By Business Insider Reporter
The rapid expansion of digital credit in Tanzania is opening new doors to finance but is also raising concerns about over-indebtedness, high borrowing costs and consumer vulnerability, the Bank of Tanzania (BoT) has warned.
The warning comes as digital lending expands rapidly across the country, with the value of digital credit rising by 32.29 percent to TSh 5.58 trillion in 2025, according to the BoT’s National Payment Systems Annual Report 2025.
The number of digital-credit transactions increased by 24.98 percent to 336.52 million.
The central bank says the growth has been driven by mobile technology and alternative credit-scoring models that use mobile-money transaction histories to extend loans to individuals and businesses that may lack traditional collateral or established banking relationships.
“Digital financial services are playing an increasingly important role in expanding access to finance and accelerating Tanzania’s transition towards a cash-lite economy. However, as digital finance grows, it is equally important to strengthen consumer protection, public awareness and risk management so that innovation does not expose users to undue financial risks,” Governor Emmanuel Tutuba (pictured below) said.
:The Bank of Tanzania will continue to work with stakeholders to promote responsible digital finance, strengthen oversight and foster innovation that is safe, affordable, inclusive and supportive of sustainable economic growth,” he added.
The development represents a major shift in access to finance, particularly for micro, small and medium enterprises (MSMEs) and smallholder farmers. According to the BoT, digital credit is supporting business expansion, agricultural financing, income smoothing and broader economic activity.
But the regulator cautions that the same technology making borrowing easier can create new financial risks.
“Over-indebtedness” is among the risks specifically identified by the BoT, alongside high borrowing costs, data-privacy concerns and fraudulent schemes.
The concern is particularly significant because digital lending removes some of the barriers that traditionally constrained borrowing. Loans can be accessed rapidly through mobile phones, often without physical visits to financial institutions or conventional collateral.
While this can improve financial inclusion, it can also make repeated borrowing easier.
The growth figures alone, however, do not establish how widespread over-indebtedness has become. The available 2025 payment-system data show the rapid expansion of digital credit but do not provide sufficient evidence to determine how much lending represents productive investment, how much goes to consumption, or how many borrowers are taking multiple loans simultaneously.
Those questions are becoming increasingly important as Tanzania’s digital financial ecosystem expands.
Digital savings also recorded exceptional growth in 2025, with value rising to TSh 3.18 trillion and transactions reaching 97.53 million. Active mobile-money subscriptions reached 75.78 million, while the agent network expanded to 1.98 million.
The numbers show that digital finance is becoming deeply embedded in everyday economic activity. But they also mean that problems associated with irresponsible lending, fraud or misuse of personal data can potentially affect a much larger population.
The BoT says it is addressing the risks through the Microfinance Act, 2018 and related regulations aimed at promoting responsible lending, consumer protection and fair market conduct.
The challenge is to ensure that rapid innovation does not outpace consumer protection.
For Tanzania, the key issue is therefore no longer simply whether digital credit can expand financial inclusion. It is whether the growing availability of instant finance can be matched by responsible lending, transparent pricing, effective consumer education and safeguards against multiple borrowing. As digital credit moves further into the mainstream, the success of Tanzania’s mobile-finance revolution may ultimately be measured not by how many loans are issued, but by whether those loans improve borrowers’ economic capacity without pushing them into a cycle of debt.
