Tanzania Postal Bank (TPB) has received a grant from Bill & Melinda Gates Foundation to fund a program to offer financial services to the unbanked poor population of Tanzania through its network of branches and agents. Through a mobile banking model, TPB will be able to bring quality, affordable savings accounts and other financial services to the door steps of the people in the rural areas. Access to financial services is important for growth and poverty reduction. Access to a bank account that enables an individual to accumulate funds in a secure place over time can strengthen productive assets by enabling him/her to invest in micro-enterprises in new tools, equipment or fertilizers; or in education or health, all of which can play an important role in improving productivity and income.
“The rapid mobile phone usage in Tanzania has seen an opportunity for expanding formal financial services to this market. TPB seeks to embrace the technology of mobile phone banking to serve the remote rural areas” said Mr. Alphonse Kihwele, TPB’s CEO. “Since nearly 25% of Tanzanians have access to a mobile phone, TPB sees this as an opportunity and appropriate technology to include the rural savings into the mainstream of the economy and enable customers to access financial services for improvement of their well being and poverty reduction. We are delighted that the Bill & Melinda Gates Foundation will be making this contribution in making all this possible”.
Banking services tend to have low penetration in rural areas as most banks establish branches in areas with high population density where there are more economic activities.
Tanzania’s population is estimated at 43.7 million, with 75% of people living in rural areas. About 40% of the rural population live on less than the amount needed to cover basic needs. In addition to low incomes, these rural households typically have high levels of illiteracy; low asset base and depend on agriculture for their livelihoods. These factors help to explain the minimal level of financial access, with only 7% of rural people being served by banks, SACCOS and other formal financial institutions. The remaining 33% are totally excluded from financial access.
Traditional banking is often too expensive or distant for low income, rural people. Mobile banking offers people lower cost transactions and the ability to perform basic banking operations “anywhere, anytime” through SMS capability. The basic mobile banking operations include account transactions, cheque transactions, mobile phone top-up and transfer of funds.
TPB’s mission is to provide customers with modern, affordable, tailor-made banking and other financial services. The bank has 27 full fledged branches country wide. Also, TPB has agency agreement with the Tanzania Posts Corporation to utilize 115 post offices countrywide and offer banking services to its customers. This broadens TPB’s outreach and brings its services closer to the rural population. A key objective and function of TPB is to mobilize savings and to promote the savings habits of the population. TPB also aims to provide adequate, proper banking services and facilities throughout the country, as well as undertake any other function performed by commercial banks
