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Study: Address constraints facing Microfinance institutions licensing and re-licensing


Dar es Salaam:

Holistically addressing the key constraints affecting the microfinance sector will lead to greater financial inclusion across the country, a workshop organised by Tanzania Association of Microfinance Institutions (TAMFI) in Dar es Salaam has been told.

The stakeholders hailed the gains in the sector especially the development of National Microfinance Policy (2017).


The Workshop in Pictures

“It’s a huge step in the right direction and as stakeholders we hope its implementation will to lead to increased access to formal financial services, which are still low,” noted TAMFI CEO, Ms Winnie Terry.

She added that challenges in the sector are an opportunity for stakeholders to work with the government to improve business environment, and ultimately help more Tanzanians access finance, especially in the rural areas.

To increase the access, it was paramount to look at the challenges facing microfinance institutions (MFIs) so as to help improve business environment.

With the support of BEST Dialogue, TAMFI commissioned a study to identify constraints/challenges encountered by microfinance institutions during the process of licensing and annual re-licensing.

The study undertaken by independent consultant in microfinance and agricultural finance, Mrs Specioza Mashauri, underscored the need for simple and straightforward procedures for obtaining licenses needed for running credit only microfinance institutions. She presented the initial finding of the study to the stakeholders at the workshop.

The study notes that the logistics for processing business licenses for microfinance activities are costly and cumbersome especially for microfinance institutions situated outside the region of Dar es Salaam since offices of the issuing authority is currently based in the business capital.

The study suggests that the issuing authority need to be decentralized at the level of the municipality and district councils to allow easy access by microfinance institutions outside Dar es Salaam.

The licences are issued by the Ministry of Industry and Trade, and stakeholders are of the view, the fees are on the higher side for small MFIs.

Currently, credit only microfinance institutions are paying same licence fees of Tshs. 600,000 despite their significant difference in sizes. The study recommends that credit only microfinance institutions should be categorized according to the operating capital of individual microfinance institutions or minimum and maximum capital requirements for non-deposit taking microfinance institutions to be set for classification purposes.

“The fees charged by the Ministry of Industry Trade and Investment is particularly high for Microfinance institutions with small capital turnover, (say Tshs. 5 million) given that the ministry incurs almost no cost since it is not supervising them,” noted Mrs Mashauri.

Mr Prosper Mzee, CEO Planet Microfinance Fund suggested that the government should consider making a one stop centre for issuance of all licenses and taxes to microfinance institutions.

“It takes a long time to complete all the formalities due to distances from one service provider to the other,” he noted, adding it leads to lengthy time to comply with regulations

Mr Julius Mcharo, CEO, Victoria Finance called on the government to consider online license applications for MFI to save time and resources. . He also suggested that for relicensing, there was no need of submitting all documents as in the initial stage of licensing. Documents can be limited to annual returns and annual reports.
Mr Gustav A. Kway, Credit Manager at Zane Microcredit said there should be a competent body to issue licenses and supervise MFIs to help the sector grow.


Tanzania Association of Micro finance Institutions (TAMFI) is a not-for-profit umbrella organization for micro finance institutions in Tanzania. It was formally registered in 2001 as a sole network for microfinance activities in the country. Members include Commercial, Community and Microfinance Banks, NGOs, Private MFIs, SACCOS, apex of informal groups, micro -insurance company and Business Service Providers. The association seeks to develop capability of microfinance institutions and the microfinance sector in general through advocacy, lobbying, research and development, responsible microfinance, capacity building, and information gathering and dissemination. The National Microfinance Policy also assigns the task of developing and ensuring application of standards to the network.

Furthermore, the Association promotes and encourages the establishment of new products and related markets and organizes forums and meetings in order to promote communication among members, to strengthen their relationship and to transfer information and experience among them. TAMFI encourages networking which is an integral part of any association. In this regard the Annual General Meetings attracts a growing number of attendees each year and make it an event where discussions are held on important and emerging issues and time is taken to learn more.

The current 135 member institutions of TAMFI reach out to approximately 2 million micro entrepreneurs in urban and rural areas. These are micro entrepreneurs who are committed to change their financial behaviours. Microfinance institutions are providing a broad range of financial services to these poor and low income people who are systematically excluded from formal financial system. Financial services include credit, savings, leasing, insurance, mobile/wire transfers, housing and pensions. And as a result these active poor communities are included in the mainstream financial system. Furthermore, they are financially educated and exposed.

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