The Bank of Tanzania (BoT) has announced a ban on unlicensed digital lenders operating in the country, urging consumers to verify the licenses of loan providers before using their services. This move targets over 100 unregistered apps that offer instant loans, often to individuals without access to traditional financial institutions.
The crackdown addresses growing concerns over unethical lending practices, such as debt-shaming of defaulters and exorbitant interest rates. According to BoT, providing loans without a valid license is a violation of the Microfinance Act of 2018, which prohibits unregistered entities from engaging in lending activities, including through digital platforms.
As part of the reforms, licensed lenders must provide borrowers with signed loan agreements that clearly outline loan terms, fees, interest rates, and any penalties for late repayment. This requirement aims to increase transparency, as many current apps allow users to secure loans instantly without detailed agreements.
The BoT has advised the public to carefully review loan agreements and ensure lenders are licensed before accepting any offers. This reform mirrors actions taken in neighboring Kenya, which recently banned over 100 unregistered digital lenders, reducing the number of authorized apps to just 50.
The Bank of Tanzania’s initiative seeks to protect borrowers from exploitative practices while promoting accountability and transparency in the country’s digital lending ecosystem.
