The Bank of Tanzania (BoT) is partnering with the President's Office, Regional Administration and Local Government (OR-TAMISEMI) to address various challenges facing the microfinance sector in the country, particularly loan services. This initiative aims to ensure the sector benefits both citizens and the national economy.
Speaking at a seminar for Members of Parliament held at Msekwa Hall in Dodoma, BoT Governor Emmanuel Tutuba highlighted the extensive efforts made by BoT in collaboration with OR-TAMISEMI. These efforts include capacity-building for community development officers and business officers to identify unlicensed lenders and take appropriate action against them.
"We have developed guidelines that will be released in July this year, outlining measures to be taken and penalties for those who violate the law. At every ward and district level, lenders will have meetings to share information about those who breach regulations," said Tutuba.
The Governor explained that many loans incur unclear additional costs such as form fees, processing fees, and loan fees. The new guidelines will regulate these costs, ensuring they are part of the loan fee only.
"Some lenders impose unclear interest rates and insurance fees, but the guidelines will control these extra charges, preventing them from being part of the loan. Lenders will also be required to submit their interest rates to BoT for approval, and these rates will be valid for the entire year," he added.
Regarding borrowers, the Governor noted that a major challenge is the failure to repay loans on time, while lenders often lack transparency when lending. "The government continues to provide public education, including incorporating financial literacy topics into the formal curriculum to ensure that when people graduate from school, they have an understanding of financial matters," he said.
Governor Tutuba emphasized that BoT continues to take strict measures against those who violate the law, including revoking licenses and prosecuting offenders.
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