)





• Adults under 35 years of age are 59% of the population, and the majority in all five customer journey segments, except active basic users. The members of the 15-24 age group are least likely to meet key readiness conditions for progress on the customer journey, such as phone ownership, and are, therefore, overrepresented in the first two, financially excluded segments.

• Nevertheless, 62% of advanced users were under 35, suggesting that this age group is the most likely to progress on the customerjourney when they overcome constraints to account registration.

AGE GROUP SEGMENTATION

27

TANZANIA

2017: Age groups, by customer journey segment(Shown: Percentage of Tanzania adults in each group in each segment)





228* 7* 8* 2*

62

67 67 67

52

1625 25 24

38

1* 1*8

No formal education Primary education Secondary education Higher education

NONUSERS(n=1,135)





• Education is not a significant barrier to financial inclusion in Tanzania. Overall, educational attainment is low: 11% of adults have no formal education, another 61% have only primary education, and only 25% have secondary education. Like the population as a whole, the majority of adults in all user segments have only primary education.

• Education is correlated with progress on the customer journey; nonusers form the least educated segment, while advanced users are the most educated.

EDUCATION SEGMENTATION

28

TANZANIA

2017: Education levels, by customer journey segment(Shown: Percentage of Tanzania adults in each group in each segment)





16 21 25 24 2833 44 80 91 9450 80 82 82 9466 71 88 87 91

Financial literacy Phone ownership Texting ability Necessary ID

Readiness increases with progress on the customer journey. Nonusers have the lowest prevalence of all four readiness indicators. Half of nonusers lack the ability to text – the key proxy for necessary skill with mobile technology. Like nonusers, unregistered users are less likely than the last three, financially included segments to have the identification necessary to comply with know your customer (KYC) rules for account registration. The financially included segments each display similar levels of readiness, though advanced users have the highest readiness indictors. Nevertheless, only 28% of advanced users were financially literate.

DIGITAL READINESS SEGMENTATION

29

TANZANIA

2017: Readiness to adopt digital financial services, by customer journey segment(Shown: Percentage of Tanzania adults in each segment)

NONUSERS(n=1,135)








7 11* 12* 10* 1811 14 16* 11* 2520 25 30 29 45

Have emergency funds to cover unplanned expenses Enough money to pay for living expenses Pay bills on time and in full

• Overall, individuals’ financial health increases as they progress along the customer journey. Yet, the majority of adults in all segments have incomes below the $2.50/day poverty line and struggle to keep up with regular and unexpected expenses.

• In 2017, advanced users were more financially healthy than any other segment. Still, only 45% paid bills on time and in full; 25% had enough money for living expenses and 18% had emergency funds to cover unplanned expenses.

FINANCIAL HEALTH SEGMENTATION

30

TANZANIA

2017: Financial health, by customer journey segment(Shown: Percentage of Tanzania adults in each segment reporting somewhat/strongly agree)

12%of all adults reported they had an emergency fund to cover unplanned expenses.

NONUSERS(n=1,135)









32 43 49 44 5336 43 49 41 5648 57 63 58 67

Friends & family rely on me to help with their finances Confident my income will grow in the future Have the skills & knowledge to manage my finances well

• Financial capacity is lowest among nonusers and highest among advanced users, but there is little difference between each of thethree intermediate segments. This finding suggests that financial access, rather than registered use of a financial account, plays a key role in financial capacity in Tanzania.

• Advanced users were also the most optimistic (56%) about future income growth and the majority of this group (53%) were relied upon by friends and family for financial assistance. The use of a mobile money account to assist friends and family by transferring funds is a key driver of progress on the customer journey.

FINANCIAL CAPACITY SEGMENTATION

31

TANZANIA

2017: Financial capacity, by customer journey segment(Shown: Percentage of Tanzania adults in each segment reporting somewhat/strongly agree)

NONUSERS(n=1,135)





45%of all adults reported they “often” or “almost always” follow through with their budget plans.




