Tanzania acts tough on loan defaulters as three banks face collapse

DAR ES SALAAM: TAMBAZA Auction Mart and General Brokers Limited, on behalf of the Deposit Insurance Board, has issued a 14-day ultimatum to loan defaulters and their guarantors to settle their outstanding debts or face legal action.

Speaking to reporters in Dar es Salaam today, June 16, 2025, the firm’s Managing Director, Abdallah Abed, emphasized that the government allowed financial institutions to issue loans to empower citizens economically.

However, failure to repay the loans has led to the collapse of several banks.

“I urge everyone who took loans from FBME Bank, Covenant for Women, and Efatha Bank to repay those funds immediately. These loans are meant to help many others in need, and non-repayment denies others the same opportunity,” Abed said.

He revealed that Efatha Bank alone is owed more than 5bn/- by defaulters, which is significantly affecting its operations.

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“These are large sums of money. We are calling on all borrowers and their guarantors to clear their debts. If the collateral put up does not cover the full amount, we will seize additional assets. And in cases where the borrower is deceased, the responsibility will fall on the guarantor,” Abed warned.

Sabrina Abeid, the Head of Operations at Tambaza Auction Mart, added that over 500 individuals have contributed to the collapse of some financial institutions due to non-repayment of loans.

“With the current systems in place, everyone can and will be tracked. We urge them to come forward before further action is taken,” she said.

Meanwhile, the company’s Head of Security, Omary Thamsy, warned that the matter is being handled seriously and called on all involved to visit the Bank of Tanzania (BoT) building to verify their loan information.

“Notices have been published repeatedly in newspapers and other media, but many people ignore them. Let me be clear this time, there will be no leniency,” he stated.

He also urged the government to continue providing financial literacy to the public to help prevent similar challenges in the future.

“Many people treat loan money as a gift, which is a dangerous misconception. The money is given to be used wisely and repaid so others can benefit as well,” he said.