By Business Insider Reporter, Tanga
The Government of Tanzania has directed the Bank of Tanzania (BoT) to step up its oversight of the financial sector in order to protect citizens from the growing risks associated with borrowing from informal and unregulated lenders – an increasingly common practice that has left many households stripped of assets through exploitative loan terms.
The directive was issued by the Minister for Finance, Ambassador Khamis Mussa Omar, in a speech delivered on his behalf by the Deputy Minister for Finance, Laurent Luswetula, during the official opening of the National Financial Services Week on 21 January 2026 at the Usagara Grounds in Tanga Region.
In his address, the Minister warned that a significant number of Tanzanians continue to suffer financial distress after taking loans from informal institutions that operate outside the regulatory framework.
Such lenders often impose excessive interest rates, hidden charges and harsh recovery methods, resulting in borrowers losing land, homes and other valuable assets.
He stressed the importance of financial awareness, urging citizens to verify the legality of financial institutions before borrowing and to read and fully understand loan agreements prior to signing. “Many losses occur because people enter contracts without a clear understanding of the terms and conditions,” the Minister noted, calling for greater public vigilance and informed decision-making.
Central Bank’s Role in Consumer Protection
Speaking on behalf of BoT Governor Emmanuel Tutuba, the Director of Financial Inclusion and Consumer Protection, Kennedy Komba, outlined the measures the central bank has put in place to strengthen transparency, consumer protection and access to reliable financial services.
He said BoT has established and enhanced several systems aimed at safeguarding users of financial services, particularly those who face challenges related to unclear loan pricing, interest rate calculations and unfair charges.
These systems include consumer complaint submission and management platforms (SEMA and BoT systems), price comparison tools, loan cost calculators, and a participatory supervisory framework for Tier II microfinance service providers.
According to BoT, these initiatives have significantly improved transparency, efficiency and service quality across the financial sector, while ensuring that providers comply with existing laws and regulations. The reforms are part of Tanzania’s broader financial inclusion agenda, which seeks to bring more citizens – especially low-income earners, women and small entrepreneurs – into the formal financial system.
A growing policy concern
The government’s renewed focus on informal lending comes amid rapid growth in mobile-based lending apps and unregistered micro-lenders across East Africa.
While these platforms offer quick access to cash, they often operate in legal grey areas, exposing borrowers to abusive practices. In Tanzania, regulators have increasingly acknowledged that limited financial literacy remains a key driver pushing citizens towards such risky alternatives.
The National Financial Services Week, running from 19 to 26 January 2026, is designed to address this gap. Through exhibitions, public forums and direct engagement with banks, microfinance institutions and regulators, the event aims to improve public understanding of financial matters and promote the use of regulated, formal financial services as a foundation for personal and national economic development. As Tanzania continues to deepen financial inclusion and modernise its financial architecture, authorities say stronger regulation, coupled with sustained public education, will be critical to protecting citizens and ensuring that access to credit translates into empowerment rather than impoverishment.
