2. Access to Credit
2.1 Banks
2.2 Other Sources
2.3 Credit Bureau

In-Country Assessment Information

2. Access to Credit


Goal – An efficient, transparent financial sector that provides a broad range of citizens with access to multiple forms of competitive credit so that they can start businesses, build wealth, and purchase property


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2.1 Banks


Core Question:         Are traditional banking services robust and extensive enough to serve the needs of the population to help them build wealth and purchase property?  No – Weak, the financial system is relatively small, but developing.



2.1.1   How easy is it to obtain a bank loan? Very Weak – Ranking 100th out of 144; Score 2.4 out of 7



2.1.2   How sound are the country’s banks? Very Weak – Ranking 114th out of 144; Score 4.4 out of 7

Source: The Global Competitiveness Report 2013, World Economic Forum

2.1.3  Microlending

Status – Very Strong, support by the Central Bank and the Tanzania Association of Microfinance Institutions          Microfinance allows citizens without traditional creditworthiness to build a credit history. How many microfinance institutions are operating in the country? 23

Akiba Commercial Bank N/A

Access Bank –TZA

BRAC – Tanzania


Equity Tanzania

FINCA – Tanzania




Mbinga CB N/A



Mwanga Community Bank


Opportunity Tanzania

Pride – Tanzania






Vision Fund TZA

YOSEFO What is the number of active borrowers per institution?

Akiba Commercial Bank 21,843

Access Bank –TZA  12,305
BRAC – Tanzania 104,225

ECLOF – TZA 5,051

Equity Tanzania  2,325

FINCA – Tanzania     N/A


K-Finance  572

MBF  2,478

Mbinga CB 6,053

Mtoni 1,351

MUCOBA 4,500

Mwanga Community Bank 4,004


Opportunity Tanzania 9,362

Pride – Tanzania  100,055

PTF  6,108

SEF-TZA   1,198


Tujijenge  8,265

VICTORIA Finance 155

Vision Fund TZA 33,394

YOSEFO  18,120

Source: Microfinance Information Exchange



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2.2 Other Sources


Core Question:         Are entrepreneurs free to raise capital outside the banking system including venture capital and/or by issuing stock in a well-regulated stock exchange? No –Weak, there is a lack of efficiency and depth in the financial sector.


Financial Freedom

2.2.1   How much control does the government exert over financial services? Weak for entrepreneurs – Score 50 out of 100 – Considerable government control

Source: Index of Economic Freedom, Heritage Foundation


Venture Capital

2.2.2   How easy is it for entrepreneurs to find venture capital?
 Weak – 80th out of 144; Score 2.4 out of 7


Equity Investors

2.2.3   How easy is it to raise money by issuing shares on the stock market? Weak – 74th out of 144; Score 3.4 out of 7

Source: The Global Competitiveness Report 2013, World Economic Forum



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2.3 Credit Bureau


Core Question:         Is comprehensive credit information available through public and private credit bureaus? No – Very Weak

Overall Ranking 129th out of 185



2.3.1   What is the depth of information available in credit bureaus? Very Weak – Score – 0 out of 6 with a higher number indicating more information is available



2.3.2   What is the extent of public credit registry coverage? Very Weak – Score – 0



2.3.3   What is the extent of private credit registry coverage? Very Weak –  Score – 0

Source: Doing Business 2013– Getting Credit, World Bank



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In-Country Assessment Information (as of 2010)


FQ 4.  How available are mortgage loans for purchasing property, who is the typical          user and what are the prevailing trends?

Following the collapse of the Tanzania Housing Bank, there has been a big gap in the market with no real access to mortgage finance. The only banks which provided mortgage loans throughout these years are CBA and Azania Bank although their portfolio remained relatively small. Since the passing of the Mortgage Finance (Special Provisions) Act No. 17 of 2008, other lenders have sought to expand their activities.

Currently mortgage loans are available from National Bank of Commerce, Commercial Bank of Africa, CRDB Bank, Stanbic, Barclays, National Microfinance Bank and Exim Bank. It is estimated that in total these loans currently amount to around USD 100 million, split among around 2,000 loans, making the average loan size around USD 50,000. This amount is growing relatively rapidly though as new entrants come into the market. Other lenders including the pension funds which have made some loans to individuals although this market lacks data and is difficult to quantify.

Loans are only typically made to formal sector salaried employees with salary deductions directly from the payroll required as an extra security on the loan repayment. Loans are available in both USD and TZS, with some banks reporting around a third of their business being done in USD. Foreign currency loans are only offered to Tanzanians from the Diaspora who are also earning in foreign currency or to Tanzanian residents who have foreign currency income.



FQ 5.              What are the interest rates, term and loan-to-value ratios for available mortgages?

The typical mortgage product offered by banks in Tanzania has a term o f between 10 and 15 years. The interest rate currently ranges between 1821%. Interest rates are usually variable although some banks do offer a limited fixed period for first five years. The rates are either benchmarked to a measure such as the bank’s prime lending rate which is based on its cost of funds or a wholly discretionary rate. This is similar to the UK system where competition ensures that the discretionary system is not abused by lenders.

The loan to value is a maximum of 80 percent although this is done in an unconventional way for some lenders. The lender effectively finances 100 percent of the property value and requires the borrower to hold a deposit equivalent to 20 percent of the property value in a blocked account with the bank. The impact of this arrangement is to make the borrower take out more than they would otherwise and effectively charging them the extra interest on that amount which would otherwise have just been their equity in the house. The purpose of the loan can be either for outright purchase, home improvement or home construction.

Source: World Bank Housing Finance Project Assessment, February 2010


FQ 6.  Are there any informal barriers to borrowing such as for women or      minorities?

Interviews and discussions with women entrepreneurs reveal that access to finance may be an even more serious constraint for them. Their limited control over land affects their ability to secure finance because they are unable to provide collateral for loans. It is estimated the despite constituting 43% of MSMEs, only 5% of Tanzanian women are banked.

Source: Gender and Economic Growth in Tanzania, Ellis, the World Bank, p. 64


Customary Mortgage

The Land Act of 1999 provides for the continuation of customary or informal mortgages where documents such as the Certificate of Right of Occupancy are held by the lender known as “a lien by deposit of documents.” The Act further refers to “small mortgages” of no more than 3 years and no more than 500,000 shillings.



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