Written by the Kopesha team · Published 29 September 2026 · 13 min read · No lender pays for these guides · How we write and check them
Is every charge on your loan allowed?
Your microfinance loan was for TZS 1,000,000, but only TZS 918,000 reached your phone. The lender's sheet lists a management fee, an application fee, an "admin fee", insurance, a credit report and a passbook. Three of those are allowed on conditions, two are banned outright, and one belongs inside another fee.
The rules are in a 2024 Bank of Tanzania document, the fee guidelines for microfinance service providers (full title in the sources below). They put no shilling figure on any fee: guideline 12(1) says only that fees must be "reasonable and affordable". What they do settle is which charges may exist at all, and on what terms.
Guideline 4 applies them to "Tier 2 Microfinance Service Providers operating in Tanzania Mainland". Section 5(1)(b) of the Microfinance Act 2018 defines Tier 2 as non-deposit-taking microfinance service providers, and gives individual money lenders as an example. So the guidelines do not cover banks, SACCOS (Tier 3) or community microfinance groups (Tier 4), and they do not bind a lender in Zanzibar. If you are unsure what kind of lender you have, check its licence and its tier first.
The other rules quoted here come mainly from two more places. GN 679 is the 2019 regulations for Tier 2 lenders, made under the Microfinance Act, which section 2 of the Act limits to Mainland Tanzania. GN 884 is the Bank's 2019 financial consumer protection regulations, amended in 2025 by GN 298. Since 2025, its regulation 2 has covered every financial service provider under the Bank's licence or supervision, unless the Bank prescribes otherwise.
Eight charges a Tier 2 lender may not make
Guideline 17(1) sets the principle. A lender "shall not impose fees and charges that are part and parcel of own operating processes and or risk management practices" on its customers. Running its office and managing its own risk are costs of the lender's business, so it may not bill them to you as separate fees.
Guideline 17(2) then names eight charges that are prohibited:
- administrative fees, the familiar "admin fee" (17(2)(a))
- maintenance fees (17(2)(b))
- charges for handling your enquiries through a call centre (17(2)(c))
- fees for issuing loan statements (17(2)(d))
- the cost of storing and managing goods the lender holds, which the guideline calls "chattel storage" (17(2)(e))
- fees for a loan enhancement, refinancing or top-up (17(2)(f))
- office expenses (17(2)(g))
- passbook fees (17(2)(h))
The top-up item matters when a lender offers to add money to a loan you are still paying. The lender earns interest on the extra cash, but a separate fee for the top-up itself is on the banned list. If you are thinking of one bigger loan to clear several small ones, getting out of debt you already have lists the conditions under which that helps.
Calling a banned charge by another name does not make it allowed. Guideline 18(2) says fees for credit-related services "shall not be bundled under ambiguous terminologies such as administrative fees or miscellaneous costs", and guideline 23(3) requires lenders to use the fee names in the guidelines or a name the Bank has approved. If a line on your sheet says only "miscellaneous" or "service charge", ask what it pays for and which guideline allows it.
What a lender may charge, and on what terms
Guideline 13(1) names two lending fees, a management fee and a loan restructuring fee. Guideline 13(2) says every lending fee must be disclosed in the loan agreement (mkataba wa mkopo).
Management fee (ada ya usimamizi). Guideline 13(3) allows a "one-off" management fee, and it must be "reasonable and affordable". Guideline 13(4) says this fee covers application and processing. A sheet that shows a management fee and also a separate application or processing fee looks like a second charge for work the first one already covers. Ask the lender which rule allows the second line.
Restructuring fee. If a lender agrees to change your installment (rejesho) or stretch the repayment period, guideline 13(5) allows a one-off restructuring fee, charged on the outstanding amount and again "reasonable and affordable". Restructuring itself is the lender's choice: under regulation 43 of GN 679 it "may" restructure, subject to its lending policy, for a borrower facing cash-flow problems or financial distress.
Money paid to others on your behalf. Guideline 13(6) lets the lender pass on what it pays third parties for you to meet regulatory requirements: agent commission, a credit reference report, search fees, title registration, discharge, a tracking device, and other fees the Bank approves. Each is capped at what the lender actually paid out. If the credit report cost the lender TZS 3,000, it cannot bill you TZS 10,000 for it. Ask who was paid and how much.
Copies and retrieval. Guideline 18(1) caps the charge for any other credit-related service at the lender's actual cost. Guideline 18(3) names two things it may charge for on that basis: photocopies of loan documents and retrieving documents.
Money held back as cash collateral or compulsory savings is not a fee, because it comes back to you. Regulation 23 of GN 679 requires the lender to keep it in a separate bank account, not to lend it out, and to refund it once your loan obligation is fulfilled. The same regulation bars individual money lenders from taking such money at all. If part of your loan is held back as savings, get the amount and the refund terms in writing.
