By Business Insider Reporter
Tanzania’s financial sector is facing major regulatory changes as the Bank of Tanzania (BoT) issues new draft Cloud Computing Guidelines for Financial Service Providers, 2025. The proposals will reshape how banks, fintechs and other licensed institutions adopt cloud technology, with the regulator seeking to balance innovation with security and sovereignty.
Under the new rules, mission-critical systems – including core banking applications and sensitive customer data – must be hosted on servers located inside Tanzania.
This move, according to BoT, is aimed at protecting the country’s financial backbone from cyber threats and foreign interference, while giving regulators direct oversight of essential systems.
Even non-core services such as human resources and customer management platforms cannot be moved to the cloud without BoT’s written approval.
This represents a significant departure from the past, when institutions had greater freedom to adopt digital services without case-by-case vetting.
The guidelines also impose strict requirements on cloud service providers.
Banks will be required to demonstrate that their chosen partners meet high standards of data encryption, system availability, and compliance with Tanzanian and international privacy laws.
Contracts must include detailed service-level agreements, clear exit strategies, backup arrangements and provisions for regulators to audit data.
BoT further requires financial institutions to conduct annual reviews of their providers’ financial and operational stability. Each institution must also develop its own board-approved cloud policy covering acquisition, risk management, and data recovery, and submit it to the regulator.
The central bank has warned of heavy penalties for non-compliance, including monetary fines, suspension of operations and, in severe cases, revocation of licences. Directors and employees who are found liable could be disqualified from holding senior positions in the sector.
Opportunities and challenges
For banks and fintechs, the rules bring both challenges and opportunities.
Larger institutions that rely on global cloud services will need to adjust their systems to comply with localisation requirements, while smaller fintechs may find the approval process and compliance standards demanding.
However, the emphasis on domestic hosting is expected to stimulate investment in local data centres and IT services, creating new opportunities for Tanzanian technology providers.
Industry observers note that the rules align Tanzania with broader regional trends. Kenya, Nigeria and South Africa have all tightened data localisation requirements for their financial sectors.
As digital banking, mobile money and fintech services expand, regulators across Africa are prioritising security and accountability to protect millions of users who rely on these platforms daily.
The BoT’s approach may also encourage international cloud providers such as Microsoft, Amazon and Google to consider setting up local infrastructure in Tanzania, as they have done in other African markets.
At the same time, domestic firms able to provide secure, scalable solutions stand to gain from guaranteed demand.
While the new framework raises compliance costs and could slow down innovation in the short term, the long-term benefits are seen in greater financial stability and reduced systemic risk.
The regulator is seeking to prevent crises such as data breaches, contract failures or technology breakdowns that could undermine public confidence in the financial system.
For financial institutions, the immediate priority will be to review which of their systems are classified as mission-critical and ensure they are hosted domestically.
They must also prepare documentation and risk assessments to support applications for cloud adoption, renegotiate existing contracts where necessary, and establish governance policies at board level.
The guidelines underline a broader message: cloud computing remains welcome in Tanzania’s financial sector, but only within a strict regulatory framework.
Innovation must now move hand in hand with compliance, giving the central bank confidence that technology will strengthen rather than undermine the financial system. As Tanzania modernises its financial services landscape, the new rules send a clear signal to institutions and providers alike: the future of digital banking is in the cloud, but on terms that protect national interests and customer trust.
