MOROGORO: The Government of Tanzania is considering revising the current Single Borrower Limit (SBL) regulation as it aims to increase borrowing capacity for local investors.
The SBL refers to a regulatory limit set by banking authorities or central banks on the maximum amount of credit exposure a bank can have to a single borrower or group of related borrowers.
Speaking at the expansion project of the Serengeti Cigarette Leaf Tobacco Processing Factory in Morogoro on Tuesday, the Head of State said the country is considering this initiative to enable local investors to secure sufficient capital.
“I have noted the issue of the Single Borrower Limit and will discuss it with banking stakeholders, the Minister of Agriculture, the Bank of Tanzania (BoT), and the Minister of Finance.
It’s true we cannot impose a blanket policy that limits domestic investors…we will examine this issue with great care and precision,” she stated.
Earlier, Serengeti Cigarette Company (SCC) founder Mr Ahmed Huwel highlighted the challenges posed by the Single Borrower Limit regulation, stating that local investors are struggling to expand their investments due to this regulation.
“The biggest issue we face as Tanzanians is with the BoT law. The Single Borrower Limit law restricts us, especially for large companies like ours. We are unable to meet our goals as local investors and the targets set by the Minister of Industry,” he said.
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The Single Borrower Limit (SBL) law sets a cap on the amount of credit a financial institution can extend to a single borrower or a group of connected borrowers. Specifically, it limits the credit exposure to no more than 25 percent of the bank’s core capital.
According to the BoT, Article 29 of the Single Borrower Limit law states that “a development finance institution shall not grant to any person and his related parties, directly or indirectly, credit accommodation exceeding 25 percent of the bank’s core capital.”
The factory, for which President Samia laid the foundation stone, is expected to process 200,000 tons of tobacco annually and create 12,000 jobs.
Agriculture Minister Mr Hussein Bashe stated that the factory expansion is vital for meeting Tanzania’s processing target of 300,000 tons of tobacco per year.