32 29 35 46 4554 56 56 62 6265 67 73 68 7048 61 72 73 86

I have most/almost all influence on final decisions on household spending Somewhat/very likely to voice disagreement with a spending decision if I disagree

I make the final decision on how my money is spent/saved I am somewhat/very involved in deciding what financial services I use

• Financial inclusion is positively correlated with influence on final decisions on household spending and deciding what financial services to use; more women in the last three, financially included segments reported this type of empowerment than did women in the first two, financially excluded segments.

• Voice and autonomy over personal spending have a weaker relationship to financial inclusion than the other two empowerment indicators. Over half of the women in all segments reported high likelihood of voicing disagreement with spending decisions, andlarger majorities in every group reported making the final decision on how they spend or save their money.

WOMEN’S ECONOMIC EMPOWERMENT SEGMENTATION

32

TANZANIA

2017: Economic empowerment indicators, by customer journey segment(Shown: Percentage of Tanzania women in each segment reporting somewhat/strongly agree)

NONUSERS(n=794)








5 7* 8* 10* 2125 22 23 22 1632 36 44 44 40

Salaried Irregular/seasonal Self-employed

INCOME SEGMENTATION

33

TANZANIA

2017: Employment income, by customer journey segment(Shown: Percentage of Tanzania adults in each segment)

• Self-employment is the most common source of income for all customer journey segments, though adults in the latter three, financially included segments were more likely to be self-employed than those in the first two, financially excluded segments.

• A quarter of nonusers engaged in irregular or seasonal work, the highest proportion across all segments.

• The advanced user group has the lowest proportion of irregular or seasonal workers, and the highest proportion of salaried workers (21%).

NONUSERS(n=1,135)





70% of all adults had income from employment.





48 65 65 48 8618 25 4* 7445 57 51 42 538

14 18 12 20

Savers Save with formal institution (bank, mobile money, or NBFI)

Save with cash or property (buying agricultural inputs, livestock, or other assets) Save with informal institution (ASCA/VSLA,ROSCA/merry-go-round, other people)

SAVING SEGMENTATION

34

TANZANIA

2017: Saving behavior, by customer journey segment(Shown: Percentage of Tanzania adults in each segment)

• Saving is the key use case that differentiates advanced users from the other groups. While mobile money savings products that pay interest via linked bank services are available, most saving behavior consists of safekeeping by leaving cash in the form of e-money.

• Mobile money provides unregistered users with an option for secure, short-term money storage by waiting to visit an agent to cash-out the transfers they receive.

• With the exception of advanced users, all other groups most frequently save in cash or other assets. More active basic users should progress to the advanced user group as mobile money continues to displace cash saving.

NONUSERS(n=1,135)





63% of all adults saved.





30 45 51 39 5315 22 23 16 2214 17 22 15 206

12* 15* 8* 19

Borrowed in the past 12 months Borrowed in the last 12 months to pay for daily expenses

Borrowed in the last 12 months to pay for emergency expenses Borrowed in the last 12 months to invest in a business

BORROWING SEGMENTATION

35

TANZANIA

2017: Borrowing in the last 12 months, by customer journey segment(Shown: Percentage of Tanzania adults in each segment)

• Progress on the customer journey is associated with a higher likelihood of borrowing; a smaller proportion of nonusers than advanced users borrowed money in the 12 months prior to the survey.

• Approximately equal proportions of each segment reported borrowing to pay for emergency expenses and for daily expenses. Advanced users were the most likely to borrow for business purposes.

• In 2017, 9% of adults reported accessing digital credit via a mobile phone. Additional uptake of this service should drive progress on the customer journey.

NONUSERS(n=1,135)





42% of all adults took a loan in the 12 months prior to the survey.





19 19 23 18 3318 31 32 31 463* 6*4*

6* 11

Have insurance Invest in own business Invest in other assets

INSURANCE AND INVESTMENT SEGMENTATION

36

TANZANIA

2017: Insurance and investment behavior, by customer journey segment(Shown: Percentage of Tanzania adults in each segment)

• Insurance – mainly health coverage – is most prevalent among advanced users, particularly those covered via employment in the formal sector. Yet only 33% of advanced users, and less than a quarter of adults in the other segments, had insurance. Further development of the insurance market is a clear potential growth area for DFS.

