Central bank touts responsible borrowing

DAR ES SALAAM: THE Bank of Tanzania (BoT) has urged the public to prioritise borrowing for income-generating activities instead of addressing short-term financial challenges, which often lead to defaults.

The BoT’s Senior Chief Officer in the Microfinance Services Regulatory Department, Mr Deogratias Mnyamani, emphasised that borrowing without a clear plan for generating returns makes it difficult for individuals to repay loans on time.

“Most people borrow money from various sources to address immediate challenges, but these loans don’t necessarily help generate income,” he said on Monday during a BoT campaign promoting responsible borrowing in Mabibo, Dar es Salaam.

The central bank launched a nationwide campaign to raise awareness about responsible borrowing and encourage loans that contribute to long-term economic well-being.

The campaign is in response to the rising issue of informal, high-interest loans within communities.

Mr Mnyamani explained that many borrowers make mistakes, such as failing to read or understand the terms and conditions before taking loans, which leads to financial difficulties.

“Many people are still suffering from predatory loans because they borrow without fully understanding the requirements. We recognised the need for financial education, and so far, the program has shown positive results,” he said.

Since its launch three weeks ago, the campaign has had a noticeable impact. Complaints to BoT about loan-related issues have significantly dropped—from an average of 35 to 50 complaints per day to just six.

The central bank continues to take steps to improve the financial sector, particularly in microfinance, to ensure borrowers have access to affordable loans.

According to BoT data, over 2,500 microfinance institutions are now licensed to operate in the country.

Mabibo resident Ms Fatuma Rashidi praised the BoT efforts, calling the campaign both timely and beneficia