INSIGHTS THAT DRIVE

INNOVATION

ZANZIBAR
REPORT 20 23
ACKNOWLEDGEMENTS
FinScope Tanzania 2023 was implemented under the guidance of a Steering
Committee, which was chaired by Mr. Elijah Mwandumbya, Commissioner for Policy
Analysis Ministry of Finance and his vice-chair Mr. Kennedy Komba, Director Financial
Deepening and Inclusion, Bank of Tanzania. The technical implementation and data
collection was conducted by the National Bureau of Statistics and the Office of
Chief Government Statistician-Zanzibar. The implementation was closely monitored
by the technical committee, which was composed of a wide set of supply side
associations, government institutions, financial sector regulators, and development
partners. Special recognition is given to the technical core team who supported
the FinScope Tanzania 2023 implementation since the beginning of its inception.
The core team comprised Dr. Peter Mmari, Lucas P. Magazi, Bakari Makame, Sylvia
S. Meku, Stephano G. Cosmas, Khalid Chum, Prisca Mkongwe, Hamis J.Hamis, Cyril
Chimilila and Salim Kimaro.

The Technical Advisory and Secretariat was under the leadership of Financial
Sector Deepening Tanzania (FSDT) and FinMark Trust with special recognition to
Eric Massinda, Emmanuel Mwamakula, Professor Andrew Temu, John Noronha,
Dr Kingstone Mutsonziwa and Bobby Berkowitz. The analysis and reporting were
spearheaded by the core technical team and ultimately compiled by Julia Seifert
and Bobby Berkowitz. It was reviewed by Eric Massinda, Dr Kingstone Mutsonziwa,
edited by Melanie Cheary and Victor Kyando, and published by FSDT.
2 FinScope Tanzania 2023 | Zanzibar Report
Abbreviations

FinScope Tanzania 2023 | Zanzibar Report 3

ABBREVIATIONS
CCRO Certificate of Customary Right of Occupancy
CHF Community Health Fund
CMG Community Microfinance Groups
CRO Certificate of Right of Occupancy
FSDMP Financial Sector Development Masterplan
FSDT Financial Sector Deepening Tanzania
FSP Financial Service Provider
FSR Financial Services Registry
GDP Gross Domestic Product
KYC Know-Your-Customer
MFI Microfinance Institutions
NBS National Bureau of Statistics
NHIF National Health Insurance Fund
NIN National Identification Number
OCGS Office of Chief Government Statistician Zanzibar
SACCO Saving and Credit Cooperative Organisations
TCRA Tanzania Communications Regulatory Authority
NFIF II National Financial Inclusion Framework II
ZIPA Zanzibar Investment Promotion Authority

4 FinScope Tanzania 2023 | Zanzibar Report

Table of Contents

1. INTRODUCTION

2. METHODOLOGY

2A SAMPLING DESIGN

2B KEY SAMPLING STATS

3. FINDINGS

3A DEMOGRAPHICS

3B ADDRESSABILITY

3C FINANCIAL BEHAVIOUR

3D FINANCIAL INCLUSION

3E FINANCIAL USAGE

3F FINANCIAL SERVICE CONSUMER SATISFACTION

4 CONCLUSION

FinScope Tanzania 2023 | Zanzibar Report 5

1 Introduction
Since 2014, the journey towards financial inclusion and unlocking the power of finance
towards economic growth for Tanzanians has been crafted into a second and intentional
National Financial Inclusion Framework (NFIF I 2014-2016). While the first framework was
focused on enhancing core enablers that would increase access and ease uptake, the
subsequent National Financial Inclusion Framework II (NFIF II 2018 – 2022) focused on
ensuring that financial sector development made two mutually reinforcing contributions
to poverty reduction: namely the derived benefits that result from enhanced and more
equitable economic growth; and the direct benefits from using appropriate financial
products and services.

In addition to the implementation of the NFIF II, the financial sector further embarked on
the development of the Financial Sector Development Masterplan (FSDMP) 2020/21
– 20/30 which was formulated to address the key challenges in all sub-sectors of the
financial sector to create a stable, safe, efficient, competitive and sound financial system.
The identified challenges include inadequate access and usage of financial services;
inadequate legal regime and supervisory framework for financial consumers; financial
system vulnerability; limited long-term resources; inadequate technical and institutional
resources for the financial sector to meet new technology demands; and an inadequate
policy and legal framework to foster innovation.

For both the NFIF II and the FSDMP, FinScope Tanzania 2023 provides endline, as well as
interim, assessment measures respectively. Hence, together in a public-private sector
collaboration spearheaded by the Ministry of Finance and Planning Tanzania and Zanzibar
and Bank of Tanzania, the Financial Sector Deepening Tanzania (FSDT), National Bureau
of Statistics (NBS) and the Office of Chief Government Statistician Zanzibar (OCGS), key
partners were incorporated to design, implement, and analyze the FinScope Tanzania
Survey. These key implementation partners include financial services provider (FSP)
industry associations, other financial sector regulators, government organizations, and
academia and development partners to design, implement and analyze FinScope Tanzania
2023.

FinScope Tanzania is a comprehensive financial sector demand-side survey of Tanzanian

adults aged 16 years and above. It provides an understanding of the financial services
uptake landscape across the country and is a reliable measure for demand and usage
of financial services across various population segments. Further, FinScope Tanzania’s
insights clearly present barriers and levers to financial inclusion.

6 FinScope Tanzania 2023 | Zanzibar Report

 main

5
behaviour benchmark
& measure

objectives policy
review

address policy, innovation

regulatory &
market obstacles

The survey has five main objectives:

• To understand the behavior (cash flow management, investing, saving etc.) and
define the financial service needs of consumers (individuals, farmers, business
owners)
• To establish credible benchmarks and measure the effectiveness of financial
inclusion and progress made towards national targets under the NFIF, FSDMP as
well as other national development plans
• To provide insights into policy, regulatory and market obstacles to access and
usage of financial services
• To provide insights which will feed into innovation within the financial and real
economic sectors
• To highlight opportunities for policy review needed to drive financial sector
development

FinScope Tanzania 2023 is the fifth wave in the FinScope Tanzania series with previous
waves in 2006, 2009, 2013 and 2017 1

The FinScope Tanzania 2023 report, dashboard and data have been made available on the
website of all core implementation partners: Ministry of Finance and Planning Tanzania
and Zanzibar and Bank of Tanzania, FSDT, NBS and OCGS.

1 The spacing for FinScope surveys is usually 3 to 4 years, in this case a combination of factors led to the delay in the roll
out of the 2023 FinScope. These factors mainly include: The overlap of the actual FinScope Tanzania data collection
timetable with general elections in 2020, following which Covid-19 advisories for data collection discouraged large
face-to-face surveys. Subsequently, the performance of the population and housing census in 2022 and the need to
use this sampling and population frame for the survey design and weighting. Lastly a shift in the management of the
FinScope Tanzania implementation.

FinScope Tanzania 2023 | Zanzibar Report 7

2 Methodology

8 FinScope Tanzania 2023 | Zanzibar Report

FinScope Tanzania 2023 | Zanzibar Report 9
 The FinScope Tanzania 2023 Survey is a national representative demand-side survey of
adults (those aged 16 years or older) living in Tanzania. Using the the latest population
census from 2022 by the NBS, the size of the Tanzanian adult population is currently
estimated to be 34,134,251 and this accounts for 55% of the total Tanzanian 2022
Census population of 61,741,120.

2A SAMPLING DESIGN
In alignment with previous FinScope Tanzania sampling strategies, the FinScope Tanzania
2023 Survey sampling was conducted in three stages.

