Mobile money stakeholders charged to cultivate new debt investors

Tanzanians should be able to buy government securities through a mobile money platform in a move that would enable the country to become less dependent on commercial lenders and institutional investors for its funding.

According to renowned economist, Professor Honest Ngowi, Tanzanians with mobile money accounts, most of whom had limited access to banks, will now be able to directly buy government debt.

“The measure would boost savings and investment among ordinary Tanzanians as well as driving economic growth,” he told the ‘Business Times’.

The move, which follows a similar move by Kenya in 2017, will also unlock the market up to Tanzania’s Diaspora.

Mobile money allows subscribers to transfer money and make payments for services and products via their mobile phones and has developed rapidly in Africa, where it is now widely utilised.

Of Tanzania’s population of 59.73 million, about 44 million are mobile phone subscribers.
Vodacom Tanzania is likely to be the main beneficiary of the change among telecoms operators as it has the largest mobile money customer base, followed by Tigo, a part of Sweden’s Millicom, Airtel, a unit of India’s Bharti Airtel, and Halotel, owned by Vietnam’s Viettel.

Tanzania has traditionally auctioned its debt mainly Treasury bills and bonds through bids submitted through commercial banks who act as primary dealers.
So, the mobile money plan should cut the government cost of borrowing.

“Widening the scope of investors reduces the dependence on a few players such as commercial banks, offshore players and institutional investors which tend to bid highly in the auctions given that government has limited choice,” said Prof Ngowi.

Critics are concerned about Tanzania’s appetite for credit, which has seen its public debt reach Tsh14.853 trillion as of April 2020, while external debt reached Tsh51.945 trillion.