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Scrutiny over lending practices in Tanzania continues to increase, particularly around the terms on which loans are priced, documented and recovered. While Tanzania does not have a blanket statutory cap on interest rates for loan products offered to consumers and micro and small businesses, this does not mean that lenders have unfettered discretion to impose, calculate or recover interest and other lending costs.
11 September 26
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Loan pricing remains subject to regulatory requirements and, as recent judicial developments demonstrate, may also be scrutinised by the courts where the terms are excessive, oppressive or otherwise contrary to applicable law and public policy.
This is particularly relevant in light of the Bank of Tanzania (BoT) regulatory framework, including the Bank of Tanzania (Financial Consumer Protection) Regulations, 2019 (as amended) (the Consumer Protection Regulations), which impose requirements on financial service providers concerning the disclosure and calculation of interest, fees and other charges.
Nonetheless, section 49 of the Banking and Financial Institutions Act, R.E. 2023 (BAFIA) also places specific limits on contractual provisions concerning interest rates and other loan conditions. In particular, section 49(3) provides that any term purporting to grant a bank or financial institution authority to introduce unilateral modifications to interest rates or other loan conditions is null and void. The High Court’s decision in Kapaya Microfinance Limited v. Lailath Mahmoud Mtunzi, PC Civil Appeal No. 2288 of 2026, further illustrates the risks lenders may face where agreed interest is challenged, and the underlying contractual terms cannot withstand judicial scrutiny.
In this legal alert, we examine the regulatory requirements governing loan pricing, interest, fees and charges in Tanzania, as well as the impact of recent judicial scrutiny of lending terms.
Click here to download and read the full alert.
Should you have any questions regarding the information in this legal alert, please do not hesitate to contact Geofrey Dimoso or Joel Kimale.