• As self-employment is the most common source of income, more adults invest in their own businesses than in other assets across all segments. DFS for business investment is a driver of progress on the customer journey.

NONUSERS(n=1,135)





34% of all adults invested, mainly in their own businesses.

23% of all adults had insurance.





7 12 18 14 217 11* 16 14 195 8* 14* 8* 151*2*

4* 3* 6

Belong to informal arrangement Save through informal arrangement Borrow through informal arrangement Invest through informal arrangement

INFORMAL FINANCIAL ACTIVITIES SEGMENTATION

37

TANZANIA

2017: Membership and uses of informal financial groups, by customer journey segment(Shown: Percentage of Tanzania adults in each segment)

• The use of informal saving and lending groups increased with progress on the customer journey, showing that informal servicescomplement formal financial services – the latter does not replace the former for a significant portion of adults in Tanzania. Nonusers are typically unserved by both formal and informal institutions.

• Across all segments, more adults saved than borrowed through informal groups, and investment through these arrangements is rare.

NONUSERS(n=1,135)





14% of all adults belonged to at least one informal group.





NONUSERS UNREGISTERED USERS

REGISTERED INACTIVE USERS

ACTIVE BASIC USERS

ADVANCED USERS

NONUSERS

38

TANZANIA



NONUSERS, BY DEMOGRAPHIC GROUP

39

TANZANIA – NONUSERS

• In 2017, one-third (36%) of adults had never accessed a formal financial service. Nonusers are most prevalent among women, rural residents, and the below-poverty demographic.

• All demographics have adopted mobile money in large numbers; a majority of all groups have used mobile money either over the counter or via a registered account.

36


42 29

Female(n=1,891)

Male(n=1,169)

42 17

Below poverty(n=2,392)

Above poverty(n=668)

43 23

Rural(n=2,070)

Urban(n=990)

2017: Nonusers, by demographic group(Shown: Percentage of each demographic group who are nonusers)


36 37

Youngerthan 35

(n=1,680)

35 yearsand older(n=1,380)



BARRIERS TO ACCESS AND REGISTRATION

40


• Perceived lack of money was the most reported reason for not registering a bank account and not using mobile money. Banks areperceived as particularly expensive; 71% of nonusers cited lack of money, and 47% said high fees discouraged them from account registration.

• The preference for cash among 39% of mobile money nonusers is not highly correlated with understanding the utility of the service or other reasons for not using mobile money, which suggests that this attitude may be a persistent barrier to adoption.

36% of mobile money nonusers were unaware of the service’s utility.

30

43

47

49

71

Do not need one or have never thought of using one

Lack of official identification or other required documents

Fees and expenses for owning an account are too high

No banks nearby

Lack of money to use the account

2017: Top reasons for not registering a bank account(Shown: Percentage of bank nonusers reporting somewhat/strongly agree, n=2,757)

36

39

39

58

Don't know what mobile money is used for

Don't have the required ID or other documents

Prefer to use cash

Don't have enough money to make transactions

2017: Top reasons for not using mobile money(Shown: Percentage of mobile money nonusers reporting somewhat/strongly agree, n=1,181)




NONUSER SAVING BEHAVIOR

41


• Nonusers’ inability to access formal financial services leaves them with few options for saving their money. In 2017, 43% of nonusers reported to have cash savings in a hiding place at home, which exposes them to the risk of losing their savings to fire or theft.

48% of nonusers saved – primarily through cash.

Very few nonusers reported borrowing money.

48 43 65

Savers At home, in cash Agricultural inputs orlivestock

Otherpeople/collectors

2017: Nonuser methods of saving(Shown: Percentage of nonusers, n=1,149)




41

60

32

45

NONUSER ECONOMIC EMPOWERMENT, BY GENDER

42


• Both male and female advanced users were more likely to report higher levels of influence, voice and autonomy over financial decisions than were nonusers. Gender gaps within both groups leave women less empowered economically than men in both stages of the customer journey.

• The gender gap in influence on final household spending decisions is smaller among nonusers than advanced users, which suggests that progress on the customer journey has empowered more men than women in Tanzania.