Loan insurance: the actual premium, or nothing
If insurance (bima) is deducted from your loan, guideline 14 sets two limits:
- The lender "shall not charge insurance premium above the actual premium charged by the insurer" (14(1)). It may not add its own margin to the insurance line.
- It "shall not charge insurance if the loan is not insured by a licensed insurance company" (14(2)).
Two rules in GN 884 add to this. Regulation 26(1)(e) requires a lender to give you the "terms and conditions of all tied or bundled financial products or services sold together with the loans". Regulation 11(2)(j), as renumbered in 2025, lists "bundling and tying practices" among unfair business practices, and 11(3)(c) defines tying as selling two or more products "without the option of distinguishing them upon sale".
So ask three things: which insurer, what premium it charges for your loan, and what the cover pays for. Then check that the insurance sits on your sheet as its own line, at that premium, with a policy behind it.
Late penalties and early-settlement fees need a written clause
Guideline 16(1) allows a penalty for late repayment (adhabu ya kuchelewa) "only if stipulated in the Loan Agreement". Guideline 16(2) adds that no penalty may be charged where the late repayment was "occasioned by" the lender's own negligence. If you paid on the due date and the lender failed to record it, the delay is the lender's doing, not yours.
Under regulation 39(2) of GN 679, a Tier 2 loan agreement has to state, among other things, the late payment penalty (39(2)(h)) and any debt recovery fee, charges or expenses (39(2)(i)). Regulation 56(3) goes further: whatever the agreement does not prescribe, whether interest, a fee, a charge or an expense, the lender may not collect. Regulation 40(2)(c) of GN 884 points the same way, barring "fees which have not been previously disclosed". What follows a missed installment, stage by stage, is in what happens if you miss a payment.
Early settlement is messier, because the texts do not agree. Regulation 42(3) of GN 679 gives you the right to settle before maturity, all of it or part, with no advance notice and no penalty. Under 42(4), paying in full early means no interest for the months that would have been left. Against that, guideline 15 permits a fee for settling early or cancelling when the agreement stipulated it clearly, and regulation 14(3) of GN 884 allows a reasonable prepayment penalty, but only if it is set out in the agreement.
None of these texts says which rule gives way, and the fee guidelines never mention GN 679. If your agreement contains an early-settlement fee, ask the lender in writing how it squares with regulation 42(3) before you pay it, and keep the reply.
One sheet of deductions, checked line by line
Here is the loan from the top of this page in full. Say the lender charges 3.5% a month on a reducing balance, over 12 monthly installments of about TZS 103,484. The installment is worked out on the full TZS 1,000,000, so it stays the same whatever is deducted.
| Deduction | Amount | Verdict | Guideline |
|---|---|---|---|
| Management fee (3%) | 30,000 | Allowed once, if written in the agreement | 13(3) |
| Application fee | 10,000 | Belongs inside the management fee; ask why it is separate | 13(4) |
| Administration fee | 20,000 | Prohibited | 17(2)(a) |
| Loan insurance | 15,000 | Allowed up to the insurer's actual premium | 14 |
| Credit reference report | 5,000 | Allowed at the amount actually paid | 13(6) |
| Passbook | 2,000 | Prohibited | 17(2)(h) |
| Total deducted | 82,000 |
Drop the administration fee, the passbook and the separate application fee, and the deductions fall from TZS 82,000 to TZS 50,000. Here is what each version of the sheet does to the cost of the loan:
| No deductions | Allowed fees only | Everything on the sheet | |
|---|---|---|---|
| Cash that reaches you | 1,000,000 | 950,000 | 918,000 |
| Monthly installment | 103,484 | 103,484 | 103,484 |
| Total repaid over 12 months | 1,241,807 | 1,241,807 | 1,241,807 |
| Total cost (interest plus deductions) | 241,807 | 291,807 | 323,807 |
| Effective annual rate | 51.1% | 67.3% | 79.3% |
The TZS 32,000 in doubtful charges adds about 12 percentage points to the effective annual rate, because you repay the full million with interest while holding less of it. To run your own figures, enter the total deducted as fees charged at the start in Kopesha's loan calculator. What a loan really costs explains the effective annual rate and why fees taken at payout push it up.
The whole list on one screen
| Charge | Allowed? | Condition | Rule |
|---|---|---|---|
| Management fee (includes application and processing) | Yes | One-off, reasonable and affordable, disclosed in the agreement | 13(2)–(4) |
| Loan restructuring fee | Yes | One-off, on the outstanding amount | 13(5) |
| Agent commission, credit report, searches, title registration, discharge, tracking device | Yes | No more than the lender actually paid out | 13(6) |
| Insurance | Yes | No more than the insurer's premium; nothing if the loan is not insured | 14 |
| Early settlement or cancellation fee | Only if clearly in the agreement | Ask how it fits regulation 42(3) of GN 679 | 15 |
| Late repayment penalty | Only if in the agreement | None if the lender's negligence caused the delay | 16 |
| Photocopies of loan documents, retrieving documents | Yes | No more than actual cost | 18(3) |
| Admin, maintenance, call-centre enquiries, loan statements, chattel storage, top-up or refinancing, office expenses, passbook | No | Prohibited by name | 17(2) |
| Accepting, handling or resolving your complaint | No | No cost, fee or penalty; complaint phone lines must be toll-free | Complaint guidelines 2025, clause 12 |
Can a lender add a new fee or raise one?