First Stage:
667 clusters selected, a cluster here is defined
as an enumeration area (EA) which is a statistical
667
clusters
cluster of around 100 households. The selection
of clusters was based on probability proportional
to size sampling approach.
1

SAMPLING
FRAME: Second Stage:

The 2022 Tanzania 2

15
households
A total of 15 households were randomly
selected per cluster. The selected
households were visited and interviewed.
Population and
Housing Census.

3
aged
Third Stage:
16+ One individual aged 16 years and above in all
selected households was randomly selected (by
use of Kish grid) for the interview.

10 FinScope Tanzania 2023 | Zanzibar Report

As was the case with previous FinScope Tanzania surveys, the sampling design was done
by NBS and OCGS in consultation with the Technical Committee.

Similarly, to the 2017 FinScope Tanzania Survey, this wave did not provide for a replacement
strategy of households or individuals who were unable to participate in the survey. The
main reasons for non-participation were unavailability of household members due to travel,
burial or refusal to participate in the survey.

Results from the survey can be disaggregated by national and regional level, rural and urban
areas, gender and, in some cases, for district level estimates.

FinScope Tanzania 2017 expanded to allow results to be representative at district level for
five regions in the mainland Singida, Iringa, Rukwa, Mtwara and Mwanza.

In contrast, FinScope Tanzania 2023 over-sampled specific districts in nine regions to

enable richer sub-level analysis. The selection of districts was oriented on the agro-
economic zones of Tanzania to ensure a broad representation, considering the close relation
between financial behaviors and economic activities. The regional selection was based on
size of the region in the specific agro-ecological zone, how the region is representative
in terms of agro-ecological features and poverty incidence, as well as levels of financial
exclusion during the FinScope Tanzania 2017. These regions are:

• Manyara
• Dodoma
• Mtwara
• Pemba Kaskazini and Pemba Kusini
• Mwanza
• Kigoma
• Tanga
• Morogoro

FinScope Tanzania 2023 | Zanzibar Report 11

12 FinScope Tanzania 2023 | Zanzibar Report
2B KEY SAMPLING STATISTICS
Fieldwork: March to April 2023
Sample target was n=1,014 16+ adult Tanzanians, across 68 EAs with about 15
interviews per Enumeration Area (EA)
Achieved sample was n=1,013, which translates into a response rate of 99.9% of the
targeted sample
This was weighted to be representative of the 16+ population, estimated by NBS to be
951,541 adults in the Zanzibar Archipelago
95% confidence level, 1% margin of error at national level reporting

Kaskazini
Pemba

PLANNED
SAMPLE

626
ACHIEVED
SAMPLE

626 Kusini
PLANNED
SAMPLE

Pemba
388
ACHIEVED
SAMPLE
Kaskazini
Unguja 387

Magharibi It is important to note that for

Mjini the purpose of this survey every
Tanzanian 16 years or above living in
Kusini Unguja or Pemba at the time of the
Unguja
survey could have been randomly
selected for the survey.

FinScope Tanzania 2023 | Zanzibar Report 13

3 Findings
The findings presented in this report provide 2023 statistics for the entire Zanzibar Archipelago,
compared to 2017, and are contrasted with national statistics. Further, each chart presented
provides a breakdown for the five regions within Zanzibar.

14 FinScope Tanzania 2023 | Zanzibar Report

FinScope Tanzania 2023 | Zanzibar Report 15
Demographics

16 FinScope Tanzania 2023 | Zanzibar Report

3A. DEMOGRAPHICS
Several significant demographic shifts within the survey population were observed, as
outlined below. Zanzibar, overall, has seen a shift towards an increased urban population.
While in 2017 only 45% of adults resided in an urban setting, now 49% do so.

Chart 1: Rural - Urban Split

National

Rural Urban 52% 48%

61% 39% Female Male

Zanzibar

Rural Urban 53% 47%

51% 49% Female Male

Kaskazi
Unguja

Rural Urban 53% 47%

88% Female Male
12%

Kusini
Unguja
49% 51%
Rural Urban Female Male
81% 19%

Mjini
Magharabi
55% 45%
Rural Urban Female Male
81% 19%

Kaskazini
Pemba
47% 53%
Rural Urban Female Male
78% 22%

Kusini
Pemba
54% 46%
Rural Urban Female Male
30%
70%

Source: FinScope Tanzania 2023 (March-April 2023)

Since the last FinScope in 2017, a 27% growth in the adult population (16 years and above)
from 747,432 (in 2017) to 951,541 (in 2023) was observed; hence 38% of the respondents
are now below the age of 25.

FinScope Tanzania 2023 | Zanzibar Report 17

 Chart 2: Age Group Distribution

41% 39%
38% 36%
33%
31%
30% 29%
29%
25%
24% 24%
22% 23%
20% 20%
17% 19% 19% 18%
15%
12% 13%
10% 10% 11%
8% 9%
7% 7%
5% 4% 6% 6% 5% 4% 4% 6% 6% 6% 6%
2%

National Zanzibar Kaskazini Kusini Mjini Kaskazini Kusini

Unguja Unguja Magharibi Pemba Pemba

16-24 yrs 25-34 yrs 35-44 yrs 45-54 yrs 55-64 yrs 65 yrs & older

Source: FinScope Tanzania 2023 (March-April 2023)

18 FinScope Tanzania 2023 | Zanzibar Report

 FINDING 1
6 in 10
respondents in Zanzibar
have attended
secondary school

Chart 3: Highest Level of Education

69%
65%
60% 57% 57%
56%
52%

43%
39%
32%
25% 25% 28% 26% 24%
26%
20%
13% 12% 14%
9% 8% 4% 10%
5% 6% 4% 2% 4% 5%
1% 2%

National Zanzibar Zanzibar Kaskazini Kusini Mjini Kaskazini Kusini

(2023) (2017) Unguja Unguja Magharibi Pemba Pemba

No formal education Primary education Secondary education Tertiary education

Source: FinScope Tanzania 2023 (March-April 2023) & FinScope Tanzania 2017 (April-July 2017)

When it comes to secondary school, 6 in 10 respondents from Zanzibar have attended.

However, education levels in Kaskazini Pemba and Kaskazini Unguja differ significantly from
the rest of the islands. The education levels on Zanzibar are significantly better than the
national average where 56% have obtained primary education. This reflects positively on
literacy levels of the isles.

FinScope Tanzania 2023 | Zanzibar Report 19

 FINDING 2 RW F

More than a third of respondents in

Zanzibar mainly
depend on others
for income

Chart 4a: Main revenue generating activity

43%
42%
40%
36%
33%
28% 30% 30% 31% 31%
26% 27%
24% 23%
21% 21%
17% 17% 17%
16% 15% 15% 16% 16% 12%
13% 13% 11% 12% 12%
8% 9% 10% 8%
10%
6% 9%
6% 7%
4% 5% 4% 4% 4%4% 4% 6%
2%

National Zanzibar Zanzibar Kaskazini Kusini Mjini Kaskazini Kusini

(2023) (2017) Unguja Unguja Magharibi Pemba Pemba

Farmers & Piece work / Dependants Business Formal Others

fishers casual labor Owners Sector
Salaried

Source: FinScope Tanzania 2023 (March-April 2023) & FinScope Tanzania 2017 (April-July 2017)

More than a third (36%) of respondents from Zanzibar mainly depend on others for their
livelihoods. Kusini Unguja is heavily dependent on casual labor, which is occasional in income
generation. High levels of dependency are also reflected in the latest household budget survey
conducted in Zanzibar. While on a national scale, dependency can be a driver towards formal
financial inclusion as dependents receive income from others, especially via mobile money.
In Zanzibar, the trend appears to differ. When it comes to female dependents especially, a
majority do not receive money to cater for their needs. Instead, they receive mainly goods,
such as groceries.

