How to get a lending license in Tanzania

In Tanzania, the rise of digital lending has opened doors for many, allowing quick access to loans right from a mobile phone. Forget long queues or endless paperwork—people can now secure credit within minutes. This shift is making a real difference: financial inclusion in Tanzania has surged, with about 65% of adults now accessing financial services, compared to just 40% in 2015, according to the World Bank. It’s a testament to how technology can level the playing field, especially in finance.

But, as with any industry growing this fast, there are some growing pains. High fees, relentless debt collectors, and concerns over data privacy have left some borrowers questioning if the convenience is worth the risk. And honestly, these issues have put a bit of a dent in the industry’s reputation.

To address these issues, the Bank of Tanzania (BoT) stepped in with clear guidelines aimed at reshaping the digital lending industry. Now, digital lenders must play by the rules, focusing on fair practices, transparent fees, and protecting consumer data.

These regulations aim to foster trust, so borrowers can access loans without wondering if there’s a catch. In this guide, we’ll break down what you need to know to get a lending license in Tanzania and what it means for the future of fair digital lending.

Also read: How to get a lending license in Malawi

Overview of Tanzania’s financial ecosystem

Tanzania’s financial ecosystem has evolved significantly over recent years, driven by efforts to bridge the financial inclusion gap. As part of a global effort, Tanzania has made remarkable progress in extending financial access, with financial inclusion rates climbing from 65% in 2017 to 76% in 2023. This growth marks a milestone, but challenges remain, particularly for women, youth, and rural residents who continue to be underserved. Approximately 18.7% of adults in Tanzania are still financially excluded, with the majority of this group residing in rural areas and over half being young people between the ages of 16 and 25 (FinScope, 2023). 

The barriers affecting these groups reflect longstanding issues. Globally, about 1.7 billion adults remain unbanked, with women facing disproportionate exclusion. In Tanzania, these patterns hold, as women and young people  encounter unique hurdles that current financial products and services often overlook. These include high costs, limited digital literacy, and inadequate products tailored to their needs.

Technology, however, is beginning to reshape the landscape. Digital solutions present new opportunities to extend affordable and accessible financial products to marginalized groups, particularly through mobile banking and digital wallets. These tools support a range of transactions and have the potential to transform how underserved communities engage with financial services. 

Yet, there are still gaps in understanding how digital access translates into genuine financial well-being. For instance, women in low- and middle-income countries are still 7% less likely than men to own a mobile phone, partly due to affordability and literacy challenges. To ensure technology benefits everyone, financial providers, policymakers, and development partners in Tanzania are now reevaluating their approaches to better meet the needs of women, youth, and rural consumers.

Also read: Why Lendsqr is Africa’s most affordable loan management software

Regulators of Tanzania’s credit ecosystem

Before issuing your first loan in Tanzania, you’ll need approval from several key regulatory bodies. These authorities ensure that lenders operate responsibly and that consumer rights are safeguarded. Here’s who you’ll need to engage with:

Ministry of Finance and Planning (MoFP)

The MoFP is responsible for creating fiscal policies and managing Tanzania’s public finances. In the credit ecosystem, the MoFP oversees budgeting, taxation, and overall economic planning to ensure a stable and sustainable financial environment. It plays a vital role in setting policies that affect the broader financial landscape, including lending regulations and tax incentives for financial institutions.

Bank of Tanzania (BoT)

The BoT is Tanzania’s central bank and primary financial regulator. It oversees the banking sector, ensuring stability and compliance with national monetary policies. Within the credit ecosystem, BoT sets regulations for interest rates, consumer protection, and lending standards, safeguarding borrowers and maintaining public trust in financial services.

Small Industries Development Organization (SIDO) 

SIDO supports small-scale industries by offering financial services, training, and technical assistance. In the credit ecosystem, SIDO connects small businesses with funding opportunities, often serving as a bridge between financial institutions and SMEs.

Tanzania Revenue Authority (TRA)

The TRA manages tax collection and compliance, which directly impacts the credit ecosystem by enforcing tax policies that influence businesses and individual borrowers. By ensuring efficient tax collection, the TRA supports government revenue and enables funding for programs that expand financial services. Moreover, tax compliance is often a requirement for businesses seeking credit, making TRA’s role critical for financial transparency and accountability.

Also read: Key providers for lenders in Malawi: Credit scoring, KYC, and payment

Process for getting a lending license in Tanzania

To obtain a lending license in Tanzania, businesses must follow a structured application process and meet specific regulatory requirements set by the Bank of Tanzania (BOT). Here is a detailed guide to help you navigate the necessary steps

Step 1: Prepare minimum required capital

Ensure you have the minimum required capital of TZS 20 million for an individual lender. Deposit this amount into your bank account and retain a recent bank statement as proof of funds.

Step 2: Register your business name with BRELA

Register your business name as a sole proprietor with the Business Registration and Licensing Agency (BRELA) under the Business Names (Registration) Act. Your business name must include terms like “microfinance,” “finance,” “financial services,” “credit,” or “microcredit.”

Step 3: Secure premises

Arrange a physical location for your business and obtain a signed rental agreement for your premises, as this will be required for the application.

Step 4: Register with Tanzania Revenue Authority (TRA)

Register for a Tax Identification Number (TIN) with the Tanzania Revenue Authority and obtain both the TIN certificate and a Tax Clearance Certificate.

Step 5: Pay the application fee

Pay an application fee of TZS 300,000 to the Bank of Tanzania (BoT) via cheque, cash, or transfer. The payment details are:

• Account No: 9924DDBGHQT
• Account name: Intermediary Account Banking

Keep the payment slip, as you’ll need to submit it with your application.

Step 6: Prepare required documents

Gather the following documents to submit with your application:

• Application letter: Use the prescribed format provided by BoT.
• Proof of payment: Submit proof of the application fee payment.
• Business registration certificate: Certified copy.
• Proof of capital: Show evidence of the capital and its source.
• CEO’s academic and professional certificates: Certified copies.
• Audited financial statements: Include balance sheet, income statement, and cash flow statement (if already operating).
• TIN and tax clearance certificates: Certified copies.
• Lending policy: Outline the policies you’ll use in your lending activities.
• Declaration of legal funds: Certified declaration that your investment funds are legally obtained.
• CEO’s proof of citizenship: Provide a CV, two recent passport photos, and one of the following:
  • Passport page with personal information, National ID, or Birth Certificate.
• Completed questionnaire: Submit the questionnaire for the CEO (available under the Fourth Schedule of the regulations).
• Credit report: Obtain a credit report from a Credit Reference Bureau.
• Contact details: Include the name, postal address, phone number, and email address of a contact person.

Step 7: Apply for a business license

Once the documentation is ready, apply for a business license at your local authority.

Now, you can lend to Tanzanians

Obtaining a lending license in Tanzania may seem like a complex process, but it’s a necessary step to operate legally and responsibly in the growing industry. By following the outlined steps, ensuring compliance with regulations, and working with the relevant authorities like the Bank of Tanzania, you can set up a lending business that is both credible and sustainable. While there may be paperwork and requirements along the way, adhering to these guidelines helps protect both your business and your customers, ensuring smooth operations and long-term success in Tanzania’s financial sector. If you need to know more about getting started in Tanzania, send us a message at [email protected].