Salary loans: what comes off your pay, and what is left

Written by the Kopesha team at Softsamic Company · Published 10 October 2026 · 13 min read · No lender pays for these guides · How we write and check them

The lender is paid before you are

A salary loan asks for two signatures: one on the loan agreement, and one on a salary deduction form (fomu ya makato) that lets your employer (mwajiri) take the installment (rejesho) out of your pay. From then on the lender is paid each month before your salary reaches your account.

That makes a salary loan hard to fall behind on, because the money you owe never passes through your hands. It also makes it easy to borrow too much. The lender gets its full installment every month, so any shortfall lands on rent, food and fares, which now come out of whatever the payroll leaves.

The lender may be a bank, a SACCOS at your workplace, or a Tier 2 microfinance lender, one the Bank of Tanzania licenses to lend without taking deposits. Each works under its own rules, set out towards the end of this guide. The employment law described here covers Mainland Tanzania only, so it does not reach employees in Zanzibar.

What your employer may take from your pay

Under Cap 366, the Employment and Labour Relations Act, your employer may make a deduction (makato) from your pay in only two cases, set out in section 28(1). In the first, a written law, a collective agreement, a wage determination, a court order or an arbitration award requires or permits it. In the second, you have agreed in writing to the deduction "in respect of a debt". A salary loan falls under the second.

Deductions under section 28 of the Employment and Labour Relations Act

Kind of deduction	What the Act requires	What to keep
Anything required or permitted by a written law, an arbitration award, a court order, a wage determination or a collective agreement, such as a Higher Education Students' Loans Board (HESLB) repayment	Section 28(1)(a); no signature from you is needed	If a line on your payslip is new to you, ask HR which law or order it rests on
A loan or other debt you owe someone	Your written agreement, section 28(1)(b)	Your copy of the signed deduction form
Goods or services you bought and agreed to pay for from your pay	A written agreement stating the cause, amount and calculation of the debt, section 28(3)	The agreement with those figures in it
Making good loss or damage at work that was your fault	The conditions in section 28(2), including a cap of one quarter of your pay in money	The employer's written claim and your reply

That quarter cap applies only to the last row; nothing in section 28 caps loan deductions. How a deduction fits into a household's month is worked through in a budget that survives the repayment.

When your employer deducts money for someone else, section 28(4) makes it pay that money over as the agreement requires. Two more rules help when you check the figures. Section 27(2) says every payment of pay must come with a written statement of its particulars: your payslip. Under section 28(5)(b) an employer may not require or allow you to acknowledge receiving more than you actually received, so never sign for a figure you did not get. Breaking section 27 or section 28 is an offence (sections 27(5) and 28(7)).

Public servants are covered as well as private employees. Members of the Tanzania Peoples Defence Forces, the Police Force, the Prisons Service and the National Service are not (section 2(1)).

The section numbers in this guide are those of the 2019 Revised Edition, which the 2025 amendment also uses. In the 2023 Revised Edition, in force since 1 July 2025, the same rules are at section 28 (payslips), section 29 (deductions) and section 87 (mediation) of the Employment and Labour Relations Act, and at section 21 of the HESLB Act. If HR works from the newer edition, give it both numbers.

Before you sign a deduction form, check it against the loan agreement for:

the lender's name and your loan number
the monthly amount
the first month of deduction
the number of months, or the month the deduction ends

A form with no end month gives HR nothing to stop the deduction by, so ask for one to be written in.

Start from your payslip, not from the loan offer

Neema teaches at a secondary school in Dodoma. She is invented for this example, and so are her figures. The tax and statutory line is illustrative, not worked out from the tax tables; use the one printed on your own payslip.

Neema's monthly payslip before any new loan (hypothetical, TZS)

Line	Amount
Basic salary	1,100,000
Responsibility allowance	100,000
Gross pay (mshahara ghafi)	1,200,000
Tax and statutory contributions (illustrative)	-270,000
HESLB repayment, 15% of basic salary	-165,000
Staff SACCOS shares and savings	-40,000
Take-home pay	725,000

Two lines deserve a second look. HESLB takes its share from basic salary, not gross pay, so the allowance does not raise it. Take-home pay is the only figure the household ever sees.

