Debt in Tanzania

Formal lending is established in Tanzania, but the rules and responsible bodies differ by territory. On Mainland Tanzania, the Microfinance Act 2018 and Bank of Tanzania (BoT) supervision cover regulated microfinance activity. Zanzibar has its own Microfinance Service Act 2023 and Microfinance Regulations 2025. Regulated providers include deposit-taking institutions in Tier 1, non-deposit-taking providers in Tier 2 such as credit companies and digital lenders, SACCOS in Tier 3, and Community Microfinance Groups in Tier 4. On Mainland Tanzania, Tier 4 supervision can involve the Tanzania Cooperative Development Commission (TCDC) and local government authorities. In Zanzibar, the Bank of Tanzania or a delegated authority handles the relevant licensing and registration functions. Borrowing also takes place through family and friends, self-help groups, rotating or community savings groups, informal moneylenders and trade credit. These arrangements are mainly informal. Their terms, security and enforceability vary, and Bank of Tanzania consumer protection generally applies only when the provider falls within the regulated system. A National Panel Survey for 2020/21 found that 11.0% of households had used credit during the previous 12 months: 3.6% used formal credit, 2.3% borrowed from friends or neighbours, 2.8% used self-help groups and 2.3% used other informal sources. This is historical information, not a current prevalence estimate. The same survey reported that 92.1% of households did not have a land certificate or Certificate of Customary Right of Occupancy (CCRO) available as security. A regulated lender commonly assesses income, expenses, assets and existing loans and may require consent to obtain credit information. A guarantor can carry written liability for the borrower's obligation. Digital lending requires particular checks: the lender should hold a BoT Tier 2 licence, provide terms in Kiswahili or English, and follow platform and data-protection rules. An unapproved lending app can constitute an offence, and consumer protection may not be available. Digital lenders must not obtain contacts, call logs, messages, photographs, storage or social-account access for electronic know-your-customer checks or delinquency pressure, and they must not disclose sensitive data. They may not charge interest in advance, and repayment must be made in Tanzanian shillings. A third-party collector should identify the customer relationship and comply with the applicable collection rules. A loan contract should state the amount, nominal annual interest, effective annual interest including fees, all fees, penalties, number and schedule of repayments, the separate amounts for principal, interest and fees, the total payment, and the recovery and security terms. The wording should be clear in Kiswahili or English. Under the Financial Consumer Protection Amendment 2025, reducing-balance interest applies where the rule covers the loan. A borrower may repay all or part of a loan early without a penalty, and full early repayment should not include interest for future periods. The borrower remains responsible for repayment according to the contract unless the lender agrees to a restructuring. Financial distress does not create an automatic right to a debt freeze or restructuring. Payment arrears can affect the whole exposure and the borrower's credit record. If an installment remains unpaid for one day, the entire loan is treated as past due for classification purposes. The categories are current for 0 to 5 days, especially mentioned for 6 to 30 days, substandard for 31 to 60 days, doubtful for 61 to 90 days and loss after more than 90 days. A group loan can expose the group to the full amount when a member defaults and the group fails to cover the obligation. A lender should give a written recovery notice of at least 14 days. For mortgage collateral, disposal generally requires 60 days after written demand, together with reasonable notice, valuation and a public auction or private treaty. Sale proceeds are applied to the loan and recovery costs before any remaining balance is returned to the borrower; a shortfall can remain payable. Collection has limits. Harassment, threats, violence, obscene or abusive language, false claims, contact-shaming, undisclosed fees and unlawful access to a device or contacts are prohibited. A licensed debt collector must follow the applicable rules. A borrower should preserve the contract, receipts, account statements, messages, notices and complaint reference numbers. The first complaint step is the provider's internal process. It should offer at least three channels, accept Kiswahili and English, charge no service fee or complaint penalty, and provide a toll-free telephone channel. The provider should issue a unique reference, acknowledge the complaint and review it impartially. The provider should respond within 10 days. If the final response is unsatisfactory or the applicable deadline expires, the borrower can escalate to the BoT Financial Consumer Protection Unit. The BoT determination can take up to 60 days; a review request is generally made within 7 days, and the BoT decision on review can take up to 21 days. Escalation should follow the internal process's finality or deadline. Credit-reference complaints follow separate timing: a provider should report data within 5 working days, mark a dispute within 2 working days and investigate or correct it within 15 working days. A credit report is available free once every 12 months. Credit data can remain for six years after final repayment, bankruptcy or write-off. Mainland Tanzania has a personal and corporate insolvency framework under the Bankruptcy Act, Cap. 25, and the Companies Law, Cap. 212. The debtor or a creditor can use a petition and Statement of Affairs, followed by a Receiving Order and administration of the estate by the Official Receiver or another authorised trustee under the jurisdiction of the High Court. The process can lead to liquidation of the estate; it does not create a general automatic cancellation of all debts. RITA is connected with insolvency and trusteeship functions. A general equivalent process for personal bankruptcy in Zanzibar was not identified, so Mainland procedures should not be presented as a Zanzibar remedy. The Judiciary also handles court claims, enforcement, small claims and mediation, subject to the applicable procedure. Public debt is a separate scale of the same broad subject. The Ministry of Finance Debt Management Division handles domestic, external and guaranteed public obligations, debt sustainability analysis, the Medium-Term Debt Management Strategy, the Annual Borrowing Plan, debt service and possible reprofiling. Treasury bills with maturities of 35, 91, 182 and 364 days and government bonds with maturities of 2, 5, 7, 10, 15 and 20 years are government borrowing instruments when discussed from the public-debt perspective. Their purchase or suitability for an individual belongs to the separate investment question. For a private borrower, the immediate checks are the provider's legal status, the written cost and repayment terms, the security or guarantor liability, the credit-record consequences and the available complaint or insolvency process.