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Why Tanzania’s mobile money agents are highly profitable

Why Tanzania's mobile money agents are highly profitable.

Report says 49% of all Tanzanian mobile money agents earn at least $100 per month in profits.

49% of all Tanzanian mobile money agents earn at least $100 per month in profits compared to just 40% in Uganda, according to a report from the Helix Institute of Digital Finance.

The study, dubbed ‘Agent Network Accelerator – Tanzania Country Report’, conducted a survey with over 2,000 mobile agents across the East African nation in 2013.

The likes of BuddeComm research describes Tanzania as one of Africa’s most competitive telecoms markets with eight operational mobile networks and a mobile penetration rate of 75% among its 48 million population. Meanwhile, the Bank of Tanzania has previously said that there are over 20 million mobile money accounts in the country.

But this competition; in turn, is not necessarily reflected in the mobile money agent report, as the study points to how Vodacom dominates this market.

Of the total mobile money agent market share in Tanzania, Helix notes that Vodacom holds 55%, Tigo 27%, Airtel 16%, and Zantel 1%.

“While Tanzania is often cited as a highly competitive market, over half of agents serve Vodacom countrywide, and outside of the capital it is nearly two thirds of agencies,” says the report.

“Tigo is focused in the capital and holds an equal market share there with Vodacom,” adds the report.

Nevertheless, Helix notes that “agents are overwhelmingly profitable, with healthy transaction rates.”

“The three aggressively expanding providers, and the non-exclusivity of agents is putting pressure on liquidity. It is also driving low operational costs and a focus on agent support (relative to Uganda),” adds the report.

The report goes on to explain that “rapid growth and the non-exclusivity of agents is putting pressure on agents' liquidity, with five transactions a day being denied due to lack of float.”

Yet the report says that “different players in the ecosystem are offering novel solutions for liquidity management, and providers need to assess what is working best and scale it up.”

Other findings of the report include that 70% of agencies are 'new'. That is, they have been in operation for a year or less: a sign that Helix says demonstrates aggressive growth in the market.

“However the small percentage of 'old' agencies suggests they have a short life-cycle,” says the report.

The report also further says that competition in Tanzania is resulting in better support, with 79% of agents receiving training. But the report notes that improvements are still needed in targeted areas.

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