A deep overview of consumer credit in Tanzania

Executive summary

Tanzania’s consumer credit landscape has grown steadily since 2019, driven by expanding mobile-money access and modest improvements in formal lending. A recent FinScope report notes that formal financial inclusion climbed from about 65% in 2017 to 76% in 2023, largely thanks to mobile banking. In practice, most Tanzanians now have some financial account (bank or mobile), but relatively few take formal loans. Only a minority of adults report having a bank or microfinance loan. In contrast, digital “microlending” has exploded: mobile-app loans and other digital credit products have roughly doubled or tripled in volume in recent years. Despite these advances, the bulk of consumer borrowing still comes from friends, family or informal savings groups. In summary, loan volumes have grown and financial inclusion is higher, but Tanzania’s credit remains a mix of an expansive digital sector and long-standing informal support networks.

Key points: formal loan accounts rose to 3.84 M in banks by 2023; bank credit grew 24% in 2023. Non-performing loans have steadily fallen (from 8.1% in 2021 to 5.7% in 2022 and 4.3% in 2023). Mobile money activity boomed (active mobile money users jumped to 51.7 M in 2023, +35%). Informal lenders (savings groups, ROSCAs, loan sharks) play a huge role. 34% of adults had borrowed in the prior year, mostly from personal networks, despite challenges in management and high default risk. Culturally, Tanzanians prioritize cash and self-finance; for example 82% still use cash for day‑to‑day transactions and many prefer saving or asking relatives over bank loans.

This report reviews (year-by-year) the data (2019–2024) on formal credit flows, borrower profiles and defaults, and consumer lending trends; dissects informal credit mechanisms (VICOBA groups, family loans, unlicensed “shylocks,” faith-based mutual funds) with available statistics; and explores cultural and behavioral factors (generational, rural/urban and gender) affecting borrowing. We also cover regulatory frameworks (Bank of Tanzania laws, Microfinance Act, payments and consumer‐protection rules), key players (banks, microfinance, mobile network operators and payment providers, credit bureaus), and conclude with future outlook. 

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Regulatory framework

Since 2019 Tanzania has strengthened oversight of lending and payments. The Microfinance Act (2018) requires licensed financial institutions (including non-bank lenders and SACCOs) to share borrower credit information with licensed credit bureaus. Consumer Protection Regulations and Mobile Money Regulations mandate fair lending practices and allow non-banks to issue e‑money. Under the Banking and Financial Institutions Act (2006) and National Payment Systems Act (2015) the Bank of Tanzania (BoT) licenses and monitors banks, SACCOs, MFIs and payment service providers. For example, BoT’s 2023 Payment Systems Report notes that oversight relied on NPS Act 2015, E-Money Regulations 2015, and Consumer Protection Regulations. Importantly, the Microfinance Act mandates reporting of most loans to credit bureaus (name, ID, loan performance), although very small “digital loans” often fall below reporting thresholds. BoT has been pushing banks and even fintechs to use the credit reference system; enquiries to bureaus jumped from 5.7 million in 2022 to 7.3 million in 2023.

Tanzania’s New Tax Regime for Mobile Money: A 2021 mobile-money levy (10–20% tax on transfers/withdrawals) initially slowed digital transactions, but was later trimmed (effective from Sept 2021) due to public outcry. Meanwhile the country has pursued technical upgrades: e.g. Tanzania’s real-time retail payment system (TIPS) launched in 2022, and iso20022/CBPR+ standards for cross-border transfers were adopted. National ID rollout has improved customer verification, and BoT’s Financial Consumer Protection Regulation (2019) aims to curb predatory lending and mandates disclosure of terms. In summary, regulatory conditions have become more rigorous (credit reporting, licensing, consumer rules), but challenges remain in enforcing them on informal and app-based lenders.

Formal credit (Banks, Microfinance, SACCOs)

Formal banks and microfinance institutions have markedly expanded loan portfolios since 2019. By end-2023 Tanzania’s commercial banks reported about 3.84 million loan accounts (up 7.6% from 3.57 M in 2022), with total outstanding bank credit at TZS 33.10 trillion (USD $14B). Similarly, SACCOs (community savings cooperatives) held TZS 1.12 trillion in loans by end-2023 (a 3.7% rise), with 1.90 M SACCO loan accounts in mainland Tanzania. These numbers imply that formal lending is growing by double digits annually after a COVID-related slump. For perspective, total claims on the private sector in November 2024 were TZS 36.7 trillion, reflecting continued strength in 2024.

