Joseph Isangura
The Tanzanian government has instructed banks working with local councils to simplify access to small business loans, acknowledging that strict requirements have been preventing many citizens from benefiting from the 10 percent council loan scheme.
Prime Minister Mwigulu Nchemba told Parliament that while channeling loans through banks was intended to improve accountability and prevent misuse of public funds, the approach had unintentionally created barriers for the people it was meant to support. Many informal workers, including food vendors, motorcycle operators, and street traders, struggled to meet conditions such as providing property documents or a guarantor employed in the public sector.
“Expecting small vendors or motorcycle riders to present house deeds or official guarantors is unrealistic,” the Prime Minister said. “These loans are meant to empower ordinary Tanzanians, not to be treated like commercial bank products.”
Lawmakers had earlier raised concerns that billions of shillings allocated for the scheme were sitting unused, especially in major cities such as Dar es Salaam. Reports indicated that over Sh91 billion remained locked in accounts because applicants could not satisfy demanding bank conditions, even though demand from small entrepreneurs was high.
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The government’s decision comes after feedback from beneficiaries highlighted the difficulties they faced under the new system. By routing loans through banks, authorities had hoped to prevent fraud and the formation of so-called “ghost groups,” but the implementation overlooked the realities of informal sector livelihoods.
Ministerial sources confirmed that the government has now instructed loan officers to adopt more practical and inclusive requirements. Verification processes will remain to ensure that funds reach legitimate Tanzanian applicants, but unnecessary hurdles such as house deeds and formal guarantors will be reconsidered.
The 10 percent council loan scheme is part of Tanzania’s broader effort to boost microcredit and financial inclusion, providing funding to women, youth, and small business operators. Experts say easing the loan conditions could unlock economic opportunities for thousands of citizens and strengthen local entrepreneurship.
As councils and banks adjust their policies, small traders across Tanzania are expected to reapply for loans, which could support business expansion, create jobs, and improve household incomes. The government emphasized that while flexibility is important, oversight will continue to ensure that funds are not misused.
