Traditional and Modern Financial Services in the Urban Social Economy: The Case of Mobile Money and Community Banks in Tanzania

Digital money, such as mobile money service (m-money), has become a part of people’s everyday lives and a trillion-euro industry. M-money allows the user to transfer and save money and take a loan without having a formal bank account or a smart phone. But for which purposes do small-scale entrepreneurs use mobile financial technology? How are mobile money loans experienced by small-scale entrepreneurs? How have community banks adopted m-money services? This article addresses these questions based on a substantivist methodology. This entailed studying the urban economy through in-depth interviews and observations of over 90 small-scale entrepreneurs and Village Community Bank (VICOBA) members in Tanzania, one of the most vibrant m-money markets in Africa. The study finds that m-money is used more for personal than business transactions, and rarely in VICOBAs. VICOBA members have been cautious about embracing digital credit. So, while m-money is a complementary good, its use is hardly widespread among small-scale entrepreneurs in the Dar es Salaam social economy. These findings throw new light on the nature of technology and urban economic development, suggesting the continuing relevance of a social economic approach to development.