Joseph Isangura
The Tanzanian government has called on its citizens to embrace the merchant payment system, commonly known as the Lipa number, to facilitate mobile phone transactions without the need for an internet connection.
This initiative, announced during the presentation of the 2024/25 fiscal year budget by Finance Minister Mwigulu Nchemba on June 13, aims to address the persistent issue of transaction failures caused by network problems.
Highlighting the advancements in electronic payment systems, Minister Nchemba emphasized that the merchant payment system is now operational nationwide. By the end of 2023, the number of registered merchants using this system had reached 657,346, with transactions totaling Sh17.9 trillion through 301.2 million transactions. This significant uptake demonstrates the system’s potential to enhance financial transactions across the country
Dr. Nchemba pointed out that the ability to conduct transactions offline is particularly beneficial for rural areas where internet connectivity is often unreliable.
By leveraging this technology, the government aims to integrate more citizens into the formal financial system, promoting economic stability and growth. This push aligns with Tanzania’s broader strategy to enhance financial inclusion and economic resilience, crucial for sustaining the country’s robust economic growth, which stood at 5.2% in 2023
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The adoption of the merchant payment system is part of Tanzania’s ongoing efforts to modernize its payment infrastructure. Since the introduction of mobile money transfer levies in 2021, there have been continuous adjustments to balance revenue generation with the promotion of electronic transactions.
These measures have been instrumental in fostering a more cashless economy, aligning with global trends and technological advancements
Tanzania’s economic landscape has shown resilience, with significant contributions from the services sector, particularly in financial services, transport, storage, and trade. The government’s focus on digital payment systems is expected to support this growth trajectory by ensuring seamless transactions even in areas with poor network coverage. This initiative also complements the government’s commitment to improving the business environment and implementing structural reforms aimed at boosting private sector investment
Tanzanian government is taking a proactive step towards mitigating transaction challenges and fostering an inclusive economic environment. This initiative not only addresses immediate technical barriers but also sets the foundation for sustained economic development and financial inclusion in the long run. As Tanzania continues to navigate its path towards a more digital economy, such innovations in payment systems will play a crucial role in ensuring broad-based economic participation and growth.
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