Kenya has long been considered the cradle of mobile financial services in East Africa, but Tanzania—owing to unprecedented recent growth in the industry—is now hot on its neighbor's heels.

Staggering figures were released in 2017 by the Bank of Tanzania (BoT). In the nine-month period between July 2016 and April 2017, the number of mobile financial transactions made in the country rose to 14.4 billion. With a total value of TZS50 trillion (USD22.1 billion), these mobile money activities are radically altering the financial fabric of Tanzania. And the new technology is enabling large percentages of the population to engage in financial services previously unavailable to them.

Mobile money was introduced in Tanzania in 2009 with 4.2 million mobile money accounts, out of which only 368,000 were active, according to BoT. Since then, the percentage of the general population with access to financial services has more than quadrupled. As of 2016, a record 62% of Tanzanians have been making use of mobile banking options. There were 53 million mobile money user accounts registered in that same year, and the average total of monthly transactions via mobile accounts increased to over USD2.1 billion.
The mobile money profile of Tanzania differs greatly to that of its neighbor Kenya. If Kenya's e-money industry is all about solidity and value, Tanzania's is about agility and volume. In Kenya, one key player, Safaricom's M-Pesa, dominates the industry with 95.5% of the mobile money pie. Transactions are usually of higher value, but come with a higher cost.
Contrastingly in Tanzania, there is fierce competition in the sector. The country has four major players dividing the market relatively evenly—though Vodacom is still the favorite—and new entrants coming in, increasing the pressure to perform and innovate. Furthermore, Tanzania boasts more individual mobile money accounts. However, there are fewer active users and less total volume transferred, implying that transactions are smaller and more sporadic. That said, the number of m-wallets is significant: Tanzania claims one-third of all of East Africa's mobile money accounts.
Tanzania's mobile money industry is also more flexible following the shift to interoperability in 2016. Now, users have the ability to transfer freely among different operators, giving them greater control over the kinds of services and providers they prefer. Innovation in the financial technology sphere has meant savings facilities, utilities payments, tax collection services, and other varied functions are readily available to Tanzanian citizens.
Also, through use of agent and aggregators, mobile money channels are reaching even the most remote locations, transforming the lives of Tanzania's large rural population. A World Bank-funded program, the Regional Communications Infrastructure and E-Government Project, has been put in place to support the Tanzanian government extend the geographical reach of ICTs, with the objective of spreading technology to 2.5 million people by YE2017.
What do these numbers mean for the country's future? For individuals, savings culture and lifestyles in general are evolving at breakneck speed, fulfilling the narrative of “leapfrogging” traditional systems that is so often applied to the African continent. For small businesses, access to credit has been made much easier since interest rates and other fees are lower for mobile systems. What is more, SMEs are able to increase their credit worthiness, facilitating overall business growth. Finally, for institutions and the government, more and more people are entering the formal banking system, which is in turn impacting fiscal revenue collection as well as measurable GDP streams.
And it does not look as if this tidal wave of technological development will stop any time soon. Government agencies, business incubators, and tech hubs are all joining forces to encourage innovation in the financial technology space. There is confidence that regulation and policy is successfully keeping pace with growing demand. And, who knows, in the next few years Tanzania may even give Kenya a run for its mobile money.