Female advanced users had higher empowerment indicators than male nonusers, but were less empowered than male advanced users.

n Male (Nonuser n=341, Advanced user n=425) n Female (Nonuser n=794, Advanced user n=429)

2017: Influence, voice, and autonomy on personal and household financial decisions(Shown: Percentage of Tanzania adults in each group, by gender)

NonuserAdvanced

user

I have most/almost all influence on final decisions on household spending

58

72

54

62

Somewhat/very likely to voice disagreement with spending decision

53

89

48

86

Somewhat/very involved in deciding what financial services to use

6974

6570

I make the final decision on how my money is spent or saved (somewhat/strongly agree)

NonuserAdvanced

user NonuserAdvanced

user NonuserAdvanced

user




UNREGISTERED USERS

TANZANIA

43


USERSREGISTERED


USERS ADVANCED USERS



UNREGISTERED USERS, BY DEMOGRAPHIC GROUP

44

TANZANIA – UNREGISTERED USERS

2017: Unregistered users, by demographic and service type(Shown: Percentage of each demographic group who are unregistered users of each type of institution)

0.9* 13 2


0.7* 1*13 123 2*

Females(n=1,891)

Males(n=1,169)

0.8* 1*14 102 3*

Rural(n=2,070)

Urban(n=990)

0.7* 2*14 92 3*

Belowpoverty line(n=2,392)

Abovepoverty line

(n=668)g Bank g Mobile money g NBFI

• Over-the-counter (OTC) users of mobile money (at agent locations) accounted for nearly all unregistered users. There are few users of other institutions, particularly banks, via an account registered to someone else. Users of someone else’s NBFI account is somewhat less rare, possibly due to greater acceptance of account sharing at these institutions.

• In 2017, OTC users formed approximately equal proportions of both the male and female demographics. OTC users were more common among rural and below-poverty adults than among urban and above-poverty groups.



1* 0.6*14 102* 3*

Younger than 35(n=1,680)

35 years and older(n=1,380)



4 6 5 14 13

OTC mobile money users

2013 (n=2,997) 2014 (n=3,000) 2015 (n=3,001) 2016 (n=3,029) 2017 (n=3,060)

OVER-THE-COUNTER (OTC) MOBILE MONEY USERS

45


Unregistered (OTC) mobile money users(Shown: Percentage of Tanzania adults, by year)

• OTC users nearly tripled in 2015-2016 because of legal and regulatory actions that led former registered users into the OTC market. The proportion of OTC users in the adult population stabilized in 2017.

• A small majority of OTC users were female. OTC users tend to be younger, rural, and have incomes below the poverty line.

2017: Unregistered (OTC) mobile money users, by demographic(Shown: Percentage of unregistered mobile money users, n=381)

Rural 74%

Women 53%

Below $2.50/day poverty line 83% 17% Above $2.50/day poverty line

47% Men

26% Urban

33% 35 and older Younger than 35 67% 95% confidence interval






ATTITUDES AND EXPERIENCES WITH MOBILE MONEY

46


• OTC and registered users had similar experiences with mobile money agents; the agent experience does not appear to have significant influence on consumer preferences for OTC or registered use. The most frequent negative experiences both groups reported were system or network problems, agent absenteeism and lack of agent cash or e-float.

• Forty-three percent of unregistered mobile money users cited the lack of official identification as the reason for not registering an account, and 39% reported that a family member or a friend has an account they can use.

2017: Experiences with mobile money agents, by user type (Shown: Percentage of user group reporting somewhat/strongly agree)

Shared my personal information

Dismissive of women

Didn’t know how to perform transaction

Didn’t give all cash that was owed

Not secure location/suspicious people

Overcharged my transaction

Poor service

Not enough cash/e-float

Absent agent

System/mobile network down

11*

15

21

22

23

29

30

48

58

59

10

18

20

25

26

55

60

62

0 10 20 30 40 50 60 70

Unregistered (OTC) user (n=381) Registered user (n=1,652)

2017: Top reasons for not registering a mobile money account (Shown: Percentage of unregistered users reporting somewhat/strongly

agree, n=381)

28 43 39

Don't use products/services

that require an account

Don't have the required

identification

Family member/friend already has an

account I can use





UNREGISTERED USER SAVING BEHAVIOR

47


• Unregistered users save through a variety of methods. Cash dominates; just above half of unregistered users (53%) saved with cash at home.

