Tanzania is one of the fastest growing mobile  markets and mobile financial services are at the  heart of this burgeoning sector. With upcoming  regulation from the Bank of Tanzania seeking to  tighten the legal and regulatory framework of the  sector, this month’s updater looks at the current  legal and regulatory status and its future.

Mobile financial services (M-Banking) is a term used to explain financial services delivered by way of mobile networks using mobile  phones. In general, such services include depositing, withdrawing, sending, saving and transferring money  as  well as making payments. Tanzania has witnessed a material growth in relation to M-Banking over  recent years and has been at the forefront of such services. With new legislation pending, we take  a look at the current status of both the legal and regulatory framework that governs M-Banking and  what one can expect from the future.

Current and future status of the legal and regulatory framework M-Banking has been touted as the  solution to a large fraction of the population who have no access to customary retail banking  services due to their geographical setting. Mobile phone money services in Tanzania developed in a regulatory environment without a National Payment Systems Act and the  existing guidelines for electronic payment schemes are not sufficient  to act as a comprehensive  guide on mobile financial services. Policy and regulatory frameworks are essential when considering  the M-Banking model with financial policies and regulations being areas that have shown to be quite  critical, along with telecommunications, competition and e-commerce policies and regulations.

There have been recent developments in the field of M-Banking in Tanzania over the last couple of  years, namely, the drafting of the Mobile Payment Regulations (MPR) and then, more recently, the signing   of an interoperability agreement between three of the major Mobile Network Operators (MNOs). The

latter development is the first of its kind in Africa and further demonstrates the significance of how M-Banking is developing as an essential means of  offering financial services, especially to those who do not have access to the traditional banking  system.

Overview of framework

The legal and regulatory framework that governs mobile payments in Tanzania is comprised of:

  • Bank of Tanzania Act 2006 (S. 6) (the BOT Act)
  • Tanzania Communication and Regulatory Authority Act 2003 (the TCRAA)
  • Tanzania Communication and Regulatory Authority (TCRA)
  • Electronic and Postal Communications (Licensing) Regulations 2011 (EPCR)
  • Electronic Payment Schemes Guidelines 2007 (the EPSG) –  Mobile Payments Regulations (Draft) (MPR)
  • Terms and conditions for agents and customers

Bank of Tanzania Regulations

The BOT Act was amended in 2006 to give the Bank of Tanzania (BOT) powers to administer and  regulate non- bank entities in offering payment services. Section 6 of the BOT Act provides that the BOT is empowered to regulate, monitor, and supervise the payment,  clearing   and settlement system together with all products and services thereof as well as conduct  oversight functions on the payment, clearing and settlement systems in any bank, financial  institution or infrastructure service provider or company within Tanzania. In 2007 the BOT issued  the  EPSG which allowed MNOs to offer payment services through mobile transfer. However, these  guidelines only covered risk management for banks and other financial institutions, largely  ignoring the role of MNOs. From the beginning, MNOs were required to partner with banks to receive “letters of no objection” (LNOs), which enabled the BOT to guarantee that consumer funds  are protected in the banking system, backed with a 100% liquidity prerequisite.

Since 2012 the BOT has taken a progressive approach to designing a regulatory framework that has  considerably contributed to the growth of a competitive market where MNOs are contributing to the  progression of electronic finance systems. This is considered in the MPR section below.


Mobile phone companies in Tanzania are regulated by the TCRA, which was established by the TCRAA,  and the EPCR. The main function of these two bodies, in relation to M-Banking, is to ensure that  the mobile companies perform to their required standard whenever a financial transaction is carried out through their services. The TCRA and the EPCA are mainly concerned with  the performance of the mobile companies alone1. The financial nature of  the transaction is outside  of their scope, and is usually left to the BOT to handle. Alone, these legislations would not  be  able to cover M-Banking as only the performance of the MNOs are considered under these frameworks.

The TCRA and the BOT enjoy a good working relationship as of this point. The TCRA and the BOT have  a memorandum of understanding (MOU) between them as to the regulation of mobile money transfer  services. This MOU was created purely from an administrative point of view and does not mean that they are co-regulators. However, the imminent MPR will be aimed at  providing a system for regulatory and supervisory coordination between the two bodies.

Mobile Payment Regulations (MPR)

Over the past few years, with no specific regulation in place with regard to M-Banking, the BOT had  adopted a “test and learn” approach in order to allow MNOs to provide mobile money services. The BOT also introduced LNOs to allow the MNOs and their relevant  partner banks to provide these new services. These LNOs provided the mobile industry with  regulatory support by containing performance requirements in relation to the market to guide  industry players.

The BOT published the first draft MPR in March of 2012. The 2012 draft allowed MNOs to continue to  receive LNOs to perform as mobile payment service providers. This early draft was critically  reviewed and discussed by industry players within the country as well as abroad, which sought to  improve the draft for its next alteration.

In May 2012, the BOT released a new version of the draft MPR. The main feature of this updated  draft was the establishment of a licensing regime for non-banks, such as MNOs, who intend to  provide mobile payments services. Future non-bank mobile payments providers will be required to  obtain a licence as wholly owned subsidiary companies. As currently, the MNOs will also continue to  be required to hold trust accounts with commercial banks at 100% cover.

The range of services that licensed providers will be allowed to provide is:

  • account to account funds transfers;
  • person to person funds transfer;
  • person to business funds transfer;
  • business to person funds transfer;
  • business to business funds transfer;
  • cash in and cash out services.

A key feature of the regulations is one of interoperability. The requirement within the draft regulations, is broadly worded and does not  specify a particular mechanism for implementation, but is based on market demands. This is in line with the new interoperability agreement that has been signed in  Tanzania by three leading MNO on the 4th of June 2014. This agreement is considered as one of the steps towards greater financial inclusion for the population of Tanzania.  It precedes  the publication of the final MPR but it demonstrates the direction that the mobile  industry is headed.

The second draft of the MPR has already been reviewed and commented on and the final draft has been submitted to the Ministry of Finance. However, it will  only be adopted once the National Payment Systems Act has been passed, which the BOT states is  expected in late 2014. We will provide a further update in this area once the relevant legislation  is finalised.


The current legal environment in Tanzania is still inadequate for M-Banking in the country. This  

is because the existing laws were developed before the development of technology in relation to transactions through mobile phones,  as well as failing to keep up with changes occurring in the industry. The laws were made to  facilitate the traditional paper based business environment,  as this was the only environment that  existed at the time. Despite all this, the mobile money industry continues to progress at an  unprecedented rate.

Going forward we are expecting to see the adoption of the MPR and the National Payment Systems Act,  expected sometime by the end of 2014, which should alleviate some of the issues with the current system. MEBE