“The average revenue per user in the Cryptocurrencies market in Tanzania is expected to be US$38.2 by the end of 2024.”.
Overview of Crypto Adoption in Tanzania
Crypto adoption in Tanzania is gaining momentum, as the interest keeps increasing in Africa. With a population of over 69 million and a steadily improving internet penetration rate, the country is positioned as a potential hotspot for digital currency innovations.
Tanzanians are exploring crypto for practical uses, from remittances to investments, spurred by interest in decentralized solutions that bypass traditional financial barriers.
A recent report highlighted that over 60% of crypto owners globally plan to increase their holdings by 2025, with Bitcoin remaining the most popular choice. This global trend resonates in Tanzania, where citizens seek alternatives to hedge against inflation and access more inclusive financial tools.
Remarkably, over 70% of Tanzania's adult population remains unbanked, creating fertile ground for cryptocurrency to bridge financial gaps and drive economic empowerment.
Adding to the optimism, the Tanzanian government has begun warming up to cryptocurrencies, signaling a potential regulatory shift. In 2021, President Samia Suluhu Hassan called on financial institutions to explore blockchain and crypto.
Also, Tanzania’s central bank had earlier expressed interest in digital currencies, hinting at a possible Central Bank Digital Currency (CBDC). This aligns with broader African crypto trends, such as Nigeria's eNaira and Kenya’s growing blockchain use cases. This suggests that digital currency could soon play a more prominent role in the region.
However, challenges like limited awareness and regulatory uncertainty still persist, with the Bank of Tanzania warning against the safety of cryptocurrencies.
Stay tuned as we explore crypto adoption in Tanzania, the challenges ahead, and the potential for broader economic impact. This could be the beginning of a financial revolution where digital assets redefine access and inclusion for millions.
Current Economic Situation in Tanzania
Source: Britannica
Tanzania's economy is showing significant promise, with the government and Central Bank forecasting a GDP growth of 5.7% by end of 2024 and 6% by 2025. This positions Tanzania among the fastest-growing economies in East Africa.
The economic expansion is driven by diversified sectors, including mining, agriculture, tourism, and technology. These industries act as buffers against global economic shocks and show the country's resilience during challenging periods such as the COVID-19 pandemic.
The mining sector, particularly, has thrived due to increased exports of gold and coal, bolstered by investment-friendly policies. The government has also made notable strides in improving the business environment. This has resulted in an improved financial sector.
Agriculture remains a cornerstone of the economy, contributing to food security and reducing inflation. Investments in farming infrastructure, subsidies, and storage facilities are enhancing productivity. This has also reduced vulnerabilities to food and energy price volatility.
The tourism sector, which faced setbacks during the pandemic, is recovering steadily, thanks to initiatives that attract visitors while expanding technology adoption. Also, the government is addressing inequality by improving access to education and healthcare through free education programs and universal health insurance plans.
These measures aim to ensure that economic growth translates into inclusive benefits for the broader population.
As Tanzania strengthens its economic foundation, challenges such as market liquidity and limited capital market listings persist. However, ongoing efforts by the government to promote venture capital and foreign investment, alongside regional collaboration, are set to further enhance the country’s global economic competitiveness.
One of such efforts is cryptocurrency.
“The number of cryptocurrency users in the world is estimated to have increased by over 40 million in the first half of 2024.”
Current Status of Crypto Adoption in Tanzania
Source: Reddit
Cryptocurrency adoption in Tanzania is in a transitional phase, reflecting both cautious exploration and significant grassroots enthusiasm. The Tanzanian government, led by initiatives from the Bank of Tanzania (BoT), has expressed interest in establishing a regulatory framework for cryptocurrencies.
In 2021, Samia Suluhu Hassan, President of Tanzania said that cryptocurrencies and blockchain were the future. “We have witnessed the emergence of a new journey through the internet. The Central Bank should be ready for the changes and not be caught unprepared,” she said.
The Governor of BoT, Emmanuel Tutuba has also acknowledged the potential of digital currencies. However, he emphasized the need for adequate systems to address associated risks, including identifying legitimate cryptocurrencies and ensuring user protection.