20 FinScope Tanzania 2023 | Zanzibar Report

 Chart 4b: Median Monthly Income in Tsh

National 50,000

Zanzibar (2023) 70,000

Zanzibar (2017) 62,500

Kaskazini Unguja 100,000

Kusini Unguja 100,000

Mjini Magharibi 75,000

Kaskazini Pemba 50,000

Kusini Pemba 35,000

Source: FinScope Tanzania 2023 (March-April 2023) & FinScope Tanzania 2017 (April-July 2017)

The monthly median income of respondents from Zanzibar is 70,000 TZS, with higher incomes
in Unguja (100,000 TZS). Nationally, the monthly median income is 50,000 TZS.

FinScope Tanzania 2023 | Zanzibar Report 21

Addressability

22 FinScope Tanzania 2023 | Zanzibar Report

3B. ADDRESSABILITY
In this section, the report will unpack whether respondents in Zanzibar are able to be
served by financial service providers.

FINDING 3
remains the language of the
KISWAHILI consumer

Chart 5: Literacy - English & Kiswahili

93% 90%
84% 81%
79% 81% 76%
67%
56% 54%
48% 48% 45%
37%
30%
26%

National Zanzibar Zanzibar Kaskazini Kusini Mjini Kaskazini Kusini

(2023) (2017) Unguja Unguja Magharibi Pemba Pemba

Kiswahili English

Source: FinScope Tanzania 2023 (March-April 2023) & FinScope Tanzania 2017 (April-July 2017)

Kiswahili remains the language of the consumer, with 84% of respondents in Zanzibar being
literate in Kiswahili and 48% in English. Zanzibar shows higher levels of English literacy
than nationally, a fact that can be directly tied to an increased number of respondents
from Zanzibar having reached secondary school education.

FinScope Tanzania 2023 | Zanzibar Report 23

 FINDING 4
Respondents in Zanzibar can
add and subtract
but less can divide and multiply

Chart 6: Numeracy Skills

94% 98% 99% 98% 99% 98% 95% 98%

96% 90% 91%
89% 91% 84% 82%
75% 71% 66%
62% 60% 65% 58% 58%
56% 56% 56%
53% 45% 58% 46%
43% 42%

National Zanzibar Zanzibar Kaskazini Kusini Mjini Kaskazini Kusini

(2023) (2017) Unguja Unguja Magharibi Pemba Pemba

Addition Subtraction Multiplication Division

Source: FinScope Tanzania 2023 (March-April 2023) & FinScope Tanzania 2017 (April-July 2017)

Respondents from Zanzibar can add and subtract but fewer can divide and multiply.
However, respondents from Kaskazini Unguja and Kaskazini Pemba are seen to lag behind
in terms of their ability to solve more advanced arithmetic.

24 FinScope Tanzania 2023 | Zanzibar Report

 FINDING 5A
Only 3 in 10
respondents in Zanzibar own
the land they live on

Chart 7: Do they own the land they live on?

55% 69% 57%

67% 70% 77%
71% 75%

3%
15%
1%
2%
4% 5%
40% 5% 4%
30% 29% 31%
25% 25%
20% 19%

National Zanzibar Zanzibar Kaskazini Kusini Mjini Kaskazini Kusini

(2023) (2017) Unguja Unguja Magharibi Pemba Pemba

Does not own Co-owns Personally

land land owns land

Source: FinScope Tanzania 2023 (March-April 2023) & FinScope Tanzania 2017 (April-July 2017)

Only 3 in 10 of respondents in Zanzibar (29%) own the land they live on, compared with
national ownership of 45%.

FinScope Tanzania 2023 | Zanzibar Report 25

 FINDING 5B
6 in 10
respondents in Zanzibar who own land have
documentation as proof of ownership

Chart 8: What documentation do they have?

Base = those who claim a form of documentation

74%
65% 64%
56%
57%
50%
46%

34%
31% 31% 31%
26% 24%
20%
14% 16% 15% 16% 14%
10%
9% 9% 7%
7% 4% 3%
3% 0% 0%

National Zanzibar Zanzibar Kaskazini Kusini Mjini Kaskazini Kusini

(2023) (2017) Unguja Unguja Magharibi Pemba Pemba

Letter from LGA Letter from Title deed / CRO CCRO

village head

Source: FinScope Tanzania 2023 (March-April 2023) & FinScope Tanzania 2017 (April-July 2017)

Although less people in Zanzibar own land, more have proof of ownership, with 6 in 10
respondents in Zanzibar having documentation as proof of ownership. Out of these, 57%
have a Certificate of Right of Occupancy (CRO) compared with the national figure of 20%.
Ownership of land and in particular formal proof of ownership are key as they remain a primary
source of collateral for most formal FSPs.

26 FinScope Tanzania 2023 | Zanzibar Report

 FINDING 6
More than 7 in 10
respondents in Zanzibar
have a NIN

Chart 9: Personal Identification Documents

(only 18+ year olds)

82% 82%
79% 77%
37% 74% 72% 74% 72% 72% 75%
70% 70% 72%
72% 76% 63%
57% 69%
63% 63%
62% 57%

14% 7% 13%
4% 11% 5% 13% 13% 6%
6% 5% 5% 9%
3% 2% 0% 4% 5% 5%
1% 4% 3% 1% 4%

National Zanzibar Zanzibar Kaskazini Kusini Mjini Kaskazini Kusini

(2023) (2017) Unguja Unguja Magharibi Pemba Pemba

National Identification Voter’s Zanzibar

Number (NIN) identification card resident ID

Driver’s license TASAF Passport

identification card

Source: FinScope Tanzania 2023 (March-April 2023) & FinScope Tanzania 2017 (April-July 2017)

When it comes to possessing NINs, 74% of respondents in Zanzibar, 18 years and above, were
in possession of one. Of these, 69% held an actual NIDA card, while 5% were in possession
of the number. Ownership of the Zanzibar residents ID remains high too at 72%.

FinScope Tanzania 2023 | Zanzibar Report 27

 FINDING 7
respondents in Zanzibar
4 in 10 own a smartphone

Chart 10: Do you have access to?

99% 100% 99% 99%

98% 95% 99% 96% 97% 98% 100%
91% 93% 95%
86% 86% 88% 91% 90%
82% 84%
75% 73% 77%
61%
52% 52% 52%
39% 39% 46% 38% 36%
38% 33%
31% 24% 20% 19%
19%

National Zanzibar Zanzibar Kaskazini Kusini Mjini Kaskazini Kusini

(2023) (2017) Unguja Unguja Magharibi Pemba Pemba

Network reception Access to

mobile phone

Owns a mobile Owns a Access to

phone smartphone internet

Source: FinScope Tanzania 2023 (March-April 2023) & FinScope Tanzania 2017 (April-July 2017)

In regard to smartphones, 4 in 10 of respondents in Zanzibar own one compared with 19%

nationally. Overall, phone ownership in Zanzibar is high at 86% compared with 75% nationally.
Apart from higher rates of phone ownership, significantly more respondents in Zanzibar
(52%) have access to internet than nationally (31%). It is also important to note that both
ownership of smartphones and access to the internet has grown significantly since the last
FinScope survey in 2017.

28 FinScope Tanzania 2023 | Zanzibar Report

 Chart 11: Adult Zanzibaris that live within 5km radius of a financial
access point

National 89%

Zanzibar (2023) 100%

Zanzibar (2017) 95%

Kaskazini Unguja 100%

Kusini Unguja 100%

Mjini Magharibi 100%

Kaskazini Pemba 100%

Kusini Pemba 100%

Source: FinScope Tanzania 2017 (April-July 2017) and Financial Services Registry Data for 2023

In 2017, only 95% of respondents in Zanzibar lived within a 5km radius of a financial access point.
Financial Services Registry (FSR) data from 2023 indicates that now 100% of respondents in
Zanzibar stay within a 5km radius of a financial access points compared with 89% nationally.
This outcome can be credited to government efforts to encourage formal FSPs to expand
their reach, especially in, and private sector investments in the isles to expand financial
sector reach.

