The value of digital credit has increased by 91.49 percent to 4,216.26bn/- , in 2024 from 2,201.81bn/-, registered in 2023.

According to the National Payment System 2024, the number of digital credit transactions  also increased to 269.30 million, which reflected an increase of 64.77 percent, from 163.42 million transactions, recorded in 2023. 

Digital credit, facilitated by mobile technology has enabled individuals who lacked access to traditional banking to secure loans for personal and business use. 

Digital credit supports economic empowerment, especially for micro, small businesses and smallholder farmers. 

Micro, small, and medium enterprises (MSMEs) through providing an access to capital for business expansion, fostering job creation and economic growth. 

In agriculture, the digital credit has enabled smallholder farmers to secure subsidies, make loan repayments, and receive proceeds of sale of their products. 

The lending model employs an alternative credit scoring for borrowers using historical mobile money transactions, enabling individuals and small businesses to access credit without traditional banking requirements. 

Despite these benefits, digital credit poses risks such as over-indebtedness, predatory lending practices, high interest rates, poor customer creditworthiness, data privacy concerns, and emerging Ponzi and pyramid schemes disguising and promising access to finance. 

The Bank issued the Microfinance Act 2018 and its regulations guiding the issuance of micro-loans including digital credit. These regulations aim at promoting easy access to credit, and responsible lending practices. 

Bank of Tanzania (BoT) has aligned its regulatory frameworks to promote consumer protection, financial literacy, and fair lending policies. 

Through these regulations, digital credit remains an important tool for financial empowerment rather than a source of financial distress. 

During the year 2024, lending products reported were Kamilisha, Timiza, Agent Overdraft, Bustisha, Nivushe, Digital Salary Advance, Boom Advance, Pension Advance, M-Pawa, Songesha and Kibubu.

Also BoT announced strict measures to prohibit unlicensed digital lenders from operating in the country. 

This decision aims to address concerns related to questionable lending practices, such as debt-shaming and high-interest rates, that have been prevalent in the digital lending industry. The directive is expected to impact a substantial portion of the population that relies on instant loans through mobile apps, emphasizing the importance of consumer protection and financial transparency.

The BoTs new restrictions will have far-reaching implications on the digital lending landscape in the country. 

With over 100 unregistered digital apps currently offering instant loans to approximately 30 percent of adult mobile phone users without access to traditional financial institutions, the crackdown is set to disrupt the operations of these unlicensed lenders. 

This move underscored the Central Bank’s commitment to upholding regulatory standards and safeguarding the interests of borrowers.

The prohibition on lending without a license extends to digital platforms, signaling a shift towards greater accountability and transparency in the lending sector. 

This initiative not only aims to protect consumers from predatory practices but also seeks to promote responsible lending and financial inclusivity in Tanzania.

As part of the regulatory reforms, licensed digital lending platforms will now be required to provide borrowers with signed loan agreements that outline the terms and conditions of the loans. 

These agreements must include comprehensive details such as total fees, interest rates, and penalties for late payments, ensuring that borrowers are fully informed about the financial obligations they are undertaking.