Over 1,000 Tier 2 microfinance institutions granted licenses in 2022

Tanzania’s microfinance sector continued to be formalized last year with the Central Bank granting licenses to 1,095 Tier 2 microfinance institutions, compared to 692 institutions licensed in the previous period according to the Financial Stability Report 2022 release recently.

Further, the Tanzania Cooperative Development Commission (TCDC) also licensed 759 SACCOS as of the  end of December 2022, compared to 580 licensed in December 2021.

According to the report, Local Government Authorities had registered 34,127 Community Microfinance Groups, compared to 24,123 licensed during the same period in 2021.

“Generally, licensing of microfinance service providers at Tier 2, Tier 3, and Tier 4 is progressing well. In addition, the Bank requires all microfinance service providers to share their credit information with credit reference bureaux, thus assisting in reducing non-performing loans in the financial sector,” the report shows.

In Zanzibar, five microfinance service providers under tier 2 were approved by the President’s Office of Finance and Planning, and 218 SACCOS were licenced by the President’s Office of Labour, Economy and Investment during the period ended December 2022.

“The microfinance business is expected to improve following the enactment of the Zanzibar Microfinance Business Act in2023. This development in the regulatory environment will enhance the monitoring and supervision of microfinance businesses and increase public awareness of the available opportunities in the sub-sector,” the report shows.