FinScope Tanzania 2023 | Zanzibar Report 29

Financial Behavior

30 FinScope Tanzania 2023 | Zanzibar Report

3C FINANCIAL BEHAVIOR
This section unpacks the financial behaviors of respondents in Zanzibar, to better understand
their needs and existing untapped opportunities for FSPs to tap into.

FINDING 8
Most respondents in Zanzibar
do not have consistent sources of income

Chart 12: How is personal revenue generated?

Base = Zanzibar Only

Piece work/Casual labor/

25%
Occasional jobs
Money from trading (including
22%
farmers)
Don’t get money – someone
21%
else pays expenses
Rely on someone else/others 16%
to give/send me money
Salaries/wages 13%

Money from providing a service 7%

Other 3%

Source: FinScope Tanzania 2023 (March-April 2023)

In Zanzibar, 61% of respondents have an occasional income, with 21% not receiving any
cash at all, but rather goods or services directly. As outlined earlier, these individuals are
mainly women dependent on male household members who give them groceries and other
household items. As they receive these items instead of cash, dependency does not provide
a pathway towards financial inclusion.

FinScope Tanzania 2023 | Zanzibar Report 31

 FINDING 9
Tuition is a notable
priority expense for
OFF
V
M+ %
M- +/-
MRC C
AC X
AC
AC
AC
AC -

respondents in Zanzibar
AC AC
AC 2 +
1
=
.
0

Chart 13: Priority expenses across the regions

(excluding food and clothes)
29%

22%

18%
18%

17%

17%
17%

16%
15%
15%

15%

14%
13%
11%

11%
10%
11%

10%

10%

9%
9%

9%
9%

8%
8%

8%
8%
4% 8%

8%
7%

7%
7%

7%
6%

5%
5%

6%
6%

5%

5%
5%

5%

5%

5%
4%

4%

4%
3%

8%

2%

1%
0%
1%

1%

0%

National Zanzibar Zanzibar Kaskazini Kusini Mjini Kaskazini Kusini

(2023) (2017) Unguja Unguja Magharibi Pemba Pemba

Farming or School/
Medical
business tuition

Rent Livestock Electricity Building

materials

Source: FinScope Tanzania 2023 (March-April 2023) & FinScope Tanzania 2017 (April-July 2017)

Apart from clothes and food, tuition and school fees are a notable priority expense (17%)
for respondents in Zanzibar. However, in Kusini Unguja a shift can be seen with the most
relevant expense being building materials (15%). This may be driven by the fact that Kusini
Unguja is currently facing increased investments due to ZIPA land allocation, which in turn
has shown increased investments by the local residents.

32 FinScope Tanzania 2023 | Zanzibar Report

 FINDING 10
Ownership of a house or property
remains a main future spending
need for respondents in Zanzibar

Chart 14: Can you think about something you want to

buy but you cannot afford?

45%
44%

43%
39%

34%
15%

28%
27%
21%

15%
19%

15%

16%

15%

15%
14%
14%

13%
13%
12%

13%
13%

12%

12%

11%
11%
11%

11%

11%
10%
10%
10%
10%

10%
10%
10%
9%

9%

8%
7%

7%

5%
4%

3%

3%
3%

0%

0%

National Zanzibar Zanzibar Kaskazini Kusini Mjini Kaskazini Kusini

(2023) (2017) Unguja Unguja Magharibi Pemba Pemba

House Land/farm Business

Livestock Car/other vehicle Have not thought

about it yet

Source: FinScope Tanzania 2023 (March-April 2023) & FinScope Tanzania 2017 (April-July 2017)

About 4 in 10 respondents from Zanzibar aspire to own a house in future. Among respondents
in Kaskazini Unguja a higher proportion (19%) than in Zanzibar overall is looking forward to
own their business.

FinScope Tanzania 2023 | Zanzibar Report 33

 FINDING 11
6 in 10 respondents in Zanzibar
Zanzibar struggle with keeping
up with regular expenses

Chart 15: Percentage of adults who claim to often/always struggle with

regular expenses

National 66%

Zanzibar (2023) 61%

Zanzibar (2017) 41%

Kaskazini Unguja 69%

Kusini Unguja 74%

Mjini Magharibi 55%

Kaskazini Pemba 60%

Kusini Pemba 59%

Source: FinScope Tanzania 2023 (March-April 2023) & FinScope Tanzania 2017 (April-July 2017)

In Zanzibar, 61% of respondents struggled with regular expenses, slightly less than the
national 66%. But in Unguja Kusini 74% struggle. An overall increase in these struggles in
Zanzibar can be observed from 41% in 2017. This is mainly linked to the overall economic
decline in terms of GDP, as well as the global recession due to the post pandemic effects.
Considering tourism is a key driver for Zanzibar’s economy, a sector that was heavily impacted
by the global Covid-19 pandemic, this trend is no surprise. Although Zanzibar kept receiving
tourists throughout the global pandemic, tourism statistics published by OCGS show a
significant dent during the pandemic years of 2020 and 2021. However, there was a strong
recovery in 2022, exceeding pre-pandemic tourism arrival numbers. Comparing December
arrival statistics from 2017 through 2022, this can clearly be observed. In December 2017,
51,112 arrivals were recorded and they continued to rise to 60,685 arrivals in December
2019. But we can see a decline in December 2020 (48,594) and December 2021 (48,167)
with a strong recovery in December 2022 when there were a record number of 66,720 arrivals.

34 FinScope Tanzania 2023 | Zanzibar Report

 FINDING 12
3 out respondents in Zanzibar borrow money
of
10 when they do not have enough
money for expenses

Chart 16: What do you do when you don’t have enough

money to cover all your expenses?
47%

35%
31%

31%

29%
29%

28%
25%
23%

22%
20%

21%

20%
21%
20%

20%

19%
18%

17%
17%
16%

16%

17%
16%
15%

15%
15%

14%

14%
13%
13%
13%
12%

12%

11%

10%
10%

9%
9%

8%

8%
8%

7%

6%
5%

5%

1%

National Zanzibar Zanzibar Kaskazini Kusini Mjini Kaskazini Kusini

(2023) (2017) Unguja Unguja Magharibi Pemba Pemba

Ask family/friends
Work harder Borrow money
to assist
Use savings Cut expenses Other

Source: FinScope Tanzania 2023 (March-April 2023) & FinScope Tanzania 2017 (April-July 2017)

While in 2017, the majority of respondents opted to cut down on expenses, in 2023 29% of
respondents claim that they borrow money to meet their needs. This is a significant shift
in behaviour and indicates an increased acceptance of a variety of financial intermediary
solutions.

FinScope Tanzania 2023 | Zanzibar Report 35

 FINDING 13
7 out respondents in Zanzibar
umiz
i Mapa
to
Ma
tum
izi

10
claim to keep track of pato
Mat

of
Ma x x
x

money they get and spend x

Chart 17: Do they keep track of

money they get and spend?

National 77%

Zanzibar (2023) 70%

Zanzibar (2017) 77%

Kaskazini Unguja 76%

Kusini Unguja 72%

Mjini Magharibi 69%

Kaskazini Pemba 65%

Kusini Pemba 72%

Source: FinScope Tanzania 2023 (March-April 2023) & FinScope Tanzania 2017 (April-July 2017)

With 7 in 10 respondents tracking the money they receive and spend, a majority show an
understanding of the importance of controlled money management.

