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Sharp rise in digital theft: Meet the crisis haunting Tanzania banking sector

Almost half of the Tsh10.3 billion in losses suffered by Tanzanian banks due to theft was made up of just under Tsh4.9 billion in total theft through online and digital banking fraud in Tanzania in 2023

According to information released by the central bank (Bank of Tanzania), digital fraud from Tanzania’s commercial banks surged by an astounding 84% during the final three months of 2023 (October–December) in contrast to July–September of the year.

Over Tsh1.65 billion (USD 647,000) was syphoned through mobile and internet banking fraud, including cyber-attacks, during the fourth quarter of the year, according to a March 5 circular from the Bank of Tanzania (BoT) to commercial banks, financial institutions, and payment system service providers.

This represents a sharp increase from Tsh901.8 million (USD 353,600) in Q3. The amount, which dropped to Tsh674.06 million (USD 264,340) in Q2, was below the Tsh1.66 billion (USD 650,980) recorded in the first quarter of the year, but it showed a consistent increase in online fraud over the following three quarters.

The threat of automated teller machine card skimming theft increased by 60% to Tsh159.87 million (USD 62,700) in Q4 from Tsh99.64 million (USD 39,100) in Q3, though it was still far short of Tsh424.16 million (USD 166,340) in Q2.

However, Q4 saw the lowest amount of theft through forged cheques and the Tanzania Interbank Settlement System for the year, coming in at Tsh11.3 million (USD 4,430), as opposed to Tsh34 million (USD 13,330), Tsh954.59 million (USD 374,350), and Tsh20.9 million (USD 8,200) for Q1, Q2, and Q3.

Almost half (47.6%) of the Tsh10.3 billion (USD 4.04 million) in losses suffered by Tanzanian banks due to theft was made up of just under Tsh4.9 billion (USD 1.92 million) in total theft through online and digital banking fraud in Tanzania in 2023.

Although the Bank of Tanzania’s (BoT) Directorate of Financial Sector Supervision did not provide comparison numbers for 2022 and prior years, it did urge domestic financial service providers to be especially watchful in identifying and reporting fraud incidents of this kind as they happen in the future in its notice dated March 5, 2024.

“We expect them to use this feedback to improve their internal controls in order to minimise future losses due to fraud,” it concluded.

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