The Bank of Tanzania (BoT) is introducing a new approach to supervising Tier II Microfinance Service Providers, shifting towards a guided self-regulatory model. This initiative, announced on August 7, 2025, is a collaborative effort with the Tanzania Association of Microfinance Institutions (TAMFI) and the Tanzania Microfinance Institutions Union (TAMIU). The goal is to enhance market practices, improve governance, and strengthen consumer protection within the sector.
The new approach leverages the unique capabilities of microfinance associations. By formally appointing TAMFI and TAMIU as Guided Self-Regulatory Institutions (GSRIs), the Bank of Tanzania aims to use their outreach and peer-regulation expertise to complement its existing supervisory framework. These associations will be responsible for promoting and enforcing sound market conduct, resolving disputes, and ensuring their members adhere to best practices.
While the associations will take on more responsibility, the Bank of Tanzania will continue to play a crucial role. The BoT will still issue licenses to Tier II providers and will oversee the overall implementation of this new framework. It will also support TAMFI and TAMIU in ensuring that all institutions comply with the new self-regulation agreements and maintain legal and regulatory standards.
To ensure the success of this initiative, all Tier II Microfinance Institutions are now required to join either TAMFI or TAMIU within six months from the date of the public notice. They must also comply with the self-regulation agreements outlined in this new arrangement.
This move is part of a broader commitment to create a more trustworthy, transparent, and user-friendly microfinance environment for clients. The BoT is encouraging all stakeholders and the general public to support this initiative, which is expected to promote financial inclusion and build a more robust microfinance service delivery system in Tanzania.
As the financial regulatory landscape in Tanzania evolves, it is essential for microfinance service providers to understand and comply with these new requirements. Our law firm specializes in financial regulation and can provide expert guidance to help your institution navigate these changes.
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