Not on its own say-so. Guideline 23(1) requires a Tier 2 lender to get written approval from the Bank before it raises an existing fee or brings in a new one. Under 23(2) the application must give the type of fee, the current and proposed amounts, and the justification.
Regulation 25(3) of GN 884, as replaced in 2025, also requires the Bank's approval before any provider it licenses or supervises raises a fee or charges fees on a new product. The new regulation 25(7) lets the Bank prohibit any fee where it deems that necessary to protect consumers, promote financial stability or ensure fair market practices.
Cutting a fee is easier. Under guideline 23(4) a lender running an advertised campaign for a set period only has to notify the Bank of a lower fee, and the fee goes back to its old level when the period ends. A cheap offer may be cheap only until a date, so ask when it ends.
For a loan you already have, regulation 30(1)(b) of GN 884 requires the lender to tell you in writing, before the change, about any change to a non-interest charge on your account.
Prices must also be public. Guideline 19(2) requires a Tier 2 lender to publish its interest rates, fees, charges and other costs every year, in Kiswahili and English, in a conspicuous place at its premises and in media with wide circulation, and 19(3) requires it to send the same information to the Bank. Regulation 40(3) of GN 884 asks for more: publication every quarter in at least one Kiswahili and one English newspaper of wide circulation, a display at its places of business and, since the 2025 amendment, its official website. Ask to see the published price list at the branch, and compare it with your sheet.
How to challenge a charge
- Find the charge in your agreement. Regulation 39(2)(c) of GN 679 requires a Tier 2 loan agreement to list "all other fees charged", and 39(2)(e) requires the repayment schedule to show the fee part of each installment separately. Mark every charge that is missing from the agreement, and every charge on the prohibited list.
- Write to the lender's complaints desk. Regulation 54 of GN 679 obliges a Tier 2 lender to set up a complaint handling desk or designate an officer, and to display the contacts at its offices. Give the charge, the amount, the date and the guideline you rely on, and keep a copy. Clause 12 of the Bank's 2025 complaint guidelines bars any cost, fee or penalty for handling a complaint.
- If you are unhappy with the lender's answer, or it has not answered within the time allowed, take the complaint to the Bank. Clause 25 of the 2025 complaint guidelines lets you lodge it during working hours through Sema na BoT: the website, the mobile app, the toll-free number or the chatbot. Attach the agreement, the record of what you received, and the lender's reply. The Bank will not take up a complaint that has been the subject of proceedings before a court, a tribunal or another competent authority (clause 25(3)(d)).
While the complaint is open, keep paying each installment as it falls due, so a dispute over TZS 20,000 does not grow into a missed payment as well.
The Bank can back these rules with sanctions. Guideline 20 lists them, from a reprimand and publishing the offender's name to suspending the lender for up to a year or cancelling its licence. Guideline 21 allows a fine of up to TZS 20,000,000 for failing to follow the guidelines, and it may be applied to the lender's directors, officers or employees as well. Under regulation 53(5) of GN 884, added in 2025, a lender that ignores the Bank's final decision on a complaint can be fined TZS 1,000,000 for every day the decision goes unimplemented. The full complaint route, with the time limit at each step, is in your rights as a borrower.
Sources
- Guidelines on Fees and Charges for Microfinance Service Providers, 2024 — Bank of Tanzania (guidelines 4, 12–23)
- Microfinance (Non-Deposit Taking Microfinance Service Providers) Regulations, 2019 — GN No. 679 (regulations 23, 39, 42, 43, 54, 56)
- Bank of Tanzania (Financial Consumer Protection) Regulations, 2019 — GN No. 884 (regulations 11, 14(3), 25, 26(1)(e), 30(1)(b), 40)
- Bank of Tanzania (Financial Consumer Protection) (Amendment) Regulations, 2025 — GN No. 298 (amended regulations 2, 11, 25, 40(3), 53)
- Microfinance Act, 2018 (Act No. 10 of 2018) — sections 2 and 5
- Guidelines for Handling Financial Consumer Complaints, 2025 — Bank of Tanzania (clauses 12 and 25)
- Sema na BoT — Bank of Tanzania complaints portal
What changed
- 29 September 2026: First published.
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This guide is general information about borrowing in Tanzania. It is not legal or financial advice about your situation or about any particular lender, and the worked examples are examples, not a quote or an offer from anybody.