What Can Tanzanian Fintechs Learn From The Recent FinScope Report?

This blog post reflects what fintech companies in Tanzania can learn from the recently published FinScope report, spearheaded by multiple partners led by the Ministry of Finance and Planning in Mainland Tanzania and Zanzibar.

Jumanne Rajabu Mtambalike
7 min readAug 8, 2023

It has been a bumpy experience working and building together with FinTech companies in Tanzania as part of the PesaTech Accelerator program. We have made friends and partners, and I have fallen in love with the sector for some reason. Data and insights are essential when running a business in an untested market with an unproven business model looking to scale exponentially. Startups can adopt the insights from the FinScope report to understand market dynamics. What Can Fintechs Specifically Learn From The Report?

Consumer Socioeconomic Activities and Literacy Levels

The first key insight is the 23 per cent increase in the adult population between 2017 and 2023, which directly influences the type of revenue-generating activities carried out by the community. The trend of moving from farming to casual labour and dependency pushes for solutions that consider these groups. Irregular opportunities, lack of job security, and low wages often characterize casual labour. If you are a startup founder designing a product right now, this is a group that you are likely to serve.

The opportunity: casual labour is often part of the informal economy, where workers cannot access social protections such as health insurance, pensions, or unemployment benefits. Fintech founders can develop innovative ways to offer these services to consumers in the informal sector by forming strategic partnerships with social security funds, insurance companies, and compensation funds to formalize the informal sector.

Even though not significantly, the size of literate consumers has increased; 3 out of 10 Tanzanian adults have ended their formal education post-primary school. This is a slight increase compared to five years ago. Also, it is evident from the report that Kiswahili is still the consumer's language. 79 per cent of consumers can read and write Kiswahili, compared to 30 per cent who can do the same in English. There is an indication that more consumers still need help with basic addition and subtraction and the slightly more complex multiplication and division arithmetic. You can easily lose customers using technical jargon and complex approaches to communicate your value proposition.

Land Ownership and Identification

From the report, some important insights inform Online Lending and Peer-to-Peer Lending (P2P), Real Estate and digital banking fintech solutions. Access to digital identity and physical address is key to these startups. The good news is there has been an uptake of the National Identification Number (NIN). The National Identification Number (NIN) penetration increased significantly from 10% in 2017 to 57% in 2023. This provides a unique opportunity to establish connections with the NIN database through APIs building on top of existing data infrastructure. Of course, there is always a question of the flexibility of the data owners. We are still facing the data conundrum; the who have data don’t use them, and those who need them don’t have access. Also, it is essential to note if you are targeting younger (16–24) consumers, only 4 in 10 hold some form of ID compared to 8 in 10 Tanzanian adults. Voter ID still takes the lion’s share of the IDs at 73 per cent.

On land ownership, if you are building anything to access title deeds easily, you might be working on a gold mine. RegTech is always the most complex form of fintech solutions due to the government's heavy involvement, but it might be the most impactful type of fintechs. If we can find a way to help land regulators improve the uptake of land documents, there will be a massive disruption in the financial sector. Only 3 per cent of Tanzanians have access to title deeds/Certificate Right of Occupancy (CRO). Considering the existing collateral regulations and requirements, land issues significantly impact access to mid and large loans for women and younger youth.

Mobile Penetration and Financial Services Access Points

89 per cent of Tanzanians lives within 5Kms radius of a financial access point. It is unclear which financial services access points are more prominent than the other, but I’m assuming mobile money and agent banking are leading the rest. Hence, if you build anything on top of the existing mobile money or agent banking infrastructure, you have a better chance to reach over 80 per cent of consumers.

Mobile Ownership and Internet Reception have also increased. 75 per cent of adult Tanzanians own a mobile phone.

It is important to note that overall, 19% of Tanzanian adults own a smartphone, which is an 8%-point increase from 2017, but still less than 2 in 10 Tanzanians overall — FinScope 2023

The number of smartphones is still relevantly small. Hybrid fintech products and solutions that cut across multiple devices and technologies are still needed. Old technologies such as USSD and SMS are still relevant even with the recent rise of mobile applications and telcos' introduction of Super Apps. You might want to consider Tabora as your pilot place if you build a product that brings financial services closer to people. In Tabora, only 65% of people stay within 5km proximity of a financial access point.

