Blocks for Building and Expanding Fintechs in Tanzania
by John Haule, Founder/CEO at Swahilies 1 April 2024According to the IMF, Tanzania, a nation of 60 million people, is among the fastest-growing economies in 2024.
Over the past two years, the Fintech industry in Tanzania has experienced significant growth, and you don’t need to use a telescope to see that.
Major funding rounds by Tanzanian Fintech startups like Ramani, which raised $32 million, and global companies like Unlimit expanding into the Tanzanian market, are just a few examples. Additionally, companies like Wasoko are doubling down on their commitment to Tanzania by investing in building structures for their talent in the country. These activities signal a promising trend for the Fintech industry in Tanzania.
Overview of Tanzania Fintech Ecosystem
In today’s article, I aim to explore a few Fintech infrastructure-based companies in Tanzania that offer potential partnership opportunities for launching or expanding Fintech products. I will delve into the specifics of these companies and how partnering with them can benefit businesses in the Fintech sector.
Identity Verification — Know your customer (KYC)
Know Your Customer (KYC) is not only a regulatory requirement for most Fintech companies but also a crucial aspect for mitigating fraud, managing risk, and ensuring the integrity of onboarded customers. In Tanzania, the National Identification Authority (NIDA) serves as an ideal partner for companies to verify the identities of their individual customers. By leveraging the NIDA API, businesses and organizations can streamline the process of customer verification, making it reliable, easy, simple, and cost-effective.
Open banking
Open banking is important in Fintech because it allows banks and other financial companies to securely share financial data with other companies, leading to innovative services. For example, open banking enables faster loan approvals by allowing lenders to access your financial history directly from your bank. In Tanzania, Credit Info is an ideal partner for this. Their service helps banks and other credit providers evaluate prospective customers, monitor the performance of existing ones, and manage any debts they may have incurred. Credit Info collects data from as many banks and other financial companies as possible, transforms it into intelligence, and makes it available for other companies to access and make decisions.
Banking as a Service(BaaS)
Banking as a Service (BaaS) is a concept where fintech startups use banking infrastructure from banks to create new financial services quickly and without building everything from scratch. It’s important because it speeds up innovation, lower costs and helps fintech companies focus on improving customer experiences without worrying about banking operations. An example of using Banking as a Service (BaaS) is when you have a bookkeeping app for farmers, but you recognize the opportunity to offer a savings service within the app.
However, since you’re not regulated as a bank to offer savings, you partner with a bank or a BaaS provider to integrate the savings service into your app. This partnership allows you to provide additional financial services to your customers without needing to navigate the complexities of banking regulations. In Tanzania, TemboPlus serves as the ideal partner for launching banking services without the need to become a bank yourself. They are working with Banks to help more companies launch banking services.
ATM and Agency Banking;
In an economy where cash reigns supreme, accounting for 90% of transactions, there is an ongoing demand for enhanced technology and proficient support systems. In Tanzania Umoja Switch (UBX) facilitates collaboration among banks, mobile money companies, Saccos, and other financial institutions, enabling them to share ATMs and agents.
If you wish to launch a bank, mobile money service, or Saccos, you need not stress over constructing your own ATMs or agent network; instead, you can leverage the Umoja Switch network of more than 1,000 ATMs and thousands of agents. UBX is also an ideal partner for companies seeking to issue both local cards and international cards, including Visa and Mastercard.
Payments Processors
Payment processors help businesses accept payments from customers by handling the transfer of money securely and efficiently. In fintech, they’re important because they make it easy for businesses to receive payments online or in-person, which helps them grow and serve more customers. In Tanzania, we are fortunate to have several payment processing companies like Selcom, Cellulant, Evmak, Azam Pay and Swahilies, which would be suitable payment partners for you and your company.
Cloud Computing
Like any other companies, fintechs need reliable cloud computing services for servers, networking, security, data storage and management, and more. While there are different global cloud computing companies, using local cloud computing services over global cloud computing companies in a country like Tanzania provides advantages like data sovereignty and regulatory compliance.
In Tanzania when acquiring fintech licenses like payment processing, you are required to make sure your data are hosted locally. Additionally, local cloud computing services offer tailored support and foster growth in the domestic tech industry. In Tanzania, UBX is an ideal partner for reliable cloud computing that aligns with regulatory requirements.
Fintech startups in Tanzania
These were just a few examples of the fintech infrastructure-based companies existing in Tanzania, and they could be suitable options for launching or expanding your fintech venture. I look forward to researching and writing about more of them in future articles.
This article first appeared on medium.com
Featured image credit: Edited from freepik
