Tanzanians cautioned against ‘kausha damu’ high-risk loans

DAR ES SALAAM: THE Tanzanian government has urged its citizens, particularly youth, women, and entrepreneurs,to exercise caution when taking high-risk loans commonly referred to as “kausha damu,” warning that such lending practices can undermine economic well-being and lead to unsustainable debt burdens.

Speaking on April 9, 2026, during the Financial Sector Stakeholders Forum 2026, the Minister of Finance, Khamis Omar, stated that despite the expansion of financial services in the country, predatory lending practices characterized by restrictive terms and high interest rates remain prevalent, disproportionately affecting low-income populations.

He emphasized the importance of conducting thorough financial assessments before taking on loans and called for increased financial literacy to support informed and economically sound decision-making.

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Ambassador Omar added that the government will continue strengthening regulatory oversight of the financial sector to ensure institutions comply with established laws and regulations. He also noted ongoing efforts to improve grievance redress mechanisms in order to enhance transparency and accountability.

Furthermore, he called on financial institutions to drive innovation, particularly by leveraging investment-based financing models to provide safer capital with more favorable terms for startups and small businesses.

He concluded that protecting citizens from predatory lending requires coordinated action between the government, financial institutions, and other stakeholders to ensure that financial services contribute to economic growth without compromising social and economic welfare.