One of the complex parts of living in Africa is getting money to spend. In most places, you have to pay in cash.
I am surprised to see many places in Tanzania starting to accept debit/credit cards. But there are still many things you have to pay in cash. The largest Tanzanian denomination is 10,000 (10k TSH), which is equal to 5 Singapore/Canadian dollars. You can imagine how many notes you need if you have big-budget items, like 10 million shillings for a car.
Method 1: ATM
The maximum withdrawal amount for most ATMs is 400k. One bank, CRDB Bank, allows 600k.
Whenever I withdraw with my debit card, there is a service fee of 15k TSH. So, for every 300 Singapore dollars I withdraw, I must pay 7.5 dollars for the service fee. That’s a lot.
Method 2: Bank Transfer
Another method is bank transfer. Many sellers and merchants allow bank transfers. For me, with Singapore banks, there is a 25-dollar service fee. Even when I choose to pay the receiver fee, they still deduct at least 10 US dollars from the transaction. It is strange, but I suspect it is some banking agent transfer fee. Anyway, both ways, I am spending a lot just for a transfer fee.
Method 3: Money Transfer to Mobile Money (M-PESA)
In most of Africa, people use mobile money. I tried it back in Uganda, and it was great. It is pretty much the telephone company (telco) that acts like a bank. You can top up money on your phone number. When you need to, you can send money to another phone number. There is a transaction fee, and it is very small.
I discovered that by using Western Union or other money transfer services like Remitly or Wise, I can send money to Tanzania via Mobile Money. The best part is that it is very cheap. When I use my Singapore bank and select bank transfer to Western Union, it only costs me 5 dollars to send any amount to my Mobile Money account in Tanzania.
It is nuts. Of course, you can compare rates with other money transfer services. At least it beats ATM fees and bank fees.
You may think, I got money in my phone; how do you get it out? You can go to a local store and ask for a withdrawal. There is a fee for withdrawing. I haven’t done that yet, but it would be cheaper than bank fees.
For now, I pay with Mobile Money whenever I can. The other day, we had someone (fundi) build us two desks and a drawer. I paid for the whole thing with mobile money. It is fast and easy.
What about setting up a local bank account?
I did think about that. I don’t see the need to do it now, but maybe in the future. The problem is that even if I do that, I still have to pay hefty transfer fees whenever I transfer money into a local bank account. Plus, bank transfers often take a day or two. I notice that bank transfers from Singapore to Tanzania bank accounts usually take about one day.
I am glad. Back in my days in Uganda, I used to have to load up with cash. I would go sheepishly to an ATM and withdraw as much as I could. And sometimes, the ATM would run out of cash, and I would have to go to another ATM. Haha, I feel so vulnerable. Imagine some guy standing in front of an ATM for a long time. It is a prime target for getting robbed!