In his words, “The current stance of BOT after undertaking several research studies is that it is prudent to take a risk-based cautionary approach and continue exploring the trends and enhance broader understanding. Meanwhile, we are working with the Government to ensure that the underlying critical infrastructure and other enablers are widely available.”
In 2023, the Directorate of Financial Deepening and Inclusion of BOT issued a public update on a central bank digital currency (CBDC), indicating that the Bank will continue to monitor, research, and collaborate with stakeholders, including other central banks, in the efforts to arrive at a suitable and appropriate use and technology for the issuance of Tanzanian shillings in digital form.
Reacting to this, Governor Emmanuel said “The decision to issue a Central Bank Digital Currency (CBDC) for Tanzania should be based on a clear use case or problem that the CBDC will address. Our current strategy is to advance and promote efficient electronic payments for inclusive access to a wider population base.”
Research and development efforts are ongoing to establish guidelines for the country's cryptocurrency use.
At the grassroot, interest in cryptocurrencies such as Bitcoin and Ethereum is growing, with their primary use cases being remittances, alternative investments, and payment solutions. This growth is supported by increased internet penetration and mobile phone usage, which provide a digital foundation for financial inclusion.
In terms of user base, the number of crypto users in Tanzania is projected to reach 876,100 by 2025. While the user penetration rate, which represents the proportion of the population using cryptocurrencies, is expected to be 1.26% by the end of 2024, it is anticipated to slightly decrease to 1.23% by 2025.
Despite these advancements, the absence of clear regulations has created uncertainty for investors and businesses.
A notable example of grassroots engagement is the widespread interest in the Pi Network, a non-listed cryptocurrency. Local enthusiasts have organized barter trade events using Pi coins across regions such as Dar es Salaam and Arusha.
“In terms of user base, the number of crypto users in Tanzania is projected to reach 876,100 users by 2025.”
Factors Driving Crypto Adoption in Tanzania
Source: Image by Freepik
Tanzania's crypto adoption is shaped by several interrelated factors. This presents a mix of public enthusiasm, government directives, and the need for a structured framework to manage growth responsibly.
Government Endorsements and Initiatives
President Samia Suluhu Hassan has actively encouraged exploration into blockchain and cryptocurrency technologies, directing the Bank of Tanzania (BoT) to prepare for their integration. This top-level support has raised public awareness and institutional interest in cryptocurrency development.
Financial Inclusion Efforts
With a significant portion of the population unbanked, cryptocurrencies provide an alternative financial solution. The country has been leveraging digital innovation to improve access to financial services. Also, the growing crypto network aligns with Tanzania’s broader financial inclusion goals.
Youth Engagement and Grassroots Initiatives
Grassroots enthusiasm for cryptocurrencies, as seen in the Pi Network's community barter events across major cities like Dar es Salaam and Arusha. This highlights the appeal of decentralized finance to younger demographics. These activities have fostered local engagement despite the lack of official regulatory frameworks.
Regional Crypto Leadership
Tanzania's significant ranking in the Global Crypto Adoption Index demonstrates a strong peer-to-peer trading culture. This trend has been supported by the broader adoption of cryptocurrencies in the East African region, further incentivizing participation.
Growing Public Interest Despite Risks
Although the BoT has warned about the speculative risks associated with cryptocurrencies, Tanzanians continue to explore digital assets for wealth preservation and economic opportunities. This dual dynamic of caution and interest reflects a nation adapting to emerging technologies.
“Consumers from countries in Africa (Tanzania inclusive), Asia, and South America were most likely to be an owner of cryptocurrencies, such as Bitcoin, in 2024.”
Crypto Usage in Various Sectors
In Tanzania, cryptocurrency adoption has seen steady growth, with significant interest emerging across different sectors.
The financial sector, in particular, has experienced a rise in cryptocurrency usage, as many individuals and businesses seek alternatives to traditional banking systems. Cryptocurrencies like Bitcoin and Ethereum are being used for remittances. They are preferred because they offer a faster and cheaper way for Tanzanians living abroad to send money home.
The e-commerce industry has also benefited from the integration of crypto payments, with more online merchants accepting digital currencies. This has allowed Tanzanians to participate in global trade with fewer barriers.
Also, in the tourism sector, cryptocurrency has started to make waves, especially with tourists who prefer using digital currencies for hotel bookings and tour services. Despite the country's growing interest in crypto, there are still regulatory and infrastructural challenges to overcome.
