Tanzania Implements Bar on Foreign-Led Fintechs in the Mobile Money Industry
In a move towards economic protectionism, the Tanzanian government has issued a directive banning foreign-owned fintech companies from operating in the mobile money sector [1][5]. The ban, outlined in Government Notice No487A, issued on July 28, 2025, has significant implications for international startups and cross-border payment companies aiming to operate or expand in Tanzania's key digital financial market.
The ban disallows foreign fintech firms from obtaining new licenses or renewing existing ones for mobile money services, forcing them to eventually exit the sector once current licenses expire [1][5]. This policy shift prioritizes indigenous businesses and local ownership over foreign participation, potentially limiting the growth of international fintech startups in the country.
Cross-border payment companies will face increased barriers to providing services in Tanzania, restricting regional integration and innovation in digital financial services [4][5]. Existing foreign operators have a grace period until their licenses expire, but after that, they must either leave the market or partner with Tanzanian entities to maintain operations, potentially increasing compliance costs and operational complexity [1].
The broader regulatory environment is also tightening, with recent bans on foreign currency use for transactions and strict penalties for violations, further complicating cross-border financial operations [4]. For foreign companies wishing to stay in Tanzania, a series of "shotgun weddings" with Tanzanian majority owners appears to be the most probable scenario [2]. This will create a seller's market for capable local partners due to the need for foreign companies to partner with Tanzanian majority owners [3].
The government is also targeting local enablers, warning Tanzanian citizens who assist or facilitate non-citizens in these activities that they too may face substantial fines and potential jail sentences [6]. Penalties for non-compliance with the ban include fines of up to TZS 10 million (approximately USD 3,800), imprisonment, and the revocation of visas and residence permits [6].
The mobile money transfer sector is one of 15 business activities prohibited to non-citizens, with the newly protected business sectors including retail and wholesale trade, tour guiding, parcel delivery, and brokerage in business and real estate [7]. The global investment community is observing closely, as this move signals a sense of unpredictability [8].
One notable fintech company affected by the ban is Nala, a Tanzanian-founded remittance startup that raised a $40 million Series A round last year [9]. Nala's model allows users in the EU, UK, and US to send money directly to over 200 banks and 26 mobile money services across Africa, including Tanzania's M-Pesa [9]. The company's significant foreign investment and international operational structure place it in a precarious grey area under the new regulations [10].
Lawyers in Dar es Salaam are likely to find themselves working overtime to interpret the regulations and help foreign companies navigate the new landscape [11]. The ban disrupts the expansion plans of international fintech startups and complicates cross-border payments into and out of Tanzania, possibly diverting investment to neighboring countries with more open policies and reducing Tanzania’s attractiveness as a pan-African fintech hub [1][4][5].
Venture capital firms might reconsider investments in fintech startups aiming to operate in Tanzania's mobile money sector, given the government's policy prioritizing indigenous businesses. The prohibition on foreign fintech firms from obtaining new licenses for mobile money services may deter technology-driven businesses from entering Tanzania's key digital financial market.