36 FinScope Tanzania 2023 | Zanzibar Report

 FINDING 14
Almost half of respondents in
Zanzibar aged 55 years and
below have no retirement plans

Chart 18: How do Tanzanians aged 55

and below plan for retirement?
55%

51%
47%

41%
39%
39%

37%
28%

25%
25%
23%

21%
20%
21%
17%
17%

16%
16%
15%

13%
14%
13%

13%
13%

12%
12%
12%

12%
10%

10%
10%

9%
8%

5%
5%

5%
4%

4%

2%
2%

2%
1%

0%

0%

0%
National Zanzibar Zanzibar Kaskazini Kusini Mjini Kaskazini Kusini
(2023) (2017) Unguja Unguja Magharibi Pemba Pemba

No plans Farming/agriculture/livestock Use savings

Owns business Children will take care Money from friends/relatives

Source: FinScope Tanzania 2023 (March-April 2023) & FinScope Tanzania 2017 (April-July 2017)

Almost half of respondents in Zanzibar (47%) aged 55 years and below have no retirement
plans. This compares with 28% nationally. A variety of reasons drive this trend: Zanzibari
culture encourages living in a multi-generational family setting, which guarantees support
not only from children but younger household members during old age; further, most formal
insurance and pension schemes lack an Islamic window, which hinders their uptake due to
cultural barriers; lastly, the Revolutionary Government of Zanzibar has introduced a government
supported retirement scheme for every elderly society member in Zanzibar under which they
receive funds every second month.

FinScope Tanzania 2023 | Zanzibar Report 37

Financial Inclusion

38 FinScope Tanzania 2023 | Zanzibar Report

3D FINANCIAL INCLUSION
This section unpacks the uptake of formal and informal financial services across the
various demographics and outlines remaining barriers for uptake.

FINDING 15A
TZS
Almost 8 in 10 respondents in Zanzibar
have taken up mobile money services

Chart 19a: Uptake of Formal Financial Services

82%

81%

78%
78%

74%
72%

65%

38%
28%
25%

24%
22%

22%

16%
16%
15%
12%

12%
10%

10%

11%
11%
9%

68%
18%

9%

8%
8%
8%

8%

6%
7%
28%

7%

7%
5%
5%
6%

4%

4%
4%

4%
3%

3%

3%

3%
2%
2%

0%

National Zanzibar Kaskazini Kusini Mjini Kaskazini Kusini

Unguja Unguja Magharibi Pemba Pemba

Mobile money Bank CMG

Insurance Pension MFI/microlender SACCO

Source: FinScope Tanzania 2023 (March-April 2023) & FinScope Tanzania 2017 (April-July 2017)

Compared with the national average, Zanzibar has more residents which have taken up
both mobile money and banking services. Further, more people have access to formal
pension services, which is mainly linked to the higher proportion of residents in Zanzibar
in formal employment.

FinScope Tanzania 2023 | Zanzibar Report 39

 FINDING 15B
Number of respondents in Zanzibar with mobile
money has more than doubled since 2017

Chart 19b: Uptake of Formal Financial Services

Base = Zanzibar only

Mobile money 78%

services
38%

Commercial 25%
bank services 15%

CMG (prev 9%
Informal
Savings group) 9%

Insurance 8%
services
5%

Pension 7%
services 5%

MFI/ 6%
microlender
2%
services

SACCOS 2%

1%

2023 2017

Source: FinScope Tanzania 2023 (March-April 2023) & FinScope Tanzania 2017 (April-July 2017)

40 FinScope Tanzania 2023 | Zanzibar Report

 Chart 19c: Uptake of Formal Financial Services
Number displayed in million
Base = Zanzibar only

Population 0.952
0.747

Mobile money 0.741

services 0.287

Commercial 0.239
bank services 0.112

CMG (prev Informal 0.081

Savings group)
Insurance 0.072
services 0.035
Pension 0.067
services 0.039

MFI/microlender 0.059
services 0.014
0.022
SACCOS 0.011

2023 2017

Source: FinScope Tanzania 2023 (March-April 2023) & FinScope Tanzania 2017 (April-July 2017)

The number of respondents in Zanzibar with mobile money has more than doubled since
2017 -- 38% in 2017 to 78% in 2023. The uptake of other formal services has also
increased with 25% of respondents in Zanzibar using banking services compared with
15% in 2017, 8% use insurance services versus 5% in 2017, 7% use pension services
compared with 5% in 2017, 6% use MFI/microlender services compared with 2% in 2017,
and 2% use SACCO services versus 1% in 2017.

These strides can be attributed to both government and private sector efforts to ensure
increased access to formal financial services. In particular, the increased expansion
of mobile money agents and the opening of multiple bank branches, agents and ATMs
has been observed on Pemba and within more remote locations within Unguja since the
previous FinScope Tanzania 2017 survey.

FinScope Tanzania 2023 | Zanzibar Report 41

 FINDING 15C

14%
of respondents in Zanzibar
can rely on supply
chain credit

Chart 19d: Uptake of Informal Financial Services

22% 23%

14%
11% 11%
8% 8%
4% 3% 4% 3%
1% 2% 0% 2% 2% 0% 0% 1% 2%

National Zanzibar Kaskazini Kusini Mjini Kaskazini Kusini

Unguja Unguja Magharibi Pemba Pemba

Informal Shop & supply Social

money lender chain credit groups

Source: FinScope Tanzania 2023 (March-April 2023

Informal service uptake is at 2% for social groups and shop & supply chain credit (mali
kauli) is at 14%. Mali kauli of informal financial service is especially high in more rural
areas, such as Kaskazini Unguja and Kaskazini Pemba with 22% and 23% respectively.
However, compared with 2017, a decline in informal financial services uptake can be
observed. This trend has also been recognized on the national level and can be attributed
to the population growth and continuous decrease of social fabric due to higher levels
of mobility in younger population segments.

42 FinScope Tanzania 2023 | Zanzibar Report

 FINDING 15D
A lower proportion of respondents in Zanzibar use
informal financial services than in 2017

Chart 19e: Uptake of Informal Financial Services

Base = Zanzibar only

Informal 1%
money lender 6%

14%
Shop & Supply
Chain credit 16%

Social groups 2%

2023 2017

Source: FinScope Tanzania 2023 (March-April 2023) &

FinScope Tanzania 2017 (April-July 2017)

All these developments have led to a significant increase in financial inclusion from 45%
in 2017 to 83% in 2023 and to a significant decline in financial exclusion from 43% in
2017 to 12% in 2023.

However, gaps remain with women, people in rural areas, youth between 16 to 24 years
and respondents in Kaskazini Unguja and Kaskazini Pemba are less likely to be included
as the below charts portray.

FinScope Tanzania 2023 | Zanzibar Report 43

 FINDING 16
Formal Financial Inclusion has
grown from 15% in 2009

to 82% in 2023
Chart 20a: Uptake of Financial Services
Base = Zanzibar only
18.7%

2023 25% 57% 6% 12%

2017 15% 30% 12% 43%

2013 12% 26% 17% 45%

2009 9% 6% 26% 59%

Have or uptake bank services Dont have or uptake bank services but
have or uptake other formal services
Dont have or uptake formal services Financially excluded
but uptake informal services

Source: FinScope Tanzania 2009, 2013, 2017, 2023

44 FinScope Tanzania 2023 | Zanzibar Report

 FINDING 17
The financial inclusion urban-rural gap has
narrowed, but the gender gap remains,
albeit at much higher financial inclusion levels

Chart 20b: Uptake of Financial Services – demographic

Base = Zanzibar only

Rural 20% 59% 9% 12%

Urban 30% 55% 3% 12%

Female 22% 57% 6% 16% Source: FinScope

Tanzania 2023
Male 29% 58% 6% 7% (March-April 2023)

FINDING 18
Formal Financial Inclusion has grown
across all ages

Chart 20c: Uptake of Financial Services – demographic

Base = Zanzibar only

16-24 years 17% 58% 6% 19%

25-34 years 30% 59% 5% 7%

35-44 years 32% 57% 6% 5%

45-54 years 29% 62% 6% 3%

Source: FinScope
Tanzania 2023
55 years & above 31% 43% 7% 19% (March-April 2023)

Have or uptake bank services Dont have or uptake bank services but
have or uptake other formal services
Dont have or uptake formal services Financially excluded
but uptake informal services

FinScope Tanzania 2023 | Zanzibar Report 45

 FINDING 19
Perceived lack of income and
awareness biggest barriers cited for
formal financial services uptake

Although significant strides were made in terms of formal financial service uptake,
awareness and financial product knowledge remain the most inherent barriers towards
further uptake of formal financial services. This cuts across various provider types.

