Cybercrime Epidemic Sweeps Through Tanzania’s Fintech Industry

A worrying trend has emerged in Tanzania’s financial services sector, with cybersecurity concerns topping the list of risks faced by executives. According to the 2023 African Financial Industry Barometer survey, a staggering 74% of respondents believe that cybersecurity regulation needs improvement.

Cybersecurity Concerns Top the List of Risks

The survey, conducted in partnership with Deloitte and the Africa Financial Industry Summit, revealed that cybercrime is considered a significant threat by 97% of top financial institutions in Tanzania. Macroeconomic conditions and political instability were also identified as major concerns, reflecting the uncertainty surrounding recent military coups and internecine conflicts.

Estimated Losses Due to Cybersecurity Incidents

The continent-wide impact of cybersecurity incidents is estimated to result in losses ranging from $3.5 billion to $4 billion annually. Notably, 97% of surveyed leaders ranked cybercrime and regulatory constraints on cybersecurity as the leading threat to the financial services industry alongside worsening economic conditions.

Recent Incident Raises Alarm Bells

A recent incident has raised alarm bells in Tanzania’s fintech sector. David Sennaike, a Nigerian cybersecurity professional, claimed to have discovered a post on the dark web forum Breached.co offering leaked data containing customer information, login details of employees, and API access of 43 Nigerian banks. The dataset was put up for sale at $50,000, with bids reaching $250,000.

Fintechs in Tanzania Fall Victim to Cyber Attacks

Several fintechs in Tanzania have fallen victim to cyber attacks or fraud incidents in recent years. MTN, a leading mobile operator, reportedly lost $53 million from its mobile money service after being targeted by hackers. TechCabal reported on alleged attacks against Flutterwave, which has since sued several recipients of the funds and frozen the bank accounts of 295 others.

Response to Threats

In response to these threats, several groups have been formed to combat fraud by sharing data, including Project Radar, a collaboration between fintechs and eKYC firms.

The Africa Financial Industry Barometer report also highlights the growing trend towards data sharing among financial institutions. While only 24% of respondents currently share incident risk data, fraud data, or data enabling interoperability of digital payments, 36% plan to establish partnerships for data sharing in the short to medium term.

Concerns About Cybersecurity Regulation

A concerning aspect is that only 15% of surveyed leaders consider Africa’s cybersecurity regulation effective, with 74% calling for improvement. Declining economic fortunes also pose a significant challenge, with sub-Saharan Africa’s economic growth expected to dip to 3.1% in 2023.

Financial Institutions Remain Optimistic

Despite these concerns, financial institutions remain optimistic about their business prospects, with only 15% predicting that unfavourable macroeconomic conditions will persist over the next three years.