• Mobile money is the second most-often reported method of saving after cash; 17% saved via receiving a transfer and waiting to cash out with a mobile money agent. Storing money is better enabled by a registered mobile money account, and should lead to account registration for unregistered users who meet preconditions, such as obtaining the necessary identification.

65 53 17 10* 8*

Savers At home, in cash Mobile money Agricultural inputs orlivestock

Otherpeople/collectors

2017: Methods of saving(Shown: Percentage of unregistered users, n=366)





UNREGISTERED USER ECONOMIC EMPOWERMENT, BY GENDER

48


• Gender gaps in the advanced user group are narrower on only two of the four indicators – decision making on personal money and choice of financial services. The gender gap on voicing disagreement is wider among advanced users (10 percentage points) than among unregistered users (4 points). Household spending decisions are more likely to be made by men in both user groups; the 16 percentage-point gender gap among unregistered users is paralleled by a 15 percentage-point gap among advanced users.

• These findings suggest that progress on the customer journey in Tanzania empowers women with greater personal autonomy, but has less effect on bargaining power at the household level.

2017: Influence, voice and autonomy on personal and household financial decision(Shown: Percentage of Tanzania adults in each group, by gender)

45

60

29

45


60

72

5662


72

89

61

86


73

74

6770


n Male (Unregistered user n=130, Advanced user n=425) n Female (Unregistered user n=236, Advanced user n=429)

Unregistered user

Advanced user

Unregistered user

Advanced user

Unregistered user

Advanced user

Unregistered user

Advanced user




REGISTERED INACTIVE USERS

49


USERSREGISTERED

INACTIVEACTIVE BASIC

USERS ADVANCED

USERS

TANZANIA



REGISTERED INACTIVE USERS, BY DEMOGRAPHIC GROUP

50

TANZANIA – REGISTERED INACTIVE USERS

2017: Inactive users of registered financial accounts, by demographic and service type(Shown: Percentage of each demographic group who are registered inactive users of each type of institution)

3 9 1*

Total population (N=3,060)

2* 4*9 90.7* 1*

Females (n=1,891)

Males (n=1,169)

1* 59 91* 1*

Rural (n=2,070)

Urban (n=990)

2* 6*9 7*1* 0.8*

Below poverty line (n=2,392)

Above poverty line

(n=668)g Bank g Mobile money g NBFI

• In 2017, 9% of adults were registered mobile money users who did not use their account in the 90 days before the survey. There was little variation in the prevalence of inactive users across demographic groups. This finding suggests that the rapid increase in mobile money accounts with new SIM card registrations has not been accompanied by a clear use case for a significant portion of the population.

• Registered inactive bank users were less common, and were mainly found among male, urban, and above-poverty adults.



2* 49 90.4* 2*





ACTIVE BASIC USERS

51


USERSREGISTERED


USERS ADVANCED

USERS

TANZANIA



ACTIVE BASIC USERS, BY DEMOGRAPHIC GROUP

52

TANZANIA – ACTIVE BASIC USERS

2017: Active basic users of mobile money accounts, by demographic(Shown: Percentage of each demographic group who are active basic users of mobile money accounts)

14

Total population (N=3,060)

14 13

Females (n=1,891)

Males (n=1,169)

13 16

Rural (n=2,070)

Urban (n=990)

14 14

Below poverty line (n=2,392)

Above poverty line

(n=668)

• Active users of financial services for basic activities only – cash-in/cash-out, person-to-person transfers – were nearly all mobile money users. Bank and NBFI accounts tend to be used for advanced activities such as saving and credit.

• Active basic users of mobile money were evenly distributed across demographic groups, albeit slightly more prevalent among womenand urban residents.

• There was no income gap among active basic users of mobile money, demonstrating that transfers are a use case that cuts across income groups.