PROVIDER PRIMARY BARRIER SECONDARY BARRIER

Mobile Lack of access/ownership of Do not engage in frequent

Money phones transactions

Insufficient income to even Cannot maintain minimum

Banks consider opening an account balance on the account due to
insufficient income

Potential customers do not Lack of awareness of how

Insurance want to think about bad insurance services work and how to
things happening to them, obtain them and the perceived high
hence they do not take up. cost of insurance and inability to
afford insurance payments.

Lack of awareness of how Insufficient income to become

MFIs MFIs operate and where they an MFI costumer.
are located.

Lack of awareness of how Membership fee is perceived to

SACCOs operate, how to join be too high.
SACCOs
them and where they are
located.

46 Source: FinScope Tanzania 2023FinScope 2023) 2023 | Zanzibar Report

Tanzania
(March-April
This section unpacks the financial usage across key financial intermediary functions,
such as transfers, payments, saving, borrowing and risk mitigation.

FINDING 20
Less than
respondents in Zanzibar
4 in 10 sent or received money

Chart 21: In the past 12 months have you ever sent or received money?

52%

44%
38% 39% 39%
34% 34% 34% 35%
32% 31%
29%
26% 27%
25%

18%

National Zanzibar Zanzibar Kaskazini Kusini Mjini Kaskazini Kusini

(2023) (2017) Unguja Unguja Magharibi Pemba Pemba

Sent Received

Source: FinScope Tanzania 2023 (March-April 2023) & FinScope Tanzania 2017 (April-July 2017)

Less than 4 in 10 respondents in Zanzibar sent or received money. This is an increase

from 2017, where only about a quarter of respondents received money and less than 2
in 10 were sending money but it still ranks below the national average. An outlier can be
observed in Kusini Pemba, where 52% of respondents have received money, but only
35% send money. This goes hand in hand with the higher levels of dependency in Kusini
Pemba. Most of the remittances received are from within the islands (the flow can mainly
be observed from Unguja to Pemba) or from various regions of Mainland Tanzania.

FinScope Tanzania 2023 | Zanzibar Report 47

 Chart 22: How do they receive their income?

90% 95% 93%

89% 89%
84%
80%
72%

20%
6% 11% 10% 13%
6% 6% 7% 5% 8%
3% 4% 1% 0% 1% 2%
National Zanzibar Zanzibar Kaskazini Kusini Mjini Kaskazini Kusini
(2023) (2017) Unguja Unguja Magharibi Pemba Pemba

Cash Bank Mobile money

Source: FinScope Tanzania 2023 (March-April 2023) & FinScope Tanzania 2017 (April-July 2017)

In Zanzibar, 84% of respondents receive their income in cash, with only 11% through
banks and 4% through mobile money. Compared with 2017, a slight increase in electronic
payments can be observed. But considering the high number of casual labourers on the
isles who pick up occasional work, FSPs may need to reflect further on their approach
towards, not only regular salary payments facilitated through bank and mobile money
transfers, but also seasonal worker payments.

48 FinScope Tanzania 2023 | Zanzibar Report

 FINDING 21
The payment space remains
largely untapped

Chart 23: How do they make payments?

Base = Zanzibar only

89%
Groceries 0.6%
2.1%

34%
School fees 5.4%
0.4%

Medical 87%
0.1%
treatment 4.8%
10%
Pay rent 0.1% 0.2%

1.8% 53%
Buy airtime 31%

Cash Bank channel Phone/MM agent Other

Source: FinScope Tanzania 2023 (March-April 2023)

More than 8 in 10 respondents in Zanzibar mostly make common payments (i.e. purchase
of groceries) with cash. Even the purchase of airtime is still mainly in cash, with 53% of
respondents doing so. Only 31% buy through mobile money.

FinScope Tanzania 2023 | Zanzibar Report 49

 FINDING 22
There is a gap in converting trial into
regular use of digital financial
services for purchasing goods

Chart 24a: Digital payment instruments used to purchase goods

Base = Zanzibar adults

Mobile money 17% 33.2%

ATM/debit card 1% 1.3%

Bank transfer 1%
4.6%

0%
Credit card 0.3%

Cryptocurrency 0%
0.5%

Past month Ever

Source: FinScope Tanzania 2023 (March-April 2023)

50 FinScope Tanzania 2023 | Zanzibar Report

 FINDING 23
Lipa namba is more popular
than conventional POS

Chart 24b: Merchant payment channels used to purchase goods

Base = Zanzibar adults

Lipa namba 2% 9.3%

Azam pay 2% 2.6%

POS 0%
0.4%

QR code 0%
0.5% Past month Ever

Source: FinScope Tanzania 2023 (March-April 2023)

Only 9% of respondents in Zanzibar have ever used a lipa number/lipa kwa simu, with 2%
doing so monthly. This indicates that although respondents in Zanzibar are aware of digital
payment options, most of them do not utilize them as their first choice. This behavior
is fueled by a variety of reasons. Subsequent qualitative focus group discussions with
residents unveiled that mobile money fraud, fear of reverse transactions, unawareness
of cost structures and low penetration of actual “lipa kwa simu” merchant tills do not
encourage most Zanzibar residents to adopt merchant payments as their default payment
option.

Further, although penetration of POS is high in Zanzibar, they are mainly placed in tourism
outlets and are used by tourists. Respondents were discouraged from their usage as it
appears a common, although illegitimate, practice by many businesses in Zanzibar to
charge a surplus of 3% to 5% on POS payments due to VISA/Mastercard fees.

FinScope Tanzania 2023 | Zanzibar Report 51

 FINDING 24

55% of respondents in Zanzibar

saved in the past 12 months

Chart 25a: Savings

National 47%

Zanzibar (2023) 55%

Zanzibar (2017) 32%

Kaskazini Unguja 65%

Kusini Unguja 78%

Mjini Magharibi 49%

Kaskazini Pemba 49%

Kusini Pemba 51%

Source: FinScope Tanzania 2023 (March-April 2023) & FinScope Tanzania 2017 (April-July 2017)

In Zanzibar, 55% of respondents saved in the past 12 months, this indicates a significant
increase from 2017 where only 32% saved. This shows an encouraging trend, which
appears to have been sparked by the awareness of potential economic downturns, such
as the recently experienced pandemic.

52 FinScope Tanzania 2023 | Zanzibar Report

 FINDING 25
Cash flow smoothing still dominates but
productive investment appears to be increasing

Chart 25b: What do they save for

Base = only those who saved

National 84% 8% 7%

Zanzibar (2023) 84% 10% 5%

Zanzibar (2017) 83% 5% 13%

Kaskazini Unguja 91% 7% 2%

Kusini Unguja 72% 23% 4%

Mjini Magharibi 85% 6% 7%

Kaskazini Pemba 89% 8% 3%

Kusini Pemba 83% 10% 5%

Smoothing Productive Asset

cashflow investment building

Source: FinScope Tanzania 2023 (March-April 2023) & FinScope Tanzania 2017 (April-July 2017)

Unsurprisingly, most savings are for cash flow smoothing purposes (84%) to cover basic
needs in times of economic hardship. Only in Kusini Unguja could an increased saving for
productive investment be observed, which goes hand-in-hand with their expenditure on
building materials, which indicates an increased economic activity and rise of investment
in this region.

