Government Notice No. 80 on Regulation on Microfinance Companies and Microcredit Activities (consumer protection-related)

Tanzania

(enacted in 2005)

Government Notice No. 80 on Regulation on Microfinance Companies and Microcredit Activities of 2005 in Part IV address different issues related to consumer protection in Tanzania. The regulation also applies to banks and other financial institutions engaged in microcredit, savings and credit cooperative societies, and schemes licensed by the Bank of Tanzania. Section 26 on fair lending practices provides that:

(1) the contract between a financial institution and a borrower shall state the nominal interest rate;
(2) borrowers shall be permitted to make a partial or total prepayments;
(3) it shall be prohibited to impose or assert any contractual term or condition granting the microfinance company authority to introduce unilateral modifications to interest rates or loan conditions;
(4) the contract may establish an indexed interest rate; and
(5) the central bank shall monitor the collection practices of institutions engaged in micro-credit and shall instruct institutions to discontinue practices that are abusive.