Approximately a decade ago most people in Africa were not banked. Actually around 2% of sub-saharan Africa used Bank Services the rest kept off. People used to keep their money ‘under the mattresses’ quite literally. New technology has come to reverse that, with customer oriented Banking methods, Mobile money and SACCOS.
A good example is the M-Pesa mobile system that allows Kenyans to transact using electronic payments while the physical money is held in an M-pesa account at the Banks. M-pesa penetration among adult Kenyans was 98%. Most Kenyans around 31Million have Bank accounts too according to the Kenya Deposit Insurance Corporation (KDIC)
In Tanzania mobile money is still ‘foreign’ and not all Tanzanians are even aware how it operates and thus most Tanzania still hide their money under the pillow.
Central Bank of Tanzania Governor, Prof Benno Ndulu said the bank monitors all currencies in circulation and 36 per cent are in banks while the balance 64 per cent is at people’s hands. “The bank [BoT] wants people to deposit their money to enable commercial banks to lend more.
President Magufuli said at the 14th Annual Engineering Day that previous corrupt officials hide ill-gotten money at home, changing the money could help solve the problem.
“I did consider changing the currencies in two or three days…knowing the corrupt guys will lose their ill-gotten fortune,” Dr Magufuli said. According to Bank of Tanzania currencies in circulation were 4.13 Trillion Tshs at the end of May slightly up from 4.0Trillion Tshs at end of April.
May be Magufuli should seek help from experts and not just conclude switching to different currencies legally invalidates the older ones.
He should also call a summit with tech gurus in Tanzania and world Bank to find a way of making more Tanzanians get banked.