{{Tanzanian mobile phone subscribers may soon be able to borrow money through their phones and avoid the bureaucracy and stringent conditions associated with bank loans.}}
Some would-be beneficiaries yesterday said the facility could spur growth by encouraging individual savings and promote the culture of borrowing for economic productivity among millions of traders in the informal sector.
The Citizen revealed on Monday that the Bank of Tanzania (BoT) was considering a request by Commercial Bank of Africa (CBA) to lend through Vodacom’s M-Pesa platform.
If approved, it will be the first time subscribers would be able to access loans through their mobile phones.
The potential and significance of the service is huge, considering the low financial penetration in the country, which has 28 million mobile phone subscribers.
Official statistics show that only 5 per cent of the more than 43 million Tanzanians have access to formal financial services.
Another 2 % are in the semi-formal class and 35 in the informal category. Tanzanians are also poor savers, with a record of only 12% of the total national wealth.
But according to a trade association bringing together over 62,000 members, the planned loaning through the mobile phone could revolutionize the way financial institutions relate with medium and small businesses.
“We hail this move because it will bring relief to small traders who have been struggling to get low cost loans for many years without success.
Availing credit through the mobile-phone will come in handy for many,” said Mr Saidi Madanga, the executive secretary of the Association of Small Traders (Vibindo).
Bank of Tanzania is reportedly preparing guidelines for the entry of the lending facility through mobile money services such as M-Pesa, Tigo Pesa and Airtel Money.
“The cost of borrowing will be reduced not only in terms of cutting excessive bureaucracy associated with cumbersome procedures but also reducing time spent looking for the credit,” said Mr Madanga.
He said traders have often given up looking for guarantees such as title deeds, letters from witnesses, official stamps from ten cell leaders and local council leaders.
Thecitizen
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