Prohibition of lending without a licence

In an effort to prohibit the lending of money without a licence, the Bank of Tanzania (the BoT), on 24 November 2022 published a notice (the Notice) prohibiting institutions, companies and individuals who are in the business of providing loans without a licence contrary to section 16 (1) of the Microfinance Act No. 10 of 2018 (the Microfinance Act).On 22 and 23 December 2022, President Ramaphosa signed two key pieces of legislation into law – the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act, 2022 and the Protection of Constitutional Democracy Against Terrorism and Related Activities Amendment Act.


Section 16(1) of the Microfinance Act states as follows:


“Without prejudice to the provisions of section 28 of this Act, a person shall not carry out any microfinance business, unless such person is licensed in accordance with the provisions of this Act.”


Institutions, companies and individuals who are in the business of providing loans without a licence will be penalised as per section 16(2)(a) of the Microfinance Act. The provision states as follows:


“Any person who contravenes the provisions of this section commits an offence and shall upon conviction –

(a) in the case of tier 2, be liable to a fine of not less than twenty million shillings but not exceeding one hundred million shillings or to imprisonment for a term of not less than two years but not exceeding five years or to both.”


Tier 2 microfinance service providers have been defined under the Microfinance Act as non-deposit taking microfinance service providers. 


Further, pursuant to the Notice, the BoT advised citizens to avoid borrowing or doing business with institutions, companies or individuals who are not licensed. The BoT has provided a list of licensed institutions, companies and individuals on their website




Read the original publication at Clyde & Co.

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