September 11, 2014 / 5:31 PM / 5 years ago

Tanzania's Tigo launches interest-earning mobile money service

DAR ES SALAAM, Sept 11 (Reuters) - Tigo, a unit of emerging markets telecom group Millicom Cellular International , has started a mobile money service that pays interest on balances, tapping into an underdeveloped market for financial services in Tanzania.

Tigo, Tanzania’s No. 3 mobile phone operator, said cellular balances would earn interest rates of between 7 and 9 percent quarterly.

Mobile money accounts have grown popular across sub-Saharan Africa, where many people do not have bank accounts but mobile phones are ubiquitous. Users can pay bills and buy goods using their phones.

The firm, which has 3.5 million mobile money customers, hopes its new service will complement the cross-border mobile money transfer service between Tanzania and Rwanda it launched in February.

The company recorded 6.6 million mobile phone subscribers by June 2014, a 12 percent increase from a year ago.

Mobile money transfers were pioneered by Kenya’s Safaricom , with M-Pesa as the world’s first mobile-phone based service for making payments. M-Shwari, launched in 2012, enables users to save money and access short-term loans.

Although Tanzania has seen an increase in the population’s access to financial services in recent years, a majority still lacks access, the country’s central bank has said.

Tanzania has a total of around 28 million mobile phone subscribers, representing a mobile penetration of 63 percent. Vodacom Tanzania, an arm of South African mobile operator Vodacom, is the country’s leading mobile phone firm. (Reporting by Fumbuka Ng’wanakilala; Editing by James Macharia and Susan thomas)

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