FinScope Tanzania 2023 | Zanzibar Report 53

 FINDING 26
Informal means of savings
Ts
h

Tsh
Tsh

remain dominant

Ts h
Chart 26: Where are people saving?
Base = only those who saved
65%

63%
49%

49%
51%
47%

46%
38%
41%
36%
37%

35%
34%

32%
30%

24%
24%
17%

19%
22%
18%

19%
11%
10%

15%

15%
16%
13%
14%
13%
11%

5%
10%

8%
10%
7%

9%
6%
9%

3%

8%
9%
6%

7%

6%
6%
5%
4%

4%

4%
3%

2%
2%

1%

1%
National Zanzibar Zanzibar Kaskazini Kusini Mjini Kaskazini Kusini
(2023) (2017) Unguja Unguja Magharibi Pemba Pemba

Keep savings Mobile CMG

at home phone

Bank Safekeeping with Pension SACCOs/

family/friend MFI

Source: FinScope Tanzania 2023 (March-April 2023) & FinScope Tanzania 2017 (April-July 2017)

Considering that most respondents in Zanzibar save for cash flow smoothing, they retain
their savings simply at home (49%) or on their phone (37%) to ease quick access in case
of need. While in 2017, 30% retained savings in banks, now only 17% of respondents do
so. Follow-up qualitative group discussions confirmed that one of the reasons is to avoid
reduction in savings balance due to charges, which may occur on current accounts held
with most Tanzanian commercial banks.

54 FinScope Tanzania 2023 | Zanzibar Report

 FINDING 27
of respondents in Zanzibar
44% borrowed in the
past 12 months

Chart 27a: Borrowing

National 36%

Zanzibar (2023) 44%

Zanzibar (2017) 42%

Kaskazini Unguja 63%

Kusini Unguja 65%

Mjini Magharibi 35%

Kaskazini Pemba 40%

Kusini Pemba 36%

Source: FinScope Tanzania 2023 (March-April 2023) & FinScope Tanzania 2017 (April-July 2017)

In the past 12 months, 44% of respondents in Zanzibar borrowed, which is a slight increase
from 42% in 2017. Respondents in predominantly rural Kaskazini and Kusini Unguja
especially show higher borrowing rates, which was driven by their seasonal incomes in
tourism. Tourism was still recovering from post-pandemic fatigue at the time of the survey.

FinScope Tanzania 2023 | Zanzibar Report 55

 FINDING 28
7 in
10 respondents in Zanzibar that
borrowed did so to
smooth cash flow

Chart 27b: What did they borrow for?

Base = only those who borrowed

National 72% 3% 6%

Zanzibar (2023) 70% 7% 12%

Zanzibar (2017) 82% 11% 9%

Kaskazini Unguja 73% 9% 11%

Kusini Unguja 65% 13% 21%

Mjini Magharibi 75% 15% 8%

Kaskazini Pemba 66% 17% 10%

Kusini Pemba 63% 17% 14%

Smoothing Productive Asset

cashflow investment building

Source: FinScope Tanzania 2023 (March-April 2023) & FinScope Tanzania 2017 (April-July 2017)

Similarly to savings, most people borrow for cash flow smoothing (70%), only 12% for
asset building.

56 FinScope Tanzania 2023 | Zanzibar Report

 FINDING 29
Friends and family remain
RW F

the key sources of credit

Chart 28: Where do they borrow from?

Base = only those that borrowed
86%

84%
85%
80%

77%

75%

71%
67%

13%

18%

18%
17%

11%

13%
10%
11%

5%
9%
4%
1%

7%
0%
1%

0%
0%

0%
6%

2%

8%
0%
6%

6%
5%

4%
3%

0%
3%
3%

4%

3%

2%
1%
0%
0%

1%

National Zanzibar Zanzibar Kaskazini Kusini Mjini Kaskazini Kusini

(2023) (2017) Unguja Unguja Magharibi Pemba Pemba
Family/friends CMG Mobile money Bank Moneylender MFI/SACCO
to pay back

Source: FinScope Tanzania 2023 (March-April 2023) & FinScope Tanzania 2017 (April-July 2017)

Considering that borrowing for cash flow smoothing purposes is mainly in emergency
situations and does not require significant amounts, respondents mainly access funds/
credit through friends and family (80%) or savings groups/CMGs (11%), which provide
credit at reasonable terms with no collateral and mostly in a short period of time.

Only 4% of borrowers in Zanzibar take loans from banks and less than 1% from mobile
money. Yet mobile money has seen a significant penetration growth on the isles. The
lack of Islamic financing options, in particular on mobile money, was pointed out by
respondents in subsequent qualitative engagements as one of the key barriers to a low
formal credit uptake, in particular among mobile money providers.

Apart from money transfers, payments, savings and borrowing, risk mitigation is a key
financial intermediary function that in a formal set-up is mainly covered by insurance
provision.

FinScope Tanzania 2023 | Zanzibar Report 57

 FINDING 30
Less than
respondents in
1 in 10 Zanzibar are insured

Chart 29: Are they insured?

National 10%

Zanzibar (2023) 8%

Zanzibar (2017) 4%

Kaskazini Unguja 3%

Kusini Unguja 6%

Mjini Magharibi 10%

Kaskazini Pemba 4%

Kusini Pemba 8%

Source: FinScope Tanzania 2023 (March-April 2023) & FinScope Tanzania 2017 (April-July 2017)

In Zanzibar, 8% of respondents are insured compared with 10% nationally. Although

Zanzibar remains behind the national average, this indicates a significant increase from
the 4% in 2017. Three reasons were observed in subsequent qualitative data collection
engagements that provide a justification for this trend: Zanzibar provides free health care
to all in its government hospitals, which generally reduces the need for health insurance
coverage; and the recent budget for 2023/24 confirmed that the Revolutionary Government
of Zanzibar is in the process of the roll out of universal health insurance for all, which will
further reduce the need for alternative insurance cover. However, since these schemes
are limited to Zanzibar, residents of Zanzibar that have regular interactions and trips to
Mainland Tanzania are still in need of insurance cover to secure themselves in case they
happen to fall sick when they are on the Mainland.

58 FinScope Tanzania 2023 | Zanzibar Report

 FINDING 31
NHIF is the driver of insurance uptake
amongst respondents in Zanzibar

Chart 30: What insurance products are people using?

Base = only those insured
100%

89%
82%

77%
72%

73%

47%
0.4%

40%
41%
0.3%

28%
3%

23%
17%
17%
16%
8% 1%

12%
5.6%
11%

11%
0.4%

8%
5%
4%
4%
1%

National Zanzibar Kaskazini Kusini Mjini Kaskazini Kusini

Unguja Unguja Magharibi Pemba Pemba

NHIF CHF TIKA

Private health Motor vehicle Motor cycle

insurance insurance insurance

Personal accident Life

SHIB
insurance insurance

Source: FinScope Tanzania 2023 (March-April 2023)

It is not surprising to see that the main form of insurance among the insured is NHIF
(82%), which not only extends cover on the mainland but also to various private health
facilities on the isles. NHIF health insurance is followed by motor vehicle insurance (17%)
and motorcycle insurance (11%) which people are obliged to have by law once they own
a vehicle or motorcycle.

