Tanzania’s digital financial sector has grown rapidly since mobile money was first introduced to the country in 2008, largely thanks to an enabling regulatory environment and a competitive market.

While mobile money account ownership has grown rapidly in recent years —from 32 percent of the adult population in 2014 to 45 percent in 2021— and while advancements in financial technology have allowed providers to offer increasingly innovative and value-added services, millions of Tanzanians remain excluded or under-served by the financial sector.

Still, the potential for digital technology to enable more meaningful usage of financial services remains high, especially for women, people living in rural areas, and owners of micro-, small- and medium-sized enterprises. Realizing this potential will depend on new partnerships between financial institutions, mobile network operators, and digital financial service providers, and the application of new technology that promote affordable and relevant products and services, build consumer trust in digital financial systems, and challenge traditional social norms.

Fintech companies are gaining relevance in Tanzania, but it is still early stages and start-ups face several challenges when it comes to growth, raising questions around demand for these products and services, especially among customers at the last mile. This paper explores the drivers of demand for digital financial services and fintech: perceived cost, perceived usefulness, perceived ease of use, perceived risk, and social norms. While these drivers are interlinked—they depend on and reinforce one another—by looking at the data in these areas (and comparing these to other markets), we gain insights into which constraints are the most concerning, and potential approaches for overcoming them.

What does this report cover?

• What are the key factors affecting consumer demand for DFS and fintech in Tanzania, and how does this compare to other countries in the region and more advanced economies on the continent? We explore cost, relevance, financial and digital literacy, trust, and social norms.
• What does this mean for addressable market sizes for different fintech products in Tanzania, and how does this compare to other countries in the region and more advanced economies on the continent? For example, given relative levels of smartphone penetration and digital literacy, what are challenges and opportunities for scaling fintech solutions?
• What challenges do providers face in understanding and meeting consumer needs, especially at the last mile?
• What policy and/or regulatory changes can increase demand for DFS and fintech in Tanzania and/or help financial service providers better-meet demand?

Data collection

This paper takes a mixed methods approach, leveraging qualitative and quantitative data, including anecdotal evidence from experts in relevant fields. Most of the analysis relies on secondary data, reports, and publications such as the World Bank Global Findex Database 2021 (2023), FSDT FinScope (2023), several reports by the GSMA, and others. Primary key informant interviews (KIIs) with fintech founders, financial service providers, and innovation ecosystem facilitators--all of whom are consumers of DFS and fintech in Tanzania-- complement this analysis. Gender is mainstreamed throughout data collection and analysis, with special attention paid to the use of sex-disaggregated data and gender differentials of key findings.