Mobile Banking in Tanzania: Can Kenya’s success be replicated next door?

by Sarah Rotman : Tuesday, July 21, 2009

No one who is a regular reader of this blog needs an introduction to M-PESA in Kenya. But some of you may not know that M-PESA launched next door in Tanzania over a year ago. Haven’t heard much about it, have you? That’s probably because unlike the rapid uptake and quick agent network that developed in Kenya, things have moved much slower for Vodacom’s M-PESA product in Tanzania.

We have just posted a web story analyzing the differences between these two implementations. To entice you to read more, here are a few of our observations.

1. Geography and culture: Tanzania is a much more spread out and less densely populated country than Kenya. This may seem trivial until you remember that the density of one’s agent network is a key factor to any m-payments product.

2. Market and competition: Safaricom in Kenya has 79% market share with 12.5 million clients. Vodacom in Tanzania has 41% market share with 5.2 million subscribers. And Zain, Tigo and Zantel are gaining ground every day.

3. Agent networks: It appears that Vodacom has less direct control and influence on its airtime distribution channel than Safaricom. Vodacom works directly with six airtime wholesalers, compared with 300 that Safaricom works with. And as you know from the experience in Kenya, Safaricom’s airtime distribution network was a key element in the rapid development of the M-PESA agent network.

4. Marketing and strategy: Initial Vodacom M-PESA marketing didn’t make the easy “send money home” message that Safaricom was so successful at. As a result, customers were unsure of what the product offered them and if it was really geared at the average Tanzanian.

Read more about this comparison at www.cgap.org/technology.

TAGS: Africa, Customer adoption, Kenya, Mobile Banking, Tanzania

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8 Comments RSS 2.0

  1. July 22nd, 2009 at 1:56 pm, thadk ()

    Also it seems Vodacom has recently, essentially thrown in the towel: event:http://bit.ly/dDAI5
    It has certainly felt that way for a while. Zain owns the market and innovates as a slow incumbent for most of the country, Tigo & Zantel are breaking ground but can’t match certain offers (like unlimited texts) due to penetration. Too early to see if Zain’s Zap will work. One funny is that they have a money transfer form in our market-place Zain kiosk, which, in lieu of a formal ID, you can simply get the village leader’s signature.

  • July 23rd, 2009 at 12:41 am, Upendra Namburi ()

    A business model performance needs to be evaluated from two perspectives
    1. Country Development Indicators : Banking penetration etc &
    2. The Organisaiton Resources : Share, customer base etc.

    Vodafone/Safaricom they may like to look at the following variables as well when entering new markets:
    a. Distribution alliances with other industries, who offer the optimal reach
    b. Alliances with other mobile operators as well!
    c. Value Proposition : The value proposition for traders may be different from consumers ( non earning members).

    Upendra

  • July 23rd, 2009 at 1:29 pm, Jennifer Gong ()

    Vodacom is definitely investing more in Tanzania. However, they have notspecified which area this new money will go into.

    http://www.reuters.com/article/rbssWirelessTelecommunicationServices/idUSLN1577920090723

  • July 28th, 2009 at 6:01 am, Chrissy ()

    Vodacom is, in fact, actively working to spread MPesa in the country. They have been working to get the government to accept more payments through MPesa, as well as more retail outlets. The model is driven by increasing options for people to pay bills with there MPesa account. This is a different approach than Kenya, but in the long run, could definitely pay off.

  • July 28th, 2009 at 10:07 am, Peter Nakamura ()

    I’m currently doing a fellowship in Pemba, Mozambique at the First MicroBank supported by the Aga Khan Foundation, and I was wondering if anyone knows whether mobile banking has moved into Mozambique as well. We have two major providers here: Mcel and Vodacom, and it would be nice to know if they’re involved with this type of initiative.

  • August 3rd, 2009 at 4:06 pm, Samuel Munzele Maimbo - World Bank ()

    Hi Peter. To answer your question, mobile payments and branchless banking have yet to play an important role in financial services provision in Mozambique. Nevertheless, mobile telephone usage is prevalent in Mozambique so there is potential for mobile banking. The two major mobile phone companies have approximately 4 million Mozambican subscribers (35 percent of the adult population), close to 5 times higher than the percentage of Mozambicans with banking services. Mobile network operators plan to reach more than 93 percent of districts in 2009. Mobile phone companies reported that sending airtime among mobile phone users was very common, with airtime transfers often used as a currency substitute. Although some banks have developed applications that allow simple transactions by their customers, mobile banking is in its incipient stages.

  • August 4th, 2009 at 5:47 pm, Alhabari.net » Reading the Tea Leaves at Safaricom ()

    [...] system- Vodafone hopes to take their money transfer model to other countries, though it has not fared well in Tanzania. Safaricom also hope to extend into international transfers from the UK via Western [...]

  • August 20th, 2009 at 4:05 am, Peter Nakamura ()

    Hi Samuel, thank you for the information.
    It’s nice to know that there is potential for mobile banking in Mozambique; though, it seems like there’s still a long way to go before it can be commercialized. Would you happen to know where I can find more information about this topic? It would be nice to keep tabs on this topic as it develops. Thank you.

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