11 18

Youngerthan 35

(n=1,680)




ACTIVE BASIC USER ECONOMIC EMPOWERMENT, BY GENDER

53

TANZANIA – ACTIVE BASIC USERS

The active basic user group has approximately the same level of economic empowerment as advanced users on most indicators and, while gender gaps persist, they are narrower between active basic users than advanced users. Approximately the same proportion of women in the active basic and advanced user groups reported strong influence on final decisions on household spending, and the gender gap between active basic users smaller than the gap between male and female advanced users on this indicator. The narrower gap on this indicator is due to the 40% of female active basic users who identify themselves as the main income earner in the household, which is higher than in any other segment.

2017: Influence, voice and autonomy on personal and household financial decision (Shown: Percentage of Tanzania adults in each group, by gender)

5360

46 45

Active user

Advanced user


66 72

62 62


85

89

73

86


63

74

68 70


n Male (Active basic user n=154, Advanced user n=425) n Female (Active basic user n=262, Advanced user n=429)

Active user

Advanced user

Active user

Advanced user

Active user

Advanced user




ADVANCED USERS

54


USERSREGISTERED


USERS ADVANCED

USERS

TANZANIA



ADVANCED USERS, BY DEMOGRAPHIC GROUP

55

TANZANIA – ADVANCED USERS

31 percentage-point income gap

22-percentage point locality gap

13-percentage point gender gap among mobile money advanced users.

2017: Advanced users, by demographic(Shown: Percentage of each demographic group who are advanced users of each type of institution)

6 27 2


4821 342* 2*

Females(n=1,891)

Males(n=1,169)

4920 421* 2*

Rural(n=2,070)

Urban(n=990)

3 1520 511* 3*

Below poverty line(n=2,392)

Above poverty line(n=668)

g Bank g Mobile money g NBFI

• In 2017, 27% of adults were advanced mobile money users, compared to 6% who were bank users and 2% who were NBFI users.

• Advanced users are most prevalent in the relatively privileged demographic groups – male, urban, and above-poverty.

• Rural, and below-poverty adults are the large majority of the population but have been slower to adopt advanced services than their urban and above-poverty counterparts.


5 729 241* 2*






ADVANCED USER 90-DAY ACCOUNT ACTIVITIES

56


13 8 92 2*

43 34 8 9 9 3*73* 2* 5*

4*

Save/set aside money Bill pay Receive wages Loan activity Pay for goods/ services Make investment/buy shares

Receive welfare/pension/ benefit

Bank Mobile money NBFI

2017: Advanced users’ account activities in last 90 days, by activity and institution(Shown: Percentage of advanced users, n=854)

• Saving money was the top activity undertaken by advanced users across all financial institutions. More advanced users saved through mobile money accounts than they did with banks or NBFIs.

• Apart from saving, advanced mobile money users also used the services to pay bills (34%), pay for goods and services (9%), obtain loans (9%) and receive wages (8%).





ADVANCED USER FINANCIAL BEHAVIORS

57


• The majority of advanced users (65%) saved with mobile money accounts. Cash, however, remains an important method of saving – nearly half (49%) of advanced users also saved/kept cash at home.

• A small proportion of advanced users borrowed money, and mobile money was the preferred borrowing method (9%).

4*

6

6

11

12

24

49

65

86

NBFI

ROSCA/Chama merry-go-round

ASCA/VSLA

Other people/collectors

Agricultural inputs or livestock

Bank

At home, in cash

Mobile money

Savers

2017: Methods of saving(Shown: Percentage of advanced users, n=854)

3*

5*

6

9

Other institution or financialservice provider

NBFI

Bank

Mobile money account

2017: Source of current loan(Shown: Percentage of advanced users, n=854)





MOBILE MONEY VALUE-ADDED PRODUCTS TREND

58


Access and active use of mobile money value-added products (Shown: Percentage of Tanzania adults, by year)

Lipa kwa M-Pesa: merchant and bill payments tool.

M-Pawa: savings account and credit provider.

Lipa kwa Tigo Pesa: integrated mobile money and mobile banking wallet service.

Airtel Money Chap : mobile money product for bill pay and online shopping.