Borrower profiles: Banks’ records show that, even in 2023, men dominated credit: only 29.4% of bank loan accounts were women, and 36.2% of accounts were held by youth (ages 16–35. Digital microloan data echo this gender tilt: about two-thirds (66.5%) of digital loan accounts were men. (These figures contrast with FinScope survey findings that the overall adult population is 50/50; they indicate that men are more likely to seek formal loans.) Geographically, urban residents hold the lion’s share of formal credit, while rural adults, especially subsistence farmers, remain largely unbanked. In short, formal credit tends to favor men, younger people, and urban dwellers, reflecting collateral requirements and outreach limitations.

Loan types: In Tanzania “personal” loans (which include small business credit and SME loans) consistently make up the largest portion of lending. For example, Bank of Tanzania data show personal/SME loans as the dominant share of bank credit, followed by trade, agriculture and manufacturing sectors (e.g. Q1 2025: “personal loans (mainly for SMEs) accounted for the largest share”). Household consumer loans (for education, home purchase, vehicles, etc.) are smaller but growing. Most bank loans are collateralized (property, equipment, inventory) and intermediated via formal branch networks. Interest rates on Tanzania’s loans have been fairly stable (bank lending rates around 12–15% per annum recently), and NPLs have improved: the non-performing loan ratio fell from 8.1% in 2021 to 5.7% in 2022, and further to 4.3% by end-2023, as lenders tightened underwriting and borrowers recovered from the pandemic.

Disbursements and growth by year: Detailed annual figures are sparse, but available reports indicate strong expansion: after low growth in 2020–21, credit growth accelerated to 18–24% in 2022–23. For instance, BoT noted private sector credit was growing robustly (Nov 2023: claims at TZS 31.88T, up 18.3% YoY. A year-by-year summary (approximate): credit outstanding was about TZS 20–25T by end-2019, grew modestly through 2020 (COVID period), and then surged to TZS 26.6T by end-2022, reaching 33.1T by end-2023. Loan account numbers climbed similarly. By end-2023, bank loan accounts were 3.84M (from 3.57M a year prior). These trends show formal lending nearly doubling over five years, driven by economic growth, credit demand for small enterprises, and regulatory facilitation.

Also read: A deep overview of consumer credit in Rwanda

Digital (mobile) lending and fintech

Digital credit AKA loans accessed via mobile phones or apps has been the fastest-growing component of consumer credit in Tanzania. Several fintech products (e.g. Vodacom’s Tanga Money, NMB’s M-Pawa via M-Pesa, Tala, Mungu Credit, Timiza by Tigo/Telkom, as well as dozens of smaller lenders) exploded in popularity after 2018. According to the Bank of Tanzania, digital loan accounts rocketed from 32.09 million in 2022 to 95.89 million by end-2023. (Note: “accounts” counts each loan transaction; many users borrow repeatedly.) Over the same period the value of digital disbursements jumped from TZS 26.79 billion to TZS 126.03 billion; an astounding 370% increase. These loans are typically very small (often only TZS 5,000–50,000) and short-term (repayable in days/weeks), with high interest but auto-repayment via mobile money. Fintechs use smartphone data and AI models for credit-scoring, so minimal documentation is required. As the BoT report notes, “institutions used Artificial Intelligence to assess creditworthiness” in setting loan limits.

The digital credit market is heavily male-dominated: 60.7 M of the 95.9M accounts in 2023 were male borrowers. In value terms, men accounted for TZS 81.2B of the TZS 126.0B lent. This reflects differential smartphone access and risk tolerance between genders. Younger users are also over-represented. Digital loans now constitute the majority of all reported loan accounts: by end-2023 they were 95.9M out of roughly 100M+ loan accounts in the economy (banks plus fintechs), indicating that “mobile credit is now ubiquitous”.

However, this rapid growth has raised consumer protection concerns. Digital lenders are often only lightly regulated: BoT reported that micro-loans under a threshold are not mandatorily reported to credit bureaus, so borrowers’ credit histories remain opaque. Many digital providers initially charged very high fees/interest, leading to criticism of “loan-shark” behavior. In 2021 BoT issued warning circulars on predatory digital loans. On the positive side, most borrowers report being able to manage these small debts: FinScope 2023 found 62% borrowed more than once a year, yet 90% said their debts were “manageable”. Policymakers are now drafting guidelines specifically for fintech lenders to ensure transparency and fairness.

Payment & technology providers

Tanzania’s consumer lending is closely linked to mobile money and fintech ecosystems. By June 2021 there were over 33 million registered mobile-money accounts in Tanzania (about 80% of the adult population), and that number has grown since. Bank of Tanzania data show active mobile-money users rose from 38.3 million in 2022 to 51.7 million in 2023 (a 34.9% increase). There are now well over 1.2 million mobile money agents nationwide, ensuring cash-in/out access even in rural areas. Major providers are Vodacom (M-PESA, half the market), Airtel (Airtel Money/Tigo Pesa), and smaller players Halotel Pesa and Zantel Pesa (Zanzibar). In 2023 MTN launched services in Tanzania, and competition is accelerating.