Cryptocurrency Regulation in Tanzania
Source: The World Economic Forum
Tanzania's stance on cryptocurrency has evolved over time, with the government increasingly recognizing its potential while expressing caution regarding its risks.
While there is no comprehensive legal framework specifically dedicated to cryptocurrencies, the government has issued several warnings to the public, urging them to exercise caution when dealing with digital currencies.
The Bank of Tanzania (BoT) has explicitly stated that cryptocurrencies are not legal tender in the country. They have also advised against their use for transactions within the formal financial system.
However, Tanzania's Ministry of Finance and the BoT have acknowledged the potential benefits of blockchain technology and are exploring ways to regulate and integrate digital currencies into the economy.
The Tanzanian government has also been working on creating a clearer regulatory environment for cryptocurrencies. The aim is to balance innovation with consumer protection and financial stability.
In 2023, President Samia Suluhu Hassan signaled an openness to cryptocurrency by announcing plans to regulate digital currencies and promote their use in the economy, particularly for investments.
Challenges Facing Crypto Adoption in Tanzania
Despite the growing interest in cryptocurrency, Tanzania faces several challenges in its widespread adoption. These challenges show the need for more targeted policies, infrastructure development, and public education to foster greater adoption of cryptocurrencies in Tanzania.
Lack of Clear Regulations
One of the primary obstacles is the lack of a clear regulatory framework, which has created uncertainty for investors and businesses looking to engage in the crypto market. The absence of specific laws and regulations has led to concerns about security, fraud, and the potential for illegal activities. These can deter users from fully embracing digital currencies.
While the Tanzanian government has shown interest in regulating crypto, there remains a reluctance to fully embrace digital currencies. Some officials expressed concerns over their potential to destabilize the financial system.
Limited Access to Reliable Internet and Technology
Another significant challenge is limited access to reliable internet and technology, especially in rural areas, where most Tanzanians are unable to participate in crypto transactions or access crypto-related services. This digital divide restricts the potential for broader adoption. It also limits the impact of cryptocurrencies on the general population.
General Lack of Awareness and Crypto Education
There is a general lack of awareness and education regarding cryptocurrencies in the country. Many Tanzanians are unfamiliar with the technology and its benefits. This knowledge gap, coupled with skepticism around the volatility of digital currencies, has hindered widespread acceptance.
“In the Digital Commerce market, the number of Tanzanian users is expected to amount to 3.70m users by 2029.”
The Potential for Cryptocurrency in Tanzania
Tanzania holds significant potential for the adoption of cryptocurrency, driven by its growing digital economy and increasing internet penetration.
The projected revenue in crypto for Tanzania is estimated to reach US$33.3m by the end of 2024. According to the forecast, this revenue is expected to grow at an annual rate of -2.56% between 2024 and 2025, resulting in a projected total amount of US$32.5m by 2025.
Cryptocurrencies can offer Tanzanians greater financial inclusion, particularly in rural areas where access to traditional banking services is limited. With mobile money services already widespread, cryptocurrencies could integrate seamlessly into the existing financial ecosystem.
This could provide faster and more affordable cross-border payments, especially for remittances.
Also, the use of blockchain technology could enhance transparency and efficiency in sectors like agriculture, tourism, and e-commerce. It can facilitate secure transactions, reduce fraud, and improve traceability.
Cryptocurrencies may also attract foreign investment, particularly in technology and innovation sectors. This could help to diversify Tanzania's economy and foster economic growth.
Lastly, the Tanzanian government’s increasing openness to exploring crypto regulation presents an opportunity to create a balanced, secure, and supportive environment for digital currencies.
Conclusion
Crypto adoption in Tanzania is at a crossroads, with a mix of grassroots enthusiasm and cautious government exploration. While regulatory uncertainty and infrastructural challenges persist, the country's growing digital economy and unbanked population present vast opportunities.
With increased awareness, strategic policies, and enhanced digital infrastructure, cryptocurrencies could play a transformative role in promoting financial inclusion. This could boost economic growth, and foster innovation.
As Tanzania continues its journey toward embracing digital assets, the potential for a financial revolution that empowers millions remains undeniable.
