A Demand for Secure Savings Exists Among Tanzanians; M-Pawa may Prove to be a Viable Savings Option – Especially for Those in Rural Areas
According to findings from two InterMedia surveys in Tanzania – the Financial Inclusion Insights (FII) research and the Financial Inclusion Household Tracker Study (FITS) – there is strong existing demand among Tanzanians for secure saving services.
In the first wave of the FII survey, 25 percent of active mobile money account holders and 23 percent of all mobile money users said they started using the services because they wanted to save money or securely store money on the mobile money platform.
Reasons for starting to use mobile money (MM) and actual use among active mobile money account holders (n=1,095) and all mobile money users (n=1,383)
Source: InterMedia FII Tracker Survey in Tanzania; November 2013-March 2014; N=2,997.
Yet, when asked if they actually used mobile money services to save money or to set money aside for pension/pension contributions, very few, even among active registered users, responded positively. This indicates there is potential for users to save more using their mobile money account, and M-Pawa’s entry into the marketplace may prove to be a positive step toward further encouraging savings among mobile money users.
M-Pawa, a mobile money savings and loan service, was launched in May by Tanzania’s leading mobile service provider, Vodacom, in conjunction with the Commercial Bank of Africa (CBA). The service is modeled on Kenya’s M-Shwari service and uses the M-Pesa platform to enable user access. It is designed to reach the largely untapped rural market with high savings potential, bridging the urban/rural gap in access to financial services.
M-Pawa allows users to securely save and borrow funds, using their mobile money accounts, and offers a purportedly competitive interest rate on savings accounts: 2 to 5 percent depending on the amount saved.According to M-Pawa developers, the service can be accessed through the M-Pesa menu and is fairly easy to use.
Tapping into the concern for safe storage of funds, the service also has been marketed widely as a more secure alternative to a hiding place or ‘kibubu,’ a popular savings method in Tanzania. According to InterMedia’s Financial Inclusion Tracker Data for 2012, 8 percent of Tanzanian households used bank accounts to save/store money in the six months prior to the survey. However, 34 percent of households reported saving money in a hiding place/under the mattress during the same period.
M-Pawa combines CBA’s banking platform with M-Pesa’s distribution system, which claims in excess of 65,000 agents across Tanzania. A vast agent network with extensive coverage of the country brings with it an opportunity for rapid uptake of the product and a stronger likelihood of better financial services access for millions of underserved Tanzanians.
So, it is easy to see the impact M-Pawa could have. This service, and others like it, could ultimately expand the pool of people who can take advantage of financial services, as long as they have a mobile phone — effectively removing barriers to access and use of financial services faced by a large percentage of Tanzanians who don’t have physical access to traditional banks.
Three weeks after the launch of M-Pawa, Vodacom Tanzania and CBA, claimed M-Pawa had over 250,000 accounts and reached combined savings of Tshs1.2 billion ($750,000). These statistics are additional confirmation of the strong demand for easily accessible savings products in Tanzania. But how effective M-Pawa will be in meeting this demand among rural populations, and for the long term, is yet to be determined.
FII research in Tanzania is ongoing, and InterMedia will follow up with new survey data on M-Pawa usage and whether rural populations’ demand for savings products shows signs of being met.