Untapped market for financial service providers in Tanzania
By Ana Mushi
There is clear evidence that financial service providers are missing out on a significant untapped market in Tanzania. This market represents over half (54%) of the micro, small and medium sized enterprise owners, invests in families and communities and has the potential to borrow and pay back loans to advance their businesses.
So who are they?
Over the past decade, financial service providers have radically changed not only the products and servicesthey offer, but also taken advantage of technological evolution to develop sophisticated digital distribution channels. Such change has had a significant impact on financial inclusion across Tanzania, allowing millions of people who were previously excluded to benefit from financial services. Digital financial services also provide a wide range of new business opportunities for existing providers and enables new market players from industries such as mobile network operators and fintechs to contribute to market expansion.
Since 2009, access to formal financial services rose from 44% in 2009 to 65% in 2017, according to the latest FinScope Tanzania study, however, there is a huge segment of the population that is being overlooked. The study revealed that there is a 10% gender gap in access to financial services which reflects a global trend among developing countries where, due to lack of access to appropriate, affordable financial products and services, women are financially excluded and therefore not able to fulfil their potential to sustain household resilience, improve their families’ prosperity and drive economic growth.
Gender gap in the new era of financial services. Financial providers have proved themselves to be forward thinking in addressing the needs of many segments of the population who were previously excluded or underserved. This has been seen in the many innovative new products and services that have been designed for low-income groups, farmers and small business owners, including the rise of microfinance schemes, affordable health and crop insurance, the expansion and deepening of rural Savings and Credit Cooperative Societies (SACCOS) and agency banking providing small business services in rural locations. Distribution channels have seen the greatest change, as providers can now reach remote, rural locations cost effectively via mobile phones to offerpayment platforms, credit, savings, insurance and otherfinancial products and solutions.
The benefits of this new era in financial products and services are not, however, reaching many women across Tanzania. There are persistent social, cultural and economic barriers which continue to prevent them fromaccessing financial services due to social norms, lack of income,education and mobile phone ownership.
Despite accounting for more than half of small business ownerswith access to many new products which have been designed to meet such needs, on a national level they lag behind men in formal education, literacy and basic numeracy.In addition, the gender gap is in factwidening in the use of digital financial services as, when asked by FinScope Tanzania 2017, almost 6 out of 10 women do not own a mobile phone, against over 7 out of 10 men, as they found them to be expensive.
A new approach for the future of financial inclusion for women.For financial service providers, a new approach is required to overcome challenges on both the demand and supply side as well as addressing regulatory and legal challenges in customer registrationand service provision. Together with the government, regulatory authorities and key stakeholders, there is growing recognition of the need to address systemic and structural practices to provide appropriate and affordable products and services to women.
Many organisations, including the Financial Sector Deepening Trust (FSDT) have made a commitment to support financial service providers to close the gender gap by providing robust market data to inform customer-led new thinking for the development of solutions that meet the needs of Tanzanian women.
FSDT has also brought together financial service providers, fintechs, government and regulatory representatives and academics in a series of innovation platforms and workshops to unpack and understand challenges in order to leapfrog barriers and create innovative ways to empower women to reach their potential as active participants in the financial sector and the economic future of Tanzania.
Women stand at the heart of household and economic resilience and their participation in the financial sector can not only provide positive impact for their families and communities, but also contribute to the future evolution of the financial sector by providing new demand for customer-led, innovative and affordable products and services.
www.fsdt.or.tz
