The Bank of Tanzania (BOT), the nation’s central bank, has recently announced that payments made using debit, credit, or prepaid cards at point-of-sale (POS) machines will no longer incur any charges. This directive is part of BOT’s broader strategy to encourage the adoption of digital payments across the country.
Merchants have been explicitly warned against violating this new regulation, with the BOT indicating that there will be penalties for non-compliance, although the specific nature of these penalties has not been disclosed.
This initiative was highlighted by Governor Emmanuel Tutuba, who emphasized that the bank’s goal is to promote the use of POS machines to facilitate and encourage digital transactions. The overarching aim is to transition Tanzania towards a cash-lite economy, which is expected to offer numerous benefits, including enhanced security, greater transparency, and increased convenience for users.
Tanzania’s Digital Payment Journey
Tanzania’s economy is on a growth trajectory, with the World Bank forecasting a positive medium-term outlook and an anticipated GDP growth rate of approximately 6%. Key sectors contributing to this growth include manufacturing, electricity, construction, tourism, trade, and financial services.
Digital payments are becoming increasingly popular in Tanzania due to their convenience and speed. According to data from Statista, the total transaction value in the Tanzanian digital payments market is projected to reach USD 4,430 million by 2024. Within this market, mobile POS payments are expected to be the largest segment, with the market value anticipated to hit USD 2,375 million in 2024.
A report by Business Insider Africa noted that only a few African countries have over 50% of their population using digital channels for payments. Leading the continent in digital payment adoption are Kenya and South Africa. Other countries with significant adoption rates include Kenya (75.8%), South Africa (70.5%), Ghana (63.7%), Gabon (62.3%), Namibia (58.5%), Zimbabwe (55.7%), and Lesotho (54.9%). Tanzania ranks eighth, with 48.4% of its population utilizing digital platforms for transactions.
According to FinScope, financial inclusion in Tanzania has seen a significant rise, with 76% of the population now formally included in the financial system, up from 65% in 2017. This growth in financial inclusion aligns with an increase in mobile phone ownership, which rose from 63% to 75% over the same period. Access to commercial banking services has also improved, increasing from 17% to 22% since 2017, largely due to the enhanced accessibility of these services through mobile phones.
These trends indicate a continued rise in digital adoption in Tanzania, driven by the expanding ownership of bank accounts and smartphones—key indicators of growth in digital payments.