Timiza Wakala Loans: mobile credit product allowing customers to access microloans through Airtel Timiza.

Source: InterMedia Tanzania FII Tracker surveys, Wave 3 (N=3,001, 15+), September 2015; Wave 4 (N=3,029, 15+), August 2016; Wave 5 (N=3,060, 15+), July-August 2017.

31*

31*

6 4 5

2*

11 4 9 3

Lipa kwa M-Pesa M-Pawa Lipa kwa Tigo Pesa Airtel Money Chap Chap

2015 (N=3,001) 2016 (N=3,029) 2017 (N=3,060)

• The rapid uptake of value-added services continued in 2017. Lipa kwa M-Pesa is the most popular service, followed by a similar payment product from Tigo.

• M-Pawa users did not grow significantly as a proportion of the population, and 2016-2017 showed a decline in users of the creditproduct Timiza Wakala Loans.




USE OF MOBILE MONEY VALUE ADDED PRODUCTS

59


• Mobile money value-added services achieve high rates of customer retention; most advanced users who access value-added services become active users.

• The merchant and bill pay service, Lipa kwa M-Pesa leads the other value-added services in access and active use, followed by the mobile money/bank service, Lipa kwa Tigo Pesa.

2017: Access and active use of mobile money value-added products(Shown: Percentage of advanced users, n=854)

28 23 10 823 19 6* 7

Lipa kwa M-Pesa Lipa kwa Tigo Pesa M-Pawa Airtel Money Chap Chap

Access/trial users Active users



Lipa kwa M-Pesa: merchant and bill payments tool.

Lipa kwa Tigo Pesa: integrated mobile money and mobile banking wallet service.

M-Pawa: savings account and credit provider.

Airtel Money Chap : mobile money product for bill pay and online shopping.



MOBILE CREDIT USERS

60


2017: Negative experiences with mobile credit(Shown: Percentage of Tanzania mobile credit users, n=251)

9%

91%

2017: Mobile credit access(Shown: Percentage of Tanzania adults, N=3,060)

11*

12*

13*

15*

19*

21

22

29

39

Difficulty contacting customer care

Couldn't access account or network

Didn't have money to repay at all

Unexpected withdrawal

Cost is too high

Didn't understand the costs or fees

Charged fees I didn't expect

Repayment period is too short

Didn't have money to repay on time


• Mobile credit is relatively new and unexplored by a majority of adults in Tanzania. In 2017, nearly one in 10 adults had ever taken a loan using a mobile phone.

• Among mobile credit users, 53% reported late repayment of their loan for various reasons; 39% reported lack of money and 29% said the repayment period was too short.

• Unexpected fees were reported by 22% of mobile credit users, and 21% did not understand the costs or fees.

53% of mobile credit users were late repaying their loans.




• Mobile credit users are more prevalent in the male, and above-poverty demographic groups than among women and below-poverty adults. Only 6% of women have taken a loan using their mobile phone, which is half of the proportion of men.

• In comparison to the demographic distribution of advanced users overall (Slide 55), there are small gaps in the prevalence of mobile credit adoption between urban versus rural adults. This finding suggests that rural adoption will drive significant growth.

MOBILE CREDIT USERS, BY DEMOGRAPHIC GROUP

61


2017: Mobile credit users, by demographic (Shown: Percentage of each demographic group who are mobile credit users )

9


6 12

Females(n=1,891)

Males(n=1,169)

8 10

Rural(n=2,070)

Urban(n=990)

7 13

Belowpoverty line(n=2,392)

Abovepoverty line

(n=668)

10 8

Youngerthan 35

(n=1,680)





• Over 40% of mobile credit users reported that this method of borrowing was advantageous because of privacy, convenience, speed of delivery, and even the amount of credit available. Among the top five advantages, trust was reported by the fewest respondents.

• Reflecting the novelty of mobile credit in Tanzania, it was used most often to purchase airtime and for meeting day-to-day needs. Meeting business needs was not a top use case, suggesting that a large market has yet to be addressed.

