Tanzanian saw this week the launch of an innovating financial service that allows users to apply for micro-loans via their mobile phones.
The product is the extension of the wide-spread mobile payment system in use for years that allows any user with a mobile line to send and receive money via their mobile phones.
Tanzania’s mobile operator Vodacom partnered with the Commercial Bank of Africa Tanzania (CBA) to provide their clients subscribed to the mobile payments system (M-Pesa) to borrow money via their phones via the so called M-Pawa.
Customers can access credit of up to TZS 500,000 (USD 300), depending on the credit score, in an eight seconds process, while incurring in a one-time fee of 9% of the amount borrowed.
In order to access loans however Vodacom users are required to have used M-Pesa for at least six months.
M-Pawa has also been presented as a platform for people to grow their money, since the subscribers will also earn interest on their M-Pesa account savings.
President of Tanzania H.E. Jakaya Kikwete who was present the launch of the new service defined it historic, stressing that it will be a catalyst to increasing access to affordable financial services for those not included in the banking system, supporting Tanzania’s efforts on financial inclusion.
“People do not access financial services because they are unable to meet most of the requirements of the formal banking sector, M-Pawa is our response to this need,” Vodacom Tanzania Managing Director Rene Meza added.
According to Finscope Tanzania 2013 survey, a nationally representative study of consumers’ perceptions on financial services and issues, the number of adults using financial services in the country has more than doubled from 27% to 57.4%, over the course of the last four years, and if just 3.3 million people (14% of adult population) are using formal banks, 43.5% are using mobile phone services: https://tanzaniainvest.com/banking-finance/news/1086-tanzania-improves-financial-services-inclusion