FinScope Tanzania 2023 | Zanzibar Report 59

 FINDING 32
About half of respondents in Zanzibar are aware
of pension funds but only about 7% of
them have taken them up

Chart 31: Investment

Base = Zanzibari adult population

56%
Pension funds
7%

T-bills, Government or 13%

other bonds 0%

9%
Cryptocurrency
0%

UTT (Unit trust 5%

Tanzania) 0%

3% Awareness Uptake
Livestock

Source: FinScope Tanzania 2023 (March-April 2023)

In Zanzibar, 56% of respondents are aware of pension funds but only 7% have subscribed.
As outlined earlier in the report, this may be driven by existing government pension schemes
and the conducive social fabric in Zanzibar which supports the elderly. However, even
other forms of investment remain low in both awareness and uptake, with less than 1%
of respondents in Zanzibar having invested in bills, bonds or UTTs. Even more traditional
forms of investment, such as livestock, which are popular on the mainland and have seen
a 15% uptake on a national scale, are only at 3% in Zanzibar. As such, an increased need
for local investment schemes that provide an Islamic window for investment are required.
For example, the government’s ambitions to establish a Zanzibar Stock Exchange may
drive investments on the isles significantly, as they provide a localized and contextualized
investment opportunity.

60 FinScope Tanzania 2023 | Zanzibar Report

FinScope Tanzania 2023 | Zanzibar Report 61
Financial Usage

62 FinScope Tanzania 2023 | Zanzibar Report

3F FINANCIAL SERVICE CONSUMER SATISFACTION
This section briefly unpacks key financial service consumer satisfaction indicators, which
are paramount to ensure continuous usage of formal financial services and can amplify
referral and recommendation-driven uptake and usage of these services.

FINDING 33
Majority of customers are satisfied with
product/service market fit

Chart 32: Products and services meet financial needs

Base: Only Zanzibaris using the respective service

Bank 94%

Mobile money 95%

MFI 95%

SACCO 86%

Insurance 78%

CMG 94%

Source: FinScope Tanzania 2023 (March-April 2023)

Overall financial service users feel that the products available meet their needs. Only
insurance products indicate lesser consumer satisfaction which is mainly linked to the
fact that the products currently available in the market do not align with Islamic insurance
principles, as further in-depth interviews with consumers revealed.

FinScope Tanzania 2023 | Zanzibar Report 63

 FINDING 34
Member-led FSPs (i.e. CMGs and SACCOs)
whose services consumers perceive as
more reasonably The Tanzanian payment
priced
space remains largely untapped
Chart 33: Have reasonable fees and charges
Base: Only Zanzibaris using the respective service

Bank 54.8% Source: FinScope Tanzania

2023 (March-April 2023)
Mobile money 29.9%

MFI 69.7%

SACCO 85.5%

Insurance 59.6%

CMG 92.3%

Although general satisfaction is high, the cost of services remain a concern, with only
3 in 10 mobile money users claiming the charges are reasonable. Even among bank
customers, only slightly more than half (55%) confirm that they feel the cost and charges
are reasonable. Such perceptions can heavily affect frequent usage, especially daily
usage or usage for small-scale transfers/payments. Member-based organizations, such
as CMGs and SACCOs, have increased consumer satisfaction when it comes to charges
as their rates and fees are set in consultation with members.

Consumers appear cost sensitive but overall usage recency has increased significantly
since the last FinScope. In 2017 only 4 out of 10 financial service users in Zanzibar
were accessing their financial services within the past 30 days. Now 84% of financial
service users in Zanzibar used mobile money in the past 30-days and 70% of banking
service users (past 90-days usage is reported at 94% for mobile money users and 83%
for banking users).

It is, however, important to note that less affluent segments, especially in the rural areas,
have not seen such a strong increase in recency.

64 FinScope Tanzania 2023 | Zanzibar Report

Conclusion

FinScope Tanzania 2023 | Zanzibar Report 65

The FinScope Tanzania 2023–Zanzibar Report set out to provide key demand-
side insights on developments in comparison with the FinScope Tanzania 2017–
Zanzibar Report, national trends from 2023 and regional comparisons for all five
regions in Zanzibar.

In doing so, it has shed light on the financial behaviors and needs of Tanzanian
adults aged 16 and older that lived in Zanzibar at the time of the survey. It provides
a reliable measure for the demand and usage of financial services across population
segments. It has been used to inform the assessment of the NFIF II (2018-2022)
and the formulation of the NFIF III (2023-2027), as well as offer a temperature
measure along the path towards the implementation of the FSDMP (2020/21-
2029/30). Further, FinScope Tanzania 2023 highlights areas of opportunity and
gaps that can be picked up by policy makers, regulators and innovators in the
sector to foster the development of evidence-driven policy and regulatory and
solution design.

The analysis, building on the NFIF’s value creation map for financial inclusion,
outlines that previous key access barriers are slowly diminishing as key access
enablers increase: proximity to a financial access point increased from 95% to
100%; access to a National Identification Number (NIN) remained high (74%);
ownership of a mobile phone (increased from 73% to 86%), access to internet
(increased from 39% to 52%) and smartphones (increased from 24% to 39%).
However, it is important to point out that youth under the age of 18 are still excluded
from having a NIN.

Further, uptake has increased significantly with 78% of respondents in Zanzibar

having taken up mobile money services versus 38% in 2017 and 25% have banking
services versus 15% in 2017, exceeding the national average on both measures.
Moreso, a significant decline of financial exclusion was observed with only 12% of
Tanzanians still excluded compared with 43% in 2017, again positioning Zanzibar
below the national average which is a tremendous achievement for the sector.
Although success seems evident, not all population segments have seen this
equally. Those aged 16-24 remain a key excluded group, which, paired with their
mainly occasional income sources such as casual labor/piece work, makes them
more volatile to financial shocks.

Although uptake of mobile money has significantly contributed to the increase of

formal financial inclusion in Tanzania, usage remains a key concern. The recency of
usage (past 90 days), especially among rural population segments, remains below
average and dissatisfaction with cost for mobile money and banking services
keeps driving consumers towards cash. The predominant financial sector use

66 FinScope Tanzania 2023 | Zanzibar Report

case remains remittance (47%). Other financial intermediary services, such as
formal credit (12%) and formal savings (31%) remain low. And formal payments
(excluding school fee payments) are at 34%, with only 17% using them regularly
at least once a month.

FinScope Tanzania 2023–Zanzibar Report outlines the current financial sector

demand-side development constraints and provides relevant insights and
information to support Tanzania’s financial sector players in reaching the next
frontier. This unfolds through the need for universal access and leaving no one
behind; strengthened sub-sector development, especially for merchant payments;
social protection and investment; and a need to shift from trial and awareness
towards uptake and usage.

The sector players, public and private alike, are challenged to utilize the evidence
generated to increase uptake of services, such as insurance, pension, formal
investment vehicles, and the regular usage of digital payments. Further, the report
has offered qualitative insights, which can be picked up by academia and market
researchers. It has also highlighted where further deep-dive analysis should occur
to enhance these insights further.

Both structural and behavioral shifts are needed to address remaining barriers to
financial inclusion and achieve increased quality of service delivery and customer
satisfaction. This ultimately increases the financial sector’s value for respondents
in Zanzibar and its contribution to economic growth and well-being.

FinScope Tanzania 2023 | Zanzibar Report 67

68 FinScope Tanzania 2023 | Zanzibar Report
FinScope Tanzania 2023 | Zanzibar Report 69
70 FinScope Tanzania 2023 | Zanzibar Report
 CORE IMPLEMENTING PARTNERS:

OTHER TECHNICAL COMMITTEE MEMBERS:

TAMNOA

FinScope Tanzania 2023 | Zanzibar Report 71

 Ministry of Finance

72 FinScope Tanzania 2023 | Zanzibar Report