Popular payment products include Lipa kwa M-Pesa (bills payment via M-Pesa), Tigo-Pesa Pay, and inter-bank transfers via mobile. Banks like NMB and CRDB have their own mobile wallets that interoperate with these networks. The BoT’s 2023 Payment Report notes a 66.8% jump in registered merchant accounts accepting mobile payments (from 394k to 657k), reflecting growing merchant usage. Despite this, many transactions are still in cash: FinScope 2023 finds 82% of Tanzanians rely on cash for major purchases and income reception. However, digital payment infrastructure is improving; for example BoT introduced interoperable QR-code payments (TANQR guidelines) and national switches (TIPS, TACH) to ease digital transactions.

Credit bureaus: Three licensed credit-reference bureaus operate in Tanzania, serving banks and some MFIs. Their use is rising: BoT reports 7.3 million credit enquiries and 4.64 million credit reports sold in 2023 (up from 5.7M enquiries/2.73M reports in 2022). This growth stems from banks requiring credit checks on new loans and some digital lenders beginning to consult bureaus. Nonetheless, credit bureau penetration is low: only 7% of adults have ever heard of credit bureaus, and tiny digital loans often aren’t captured. BoT encourages all formal lenders to report loan data, but informal and fintech sectors remain underreported.

Also read: A deep overview of consumer credit in Kenya

Informal lending practices

Even with formal credit growing, informal finance dominates borrowing for most Tanzanians. By FinScope 2023, only about one-third (34%) of adults had taken any loan in the past year down from 57% in 2017. Crucially, two-thirds (67%) of borrowers relied on family or friends. These informal social loans (essentially interest-free IOUs or gifts) provide emergency cash but can strain relationships. About 17–18% borrowed through community savings groups (often called VICOBA or ROSCAs). Such groups typically pool savings from 15–30 members; each month a “pot” is loaned to one member or divided equally. In Tanzania these may be known as Upata, Michezo, or VICOBA (Village Community Banks). They are very common. For example, a recent WWF study notes WWF helped set up 50 new VICOBAs in rural Tanzania, benefiting 1,400 members. These groups empower especially women and villagers to save and borrow small sums. However, they face challenges like limited funds (the pot depends on members’ contributions), risk of default if a member cannot repay, and lack of formal legal protection. As one report notes, savings groups offer lending but are “unfunded” (they have no reserves) and rely entirely on member trust. To improve transparency, some NGOs (like WWF) have introduced digital ledgers (e.g. the CHOMOKA app) for VICOBAs, reducing fraud and double-spending.

Other informal sources include unregulated moneylenders (“loan sharks”) and religious-circle funds. But these carry very high interest and little consumer protection. In rural areas and some religious communities, people also contribute to cooperative finance schemes (for instance, Muslim mudharabah circles or church-based burial societies). While hard to quantify, such groups can act like rotating credit associations with a social twist,  members contribute to help each other with loans or funeral costs. These remain niche compared to family and VICOBA networks.

Overall, informal finance remains far larger than formal credit: financial-sector data show 3.84 M formal loan accounts in 2023, but FinScope implies tens of millions of TZS circulating via informal channels annually. Informal lenders often accept no collateral and flexible repayment (daily or weekly), but loans are small. The prevalence of informal lending reflects low trust in banks (only 3% of borrowers used banks vs 67% family/friends) and the hassle of bank requirements. Yet it also means borrowers have no legal recourse if things go wrong.

Cultural and behavioral insights

Tanzanians’ attitudes toward debt and lenders are shaped by culture, trust and livelihood patterns. Many view borrowing with caution or even stigma. A FinScope-informed commentator observes “borrowing is considered bad” and even illegal by some, so most people avoid formal loans. This cultural reluctance stems partly from past experiences with predatory lenders and a tradition of self-reliance. Consequently, Tanzanians often prefer self-help (cutting expenses or selling assets) or turning to relatives in hard times.

Repayment habits: By survey 2023, 62% of borrowers had taken loans repeatedly in the past year and 90% felt they could handle their debt load. This suggests many manage informal debts (often very small) without distress. Formal lenders likewise note improving repayment discipline (reflected in falling NPLs). Yet some groups have erratic income: FinScope finds only 13% of Tanzanian income sources are “frequently paid” (monthly or better), which means many rely on seasonal or irregular cash flow. This compels a focus on short-term loans and rapid repayment in both formal and informal markets.

