Author(s) :

Magreth Mushi.

Volume/Issue :

Abstract :

This business case explores Vodacom Tanzania’s struggle to expand its M-Pesa mobile money network due to stringent Know Your Customer (KYC) requirements. CEO Philip Besiimire identifies the main challenge as “onboarding friction,” where bureaucratic and rigid KYC procedures hinder the registration of new agents and merchants, particularly in rural and informal sectors lacking National IDs, Tax Identification Numbers, and business licenses. These barriers result in high abandonment rates, slow network growth, and constrained revenue potential. The traditional paper-based KYC process is highlighted as costly and time-consuming, creating a significant entry hurdle for informal businesses. The study applies Transaction Cost Economics and Information Asymmetry Theory to explain the operational and regulatory impacts of KYC practices. Proposed solutions include a tiered, risk-based KYC system in collaboration with regulators, the adoption of a digital e-KYC platform for real-time verification, enhanced training for agents and merchants, and advocacy for more flexible regulatory approaches. The business case concludes that technology-driven and well-structured compliance can serve as both a growth enabler and a tool for financial inclusion. By implementing these measures, Vodacom can streamline onboarding, expand the M-Pesa network, and support the formalization of Tanzania’s informal economy.

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