Income Versus Payments

Uncertainty is the keyword. Most Tanzanians rely on seasonal or occasional income. Due to the unpredictability of the income to most of them, innovative savings and insurance solutions might have a better chance to strive. Innovative tech-enabled loan products capitalizing on future incomes can be a saviour to 44 per cent of Tanzanians who rely on seasonal trading activities, including farming. Products to support casual labourers who rely on occasional gigs might be attractive to consumers, especially if they allow group and goal-based savings allowing workers with unpredictable incomes to prepare for the unexpected. This also goes to pay-as-you-go products and solutions.

There is room for improvement in blended solutions that work between health and fintech. Medical expenses are still a key expenditure for an average Tanzanian, coming second to business expenses (or farming). Very few payment home-grown solutions target this sector emerging from startup companies. More products and solutions are also needed for school fees and house rent. This is good news for fintech companies like Pango working to offer renting solutions for millennials living in fast-growing cities in Tanzania. The payment section of the report gives you an idea of which areas to build new payment solutions.

AI-Generated Image (FreePik) | Over a quarter of adults aged 55 years and below have no retirement plans.

Managing Expenses and Future Spendings

Save Now Buy Later (SNBL) fintechs such as Tunzaa will significantly benefit from the insights around the future spending of Tanzanians showcased in the report. Based on the report, many Tanzanians want to buy houses, farms (land), or livestock. Any fintech solution that will ease access to purchase long-term physical assets such as houses and lands might have a chance to succeed depending on the business model. Spending (investing) on businesses comes third on the list of future spending, showing an opportunity for fintech companies that can give options for people to buy and invest in traditional SMEs and other startups.

The Payment is Largely Untapped

Eighty-two per cent of payments are still being made in cash. While several startups are being found to address the issue, money still takes the lion's share of all charges. More solutions are needed targeting the payment sub-sector of the fintech sector. There is a need to think of innovative business models (payment methods) targeting specific areas, such as education, agriculture, health, and other consumer services.

Savings and Spendings Tracking

Savings and spending tracking applications are still needed. While the Finscope reports highlight the culture of tracking spending among Tanzanians. It has mentioned how they track their spending. 77 per cent of adult Tanzanians claim to keep track of the money they get and spend. I’m assuming mostly through physical notebooks and diaries. There is an opportunity for localized simple products that meets the needs. It is important to note Tanzanians save to smoothen cash flow hence the need to incorporate targets and goal-setting features in the solutions. 47 per cent of adult Tanzanians saved in the past 12 months, primarily to smooth cash flow.

Other ideas;

  • It is about time someone creates an app or solutions for retirement plans. It should give people around the retirement age options to invest in less stressful assets; according to the Finscope report, Over a quarter of adults aged 55 years and below have no retirement plans.
  • There is a need for products and solutions mainly targeting youths and people living in rural areas. They are the most financially excluded groups.
  • More products and solutions are needed to address remittance opportunities. For the past five years, remittances have remained largely the same.
  • There is an opportunity for Peer-to-peer lending fintech solutions. Friends and family remain key sources of credit. Over two-thirds (67%)
    of Tanzanian adult borrowers
    accessing their loans in this way.
  • If you are building an insure-tech product, it is important to note the interest of beneficiaries has moved from Community Health Insurance Fund (CHF)to National Health Insurance Fund (NHIF). A significant increase in NHIF beneficiaries is observed, from 39% of the insured in 2017 to 72% in 2023. There is an opportunity to build on top of NHIF.
  • There is a need to build products that easily and smoothly allow people to invest across multiple assets available in the market. About 3 in 10 Tanzanians know about investment vehicles, but only about half have taken them up. Currently, options like T-Bills (Government/Other Bonds), Cryptocurrency, Unit Trust Tanzania (UTT) and livestock look like options for a specific group of society. There is an opportunity to demystify that using tech solutions.



Jumanne Rajabu Mtambalike

Entrepreneur, TZ Patriot, Loves Tech, Founder saharaventures.com, Project Management Consulting firm, Co-Founded saharasparks.com and Sahara Accelerator.