Digital Lender, Tala, Exits the Tanzanian Market Amid Lawsuits and a Lack of Competitive Edge

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The digital lender, Tala, has announced that it is exiting the Tanzanian market and has ceased offering loans to its Tanzanian customers.

In a tweet, Tala announced:

“We regret to info you that Tala is no longer offering loans in Tanzania. We appreciate the opportunity to serve you, and wish our loyal customers continued success in your financial journeys. You can use our paybill number to pay outstanding balances.”

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The announcement comes just months after the company, together with Vodacom Tanzania, were charged with economic crimes in Dar Es Salaam for causing the Tanzanian government the loss of $2.5M in fraudulent use of their networks under the Economic and Organized Crime Control Act, 2002.

Tala has been ranked the second best mobile loans provider in Kenya and considers this to be its prime market. The Tanzanian market however is a whole different story for Tala.

Tala, in association with other digital lenders, recently came together to set up the Digital Lenders Association of Kenya to lobby for friendly regulations amid backlash from the Kenyan government on ‘predatory behavior’ in the digital lending space in the country.

Below is a breakdown of the Tanzanian digital credit market share:

  • M-Pawa – 10%
  • Timiza – 8%
  • Nivushe – 6%
  • Branch – 0.1%
  • Tala – 0.1%

Despite entering the Tanzanian market in 2014 together with M-Pawa and Timiza, Tala has been unable to capture the market as well as its contemporaries, which could also have contributed to its market exit.

A breakdown of the digital lending space in Tanzania

The Tanzanian digital credit market stands as follows:

  • 1/5 of Tanzanian phone owners have taken a digital loan
  • Digital borrowers are 3 times more likely to have a bank account than non-borrowers
  • 1/3 of digital borrowers use the loan for business
  • 72% of digital borrowers are self-employed
  • 60% of digital borrowers had a digital loan in the last 90 days
  • 1/3 of digital lenders have defaulted on a digital loan

The digital credit market dominance stands as followers:

M-Pawa – 48% of digital borrowers use the service (Appx. 5M subscribers)

Airtel Timiza – 39% of digital borrowers use the service

Tigo Nivushe – 29% of digital lenders use the service

The digital credit space in Tanzania is highly competitive and seemed to be largely dominated by the three players above, which may also explain the departure of Tala out of the Tanzanian market.

 

 

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