Neema's essential spending comes to TZS 520,000 a month: rent, food, fares, school costs and money sent home. That leaves TZS 205,000 (725,000 - 520,000). Kopesha's affordability calculator would call half of that, TZS 102,500, a safe installment, and it draws the limit at 70%, TZS 143,500. Both figures are our own cautious rule of thumb, not a law.

If you try the calculator for a salary loan, enter your take-home pay as the money that reaches you. Loans already deducted on your payslip are inside that figure, so put 0 under loan repayments you already make, or you will count them twice.

The one-third figure, and what it does not tell you

You may hear that take-home pay must never fall below a third of salary. One public source for that figure is the Controller and Auditor General (CAG). On 18 April 2018 Mwananchi reported his audit of local government for 2016/17. It found 4,830 employees in 58 councils receiving less than a third of their salaries, against 625 in 33 councils in 2015/16 and 789 in 16 councils in 2014/15. The report tied the rise to HESLB's repayment rate going from 8% to 15% after Parliament changed the law in 2016.

The CAG called this contrary to Act No. 7 of 1970. Mwananchi does not quote that Act, and we could not open an official copy, so we cannot tell you whom it covers or whether it reaches loans you agreed to yourself. Section 28 of the Employment and Labour Relations Act, the rule for deductions you agree to in writing, sets no one-third floor. Ask your HR office whether your employer applies a limit on total deductions, and what it is.

Even where such a line is enforced, it measures the payslip, not the household. The table below puts that line beside the calculator's two figures for Neema, measuring the third against her gross pay. Each loan runs 48 months at 1.5% a month on the reducing balance. The 1.5% is chosen for the example and comes from no lender; to turn a real quote into a true yearly rate, use the method in what a loan really costs.

Neema's three possible installments, 48 months at 1.5% a month, reducing balance (TZS)

Monthly installment	Where it comes from	Largest loan it repays	Total repaid	Left after essentials
102,500	Half of what is left (calculator)	3,489,362	4,920,000	102,500
143,500	70% of what is left (calculator's limit)	4,885,106	6,888,000	61,500
325,000	Take-home falls to exactly a third of gross	11,063,830	15,600,000	-120,000

A third of Neema's gross pay is TZS 400,000. Her take-home is TZS 725,000, so the one-third line leaves room for an installment of TZS 325,000. That installment would repay a loan over three times the size of the safe one, and it leaves her TZS 120,000 short of her essentials every month for four years. The interest alone would be TZS 4,536,170, against TZS 1,430,638 on the smallest loan. At 1.5% a month, each loan works out at about 19.6% a year once monthly compounding is counted.

A lender's officer may tell you how much you "qualify for". Ask how that number was worked out. Your own answer has to start from the household, not the payslip. The loan calculator shows the full month-by-month schedule for any offer you are given.

HESLB's 15% comes first, and it can start in the middle of a loan

If HESLB paid for your studies, your employer has to deduct at least 15% of your basic salary each month once the Board confirms you are a borrower. That duty comes from section 20(1)(b) of the Board's Act as amended in 2016, and the Board's 2026/2027 guidelines repeat the 15% in section 10. The Act goes further: section 20(1)(c) tells the employer to treat that deduction as statutory and take it "as first charge over non statutory deductions". Your bank, SACCOS or microfinance installment is one of those non-statutory deductions, so it comes after HESLB's.

HESLB's page for employers says they must report graduate employees within 28 days of taking them on, then deduct 15% from basic salary for each borrower HESLB has billed. Repayment starts, its FAQ says, once 24 months have passed since you finished or stopped your studies.

The timing is where salary borrowers get caught. Suppose Neema had taken a loan in her first year, before HESLB's bill reached her employer. Her take-home would then have been TZS 890,000 and her money left after essentials TZS 370,000, so half of it, TZS 185,000, would have looked safe. When the TZS 165,000 HESLB deduction began, her take-home fell to TZS 725,000, and after essentials and that installment she would have had TZS 20,000 left each month.

If you studied on a HESLB loan and nothing is being deducted yet, count 15% of your basic salary as already gone when you size a new loan.
Check your HESLB balance before you borrow, so you know roughly how long its deduction will last.
When the HESLB loan is cleared, that 15% returns to your take-home pay; a new loan can wait until it does.

Loans through the Watumishi Portal

Public servants can also apply for some salary loans through the government's Employee Self Service system, the Watumishi Portal, at ess.utumishi.go.tz. It was live when we checked on 10 October 2026. Type that address yourself rather than following a link sent by message, and do not hand your login details to an agent who offers to apply for you.

