SoC04 Tanzania digital economy

Tanzania is one among countries which its economy has been growing fast and at a high rate. According to national bureau of statistics in 2022 the net worth of output increases to TZS 141,872,730 compared to TZS 135,478,189 in 2021 equals to growth rate of 4.7 percent (www.nbs.go.tz). The growth rate of this economy are results of efforts and investments done by the government, private sector and other development partners.

In recent decades the global vision on economic growth has been transforming economy into Digital enomony, The economy that connect individuals, businesses, devices, data and operations through digital technology. It encompasses the online connections and transactions that take place across multiple sectors and technologies, forinstance internet, mobile technology, big data and information and communications technology. Therefore for Tanzania to propel this global vision and its national development vision of 2025 and 2050, there must strategic investment in ICT sector.

ICT sector is the bedrock and facilitator of economic, social, and cultural development for the country, especially in this Fourth Industrial Revolution (4IR) which is embedded with Digital Transformation Agenda globally. ICT is enhancing productivity growth in all sectors of the economy largely through e-services, exposing companies and firms to new ideas, ICT-enabled technologies, new management style and business models as well as creating new channels of market access.

The Government acknowledges the leading role of the ICT sector as a catalyst and a major force in driving the economy. Statistics from the last five years indicate that ICT has averaged a contribution of 1.5% to the Gross Domestic Product (GDP). Working in partnership with various public and private organizations, the Government has persistently facilitated the use of ICT across all productive and Service sectors, thereby strengthening the overall innovation ecosystem.

Digitalization has profoundly impacted all sectors of Tanzania’s economy, much like in other emerging and developing countries. It has revolutionized how citizens receive government services, make payments, work, pursue education, foster innovation, shop, and socialize. These significant developments in digital technologies have marked the beginning of a new digital economy era, visible across numerous sectors. The continued rapid growth of these technologies is likely to exert a greater influence on the economy as a whole.

One of the most significant societal developments attributed to the rapid technological changes is the move towards a cashless economy. Digital platforms and technologies have played a crucial role in enabling the creation, storage, and exchange of digital money. Individuals in Tanzania are able to create digital wallets with Mobile Network Operators (MNOs) to perform financial transactions directly from their mobile phones. Currently, users can send and receive money, pay bills, purchase airtime, and receive payments and salaries. Additionally, the government can make direct deposits into these mobile wallets.

Mobile wallets have garnered significant popularity among Tanzanian consumers, boasting an impressive usage rate of 72% among mobile users. According to the Tanzania Communication Regulatory Authority (TCRA) quarterly report of March 2024, there were 53.0 million mobile money accounts in Tanzania. This remarkable success is directly attributed to the widespread adoption of mobile phones in Tanzania, along with the convenience and cost-effectiveness of mobile wallet payments, which offer ease of use and often lower fees compared to traditional banking services.

In Tanzania, the predominant method for online payments for goods and services is through mobile payment platforms, rather than using credit or debit cards. Therefore, the ability to monitor and track mobile money transactions directly from the source could significantly increase the country's tax revenues through the elimination of tax leakages.

This would require upgrading the Tanzania Revenue Authority's (TRA) domestic revenue collection system, incorporating the Tanzania Unique Digital Identifier (Jamii Namba), which has been introduced under the digital economy initiative. The Jamii Namba will enable TRA to associate each mobile transaction with the individual making payment and classify the transactions for tax eligibility. This goal will be achieved by employing advanced technologies such as Artificial Intelligence (AI), Machine Learning (ML), and Robotic Process Automation (RPA) to track revenue collection at the source

Despite of the efforts and some of the achievements there challenges which still prevail in the sector include; readiness to harness opportunities from new and emerging technologies; standardize the use of data; absence of digital ID; lack of interoperability of existing ICT systems; Insufficient online protection and security; digital divide; Insufficient support on issues related to ICT R&D and innovation ecosystem; and lack of partnership between public and private sector in digital transformation

Therefore the followings have to considered in order to create sustainability of the digital economy as a move to attain the development vision of Tanzania ;​

CONCLUSION
The structuring and formalizing of the ICT sector, along with investments, innovations, and the rollout of legal and regulatory frameworks, will propell the fulfillment of the Tanzania Development Vision of 2025 and 2050​