Tanzania has witnessed a remarkable surge in formal financial service usage, reaching 76% by 2023. This growth is largely attributed to the transformative power of financial technology (fintech). However, a critical gap persists: limited digital literacy among users hinders their ability to fully exploit these tools that have unlocked digital financial inclusion for millions.

Fintech encompasses a range of digital solutions for financial services, from online payments and internet banking to digital currencies. Its core promise lies in simplicity and accessibility, reaching customers previously excluded from traditional banking systems.

In Tanzania, mobile network operators have taken the lead in this arena, a testament to the pervasiveness of mobile phones. By March 2024, Tanzania Communications Regulatory Authority (TCRA) reported a staggering 53 million registered mobile money accounts. Notably, 70% of those utilizing formal financial services leverage these mobile platforms, highlighting their effectiveness in bypassing traditional brick-and-mortar limitations (Finscope, 2023).

Despite progress, a significant knowledge gap persists among users. Many primarily leverage these services for basic money transfer, neglecting the broader functionalities available.

A Financial Sector Deepening Trust (FSDT) report highlights this underutilization: a substantial 52% of mobile money users still rely on agents for bill payments, for a service readily available on their phones. Similarly, only 23% utilize their accounts for airtime purchases.

This limited engagement underscores the need for targeted educational initiatives to improve digital literacy and promote broader digital financial inclusion.

Furthermore, a cash-centric culture persists among many small businesses, including vendors, street food stalls, and many others.

This reluctance stems from a confluence of factors including security concerns regarding digital transactions, perceived high fees, and, most importantly, a lack of awareness about the potential benefits these platforms offer.

The threat of online fraud further complicates matters. As of March 2024, TCRA documented a concerning 17,318 reported fraud attempts directed at mobile network operators. The Bank of Tanzania (BOT) reported losses exceeding TZS 4.89 billion due to fraud and cyberattacks in the banking sector by year-end 2023, primarily targeting mobile and internet banking channels.

These figures underscore the urgency of user education on online security practices to ensure data privacy and a secure digital financial inclusion ecosystem.

Enhancing user digital literacy is paramount. Educational programs focusing on smartphone usage and financial service applications are essential, particularly for adults and rural residents with limited technological literacy.

Localization of fintech interfaces and resources into Kiswahili, the primary language for financial services for 79% of Tanzanians [Finscope, 2023], is another crucial step.

Bridging the digital divide requires improved internet access, especially in underserved peri-urban and rural areas. While current 3G and 4G network coverage reaches 72% and 64% respectively, a substantial user base – an estimated 12.2 million, remains tethered to slow 2G connections (TCRA, 2024).

Collaborative efforts by governments, financial service providers, and technology companies are necessary to equip users with the knowledge and tools to navigate the digital financial landscape safely and effectively, promoting digital financial inclusion for all.

Aziz Rashid.
azizrashid90@yahoo.com.