Trust in lenders: Trust is higher in personal networks than in institutions. Family/friends often allow delayed or partial repayment, whereas banks and even mobile lenders enforce schedules. Only 7% of adults are aware of credit bureaus, so few factor formal credit scores into their plans. In general, urban Tanzanians (with better education and more exposure) are somewhat more open to bank loans than rural folk. FinScope data show financial exclusion rates are higher for women (19.4% excluded) than men (14.2%), and higher in rural (21.3%) than urban areas (13.6%). This reflects not only cultural norms (men traditionally control money matters) but also barriers: urban residents live nearer branches/agents and often have IDs and bankable jobs, whereas many rural households are subsistence farmers paid in kind or cash seasonally.

Generational differences: Younger Tanzanians (especially university graduates) are increasingly credit-savvy. About 36% of bank loan accounts are held by youth (16–35). They also dominate mobile credit usage. By contrast, older adults are more risk-averse: A report shows that older borrowers are more likely to rely on community groups or family. Rural youth blend both worlds, often using group loans (VICOBA) to fund small businesses. Overall, surveys suggest that between 2017 and 2023 rural people gained slightly in financial inclusion, but the gap remains. The one-pager highlights that formal financial inclusion rose from 65% to 76% between 2017 and 2023, a sign of progress, yet 18.7% of adults (6.4 million people) remained fully excluded in 2023. Many excluded cite lack of proximity (no branches nearby), irregular income, or the belief “I need more money to open an account”.

In terms of payment behavior, Tanzanians remain largely cash-oriented. For basic needs nearly everyone uses cash: 87% use cash to pay rent, 98% use cash for groceries, and 72–89% use prepaid airtime to pay for other goods. Only a minority routinely uses cards or even mobile payments for daily expenses. However, mobile phone ownership is high (around 89% of adults have a phone, so there is room to shift habits. Younger, urban Tanzanians are already paying with Lipa-poa and scanning QR codes (recently introduced) at some merchants.

Also read: A deep overview of consumer credit in Ghana

Future outlook

All signs point to continued credit growth, especially in digital channels. The strong GDP growth and low inflation have created demand for consumer loans. The BoT and government are likely to fine-tune regulations, for example raising reporting thresholds so digital lenders also share data with bureaus, and enforcing caps on interest. Digital credit may see prudent tightening (Kenya’s model, e.g. capping fees, is being studied). However, Tanzania’s youth and tech adoption bode well: smartphone penetration and digital ID are rising, making digital lending safer and more scalable. By 2025–26 we expect the number of digital loan accounts to top 150 M and the outstanding value to continue doubling year-on-year, unless regulators intervene.

Traditional banks and MFIs will also grow: BoT’s new policies aim to boost SME financing and rural outreach (including via agent banking). The rural and female gaps are recognized, for example, microfinance institutions have expanded mobile banking vans and rural branches. Fintechs too are diversifying: some are offering “savings pods” or credit-building products, and a few consumer-loan apps have begun small housing/education loan pilots.

Informal finance will remain critical. Given the success of initiatives like WWF’s CHOMOKA app, expect more digitization of VICOBA groups and ROSCAs. Mobile platforms for group savings (sometimes linked to mobile money) will spread, improving transparency and allowing peer groups to tap formal credit themselves. Some NGOs and savings groups may also seek regulation as credit cooperatives, especially those growing into thousands of members.

Key challenges and opportunities: Building trust is important. Credit bureaus will be essential to create track records but awareness remains low. BoT aims to educate consumers: for example, workshops are held to explain credit scores. Increased financial literacy (funded by FSDT and others) should help borrowers understand interest and avoid over-borrowing. On the supply side, fintech innovations like AI credit scoring will improve access for those without collateral. Meanwhile, the government’s agenda to integrate payments (e.g. interoperable QR codes, GovPay enhancements) will lower transaction costs and encourage formal usage.

The future of Tanzania’s consumer lending market

In sum, Tanzania’s consumer lending market is expanding rapidly but unevenly. Formal bank credit has grown on the back of economic recovery, while digital microloans have soared via mobile networks. Informal lending like VICOBA, family loans, rotating funds, still dominates for most people, but is gradually benefiting from digitization. Cultural attitudes remain conservative about debt, especially outside cities, though younger generations are more receptive. With robust regulatory support (credit reporting, consumer protection) and evolving technology, the sector looks poised for deeper financial inclusion. As BoT and industry players note, credit must be extended responsibly, but the data show that more Tanzanians are now finding ways (formal or informal) to borrow and invest in their futures.