Open banking in Tanzania – Open Banking Nigeria

Tanzania

Open Banking Model

Tanzania is one of East Africa’s fastest-growing economies and is known for its focus on financial inclusion and digital innovation. The country has made significant strides in digital finance and fintech evolution in the past decade, particularly through mobile money services like M-Pesa, Airtel Money, and Tigo Pesa. These platforms have broadened access to financial services, especially in rural areas, establishing Tanzania as one of the most mobile money-centric economies in Africa.

Current Status of Open Banking

While the Bank of Tanzania (BoT), the country’s central bank, has been a strong supporter of digital financial services and interoperability among mobile money providers, fintech companies, and financial institutions, it has yet to introduce regulations that specifically address open banking or data-sharing standards between financial institutions and fintechs.

Despite the absence of a regulatory framework, there are indications that Tanzania is taking preliminary steps towards open banking. In 2021, NMB Bank Tanzania, the largest commercial bank in Tanzania, launched the country’s first fintech sandbox. This sandbox provides fintech companies with controlled access to banking APIs, allowing them to develop and test digital financial products. NMB’s initiative is a pioneering move in Tanzania’s open banking journey as it paves the way for future innovations in the sector.

Key Drivers and Innovators

The drive towards open banking in Tanzania is supported largely by market demand for digital financial services and the rapid growth of the fintech ecosystem. Key drivers include:

NMB Fintech Sandbox: As the first sandbox in the country, NMB’s sandbox is an essential step towards open banking, enabling fintechs to access banking APIs and develop innovative solutions in a regulated environment. This initiative has encouraged collaboration, allowing fintechs to experiment and create consumer-focused products that could shape the future of Tanzania’s financial landscape.
Mobile Money Dominance: With mobile money platforms dominating Tanzania’s financial landscape, the existing mobile payments infrastructure provides a solid foundation for developing potential open banking-powered products. This reliance on mobile payments also creates an opportunity to bring financially excluded consumers into the broader digital financial ecosystem, offering them new financial products such as micro-savings, credit scoring, and affordable lending solutions.
Growing Fintech Ecosystem: Tanzania’s fintech sector has been expanding rapidly in recent years. This growing ecosystem is poised to benefit from open banking, as fintechs are increasingly interested in leveraging banking data to create personalized financial solutions.

The Role of the Central Bank

The Bank of Tanzania (BoT) is the primary regulator of financial services in the country. It has played an active role in promoting financial inclusion, especially through the National Financial Inclusion Framework (NFIF), which seeks to bring more Tanzanians into the formal financial system. The BoT has also been instrumental in fostering interoperability across mobile money platforms, ensuring that users can transfer funds across different providers seamlessly.

While the BoT has not yet issued a regulatory framework for open banking, its focus on interoperability and digital finance indicates an openness to supporting data-sharing initiatives in the near future. BoT’s ongoing digital finance policies, along with its support for innovations like the NMB fintech sandbox, signal a progressive approach that could eventually incorporate open banking regulations.

Looking Ahead

Though open banking is not yet fully implemented in Tanzania, the groundwork is being laid by forward-thinking institutions like NMB Bank and the supportive stance of the Bank of Tanzania.

We eagerly await the next steps and will keep you updated on the latest advancements and regulatory changes that will pave the way for open banking in Tanzania. Stay tuned!