Banks have announced public-servant products through the portal. Two examples, as reported by Mwananchi:

Stanbic Bank launched a digital loan for public servants, which it calls eMkopo, through the Watumishi Portal, for up to TZS 200 million repaid over up to nine years without visiting a branch (22 April 2025).
Exim Bank said it was the first institution to take over public servants' loans from other lenders through the portal, with loans of up to TZS 200 million over up to 120 months, equal monthly installments, life cover included, and the option to raise the loan every three months (3 April 2025).

Those are the banks' own announcements from 2025, and terms change, so ask for the current ones in writing. The portal is only the channel: you still sign a bank's loan agreement, with the bank's rate, fees and insurance. Put two offers side by side on cash in hand and total repaid with the offer comparison tool.

A takeover uses the new loan to pay off the old one. If the new loan is larger, the cash you receive is only the difference, less any fees, while you pay interest on the whole new amount. Before you accept, ask for the payoff figure on the old loan and the full cost of the new one in writing, and compare the extra you will repay with the cash you actually receive. The guide to debt you already have sets out when one new loan to clear old ones is worth taking.

Bank, microfinance lender or workplace SACCOS: whose rules apply

A Tier 2 lender must appear on the Bank's register; search it in the lender directory or follow how to check a lender is licensed. The 2019 Tier 2 regulations (GN 679) then apply, including regulation 42(3), which lets you repay early with no notice and no penalty.
A bank falls under GN 884, the Bank's 2019 consumer protection regulations, which bind Tier 2 lenders too. Regulation 33 requires the lender to assess whether you can meet the loan's terms before you sign up.
A workplace SACCOS that collects shares, savings or loan repayments through the payroll must have an agreement with your employer. Regulation 88 of the SACCOS regulations (GN 675) says it must set out how loan repayments are deducted and passed to the SACCOS, the duties of each side and the remedies for breach, and be sent to the Bank or its Delegated Authority for vetting. VICOBA, SACCOS and microfinance lenders compared covers how a SACCOS is licensed and supervised.

GN 679 and GN 675 were both made under the Microfinance Act 2018, and section 2 of that Act confines it to Mainland Tanzania. GN 884 is different: it was made under the Bank of Tanzania Act, and since the 2025 amendment (GN 298) its regulation 2 reaches any financial service provider the Bank has licensed, and any it supervises and regulates, except where the Bank prescribes otherwise. Before you sign any of these agreements, run through the questions to ask before you sign.

When a deduction goes wrong

Keep every payslip until the loan is cleared, and make each request below in writing, keeping a copy.

The deduction goes on after your last installment. If the lender is a bank or a Tier 2 lender, ask it for the written declaration of full settlement that regulation 29 of GN 884 requires (the papers you are owed lists what it must contain); from any other lender, ask for a signed letter saying the loan is cleared. Give HR a copy and ask it to stop the deduction, and ask the lender in writing to return anything it received after the loan was cleared.
Money left your pay but the lender says it never arrived. Ask HR for proof of each remittance under section 28(4), with its date and amount, and send it to the lender with your payslips.
A deduction you never agreed to. Write to HR asking which law, order or signed agreement allows it. If that does not settle it, a dispute about how the Act is applied counts as a "complaint" under section 4. Section 86 lets you refer it to the Commission for Mediation and Arbitration (CMA) on the prescribed form, with a copy served on your employer. The mediator must try to resolve it within 30 days, or longer if both sides agree in writing; if that fails, section 86(8)(b), as amended in 2025, lets you take the complaint to arbitration within 30 days of the date mediation failed, or to the Labour Court.
You change jobs or leave. The deduction stops with your last payslip, but the loan does not. Before that payslip, agree with the lender how you will pay it directly, or the first missed installment starts the chain of events set out in the guide to missed payments.

A complaint about the lender itself, such as a wrong balance, a fee you did not agree to or rude collection calls, goes first to the lender's complaints desk. If that fails and the lender is a bank or a Tier 2 lender, the Bank's own complaints channel is Sema na BoT. Your rights as a borrower sets out how long each step may take.

Sources

What changed

10 October 2026: First published.

Found a mistake? Tell us through the contact page and name this guide. We check it against the source and correct the page.

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.