USES AND ADVANTAGES OF MOBILE CREDIT

62


40

43

43

44

48

Trust in provider

Size of loan

Speed of getting the loan

Convenience

Privacy of loans

2017: Top advantages of mobile credit(Shown: Percentage of Tanzania adults who have ever taken a loan using a mobile phone, n=251)

14*

30

35

65

For medical needs or emergency

Just to try it out

For meeting day-to-day needs

To purchase airtime


2017: Top uses of mobile credit(Shown: Percentage of Tanzania adults who have ever taken a loan using a mobile phone, n=251)




REPAYMENT PROBLEMS OF MOBILE CREDIT USERS

63


2017: Late repayment of mobile credit(Shown: Percentage of Tanzania adults who have ever taken a loan using a mobile phone, n=251)

2017: Negative outcomes of late repayment of mobile credit(Shown: Percentage of Tanzania adults who have been late in repaying a loan

they took using their mobile phone, n=134)

20*

23*

46

58

Blacklisted at the credit bureau

Denied access to future loan with the same lender

Reduction in future loan limit after repaying

An extra fee or a rollover fee

53%

47%


• In 2017, 53% of those who obtained mobile credit did not repay their loan on time. Among those who obtained mobile credit and were late to repay, 58% experienced an extra fee or a rollover fee, and 46% had their future loan limits reduced.

• Similarly, 23% of users who obtained mobile credit and did not pay their loan on time reported being denied access to future loans with the same lender, and 20% were blacklisted at the credit bureau.




KEY INDICATORS SUMMARY

64

TANZANIA

Key Indicators2014 2015 2016 2017 Base

Definition%, Base n %, Base n %, Base n %, Base n

Adults (15+) who have active digital stored-value accounts35% (+/- 2.8%) 54% (+/- 2.8%) 41% (+/- 2.1%) 43% (+/- 1.9%)

All adults3,000 3,001 3,029 3,060

Poor adults (15+) who have active digital stored-value accounts32% (+/- 2.8%) 49% (+/- 3.0%) 33% (+/- 2.4%) 35% (+/- 2.0%) All poor

2,633 2,484 2,338 2,392

Poor women (15+) who have active digital stored-value accounts29% (+/- 3.4%) 46% (+/- 3.6%) 27% (+/- 2.8%) 30% (+/- 2.5%) All poor

females1,389 1,288 1,419 1,517

Rural women (15+ ) who have active digital stored-value accounts 25% (+/- 3.6%) 38% (+/- 4.2%) 22% (+/- 3.3%) 27% (+/- 2.8%) All rural

females1,049 995 1,161 1,258

Adults (15+) who actively use digital stored-value accounts and have accessed at least one advanced financial service (beyond basic wallet & P2P)

24% (+/- 2.4%) 29% (+/- 2.6%) 24% (+/- 1.8%) 29% (+/- 1.9%)All adults

3,000 3,001 3,029 3,060

Poor adults (15+) who actively use digital stored-value accounts and have accessed at least one advanced financial service (beyond basic wallet & P2P)

21% (+/- 2.3%) 24% (+/- 2.6%) 17% (+/- 1.8%) 21% (+/- 1.8%)All poor

2,633 2,484 2,338 2,392

Poor women (15+) who actively use digital stored-value accounts and have accessed at least one advanced financial service (beyond basic wallet & P2P)

18% (+/- 2.6%) 22% (+/- 3.3%) 12% (+/- 1.7%) 16% (+/- 1.9%) All poor females1,389 1,288 1,419 1,517

Rural women (15+) who actively use digital stored-value accounts and have accessed at least one advanced financial service (beyond basic wallet & P2P)

15% (+/- 2.6%) 13% (+/- 3.0%) 8% (+/- 1.9%) 14% (+/- 2.3%) All rural females

1,049 995 1,161 1,258

Digital stored-value accounts: accounts in which a monetary value is represented in a digital electronic format and can be retrieved/transferred by the account owner remotely. For this particular study, DSVAs include a bank account or NBFI account with digital access (a card, online access or a mobile phone application) and a mobile money account.




For more information, contact:

Loice Cherwon, Senior Research Associate, Africa [email protected]

Samuel Schueth, Director of Research [email protected]



mailto:[email protected]

mailto:[email protected]