Section 1: BANK LICENCES
1.1 What licences or approvals do lenders need to have if
lending to a borrower in this jurisdiction if a) the lender is
a bank or b) the lender is a not a bank?
a) Banks must be licensed by the Bank of Tanzania (BOT) as
set out in the Banking and Financial Institutions Act 2006 and
the Banking and Financial Institutions (licensing) Regulations
2008. Foreign banks operating outside Tanzania do not require
licensing from the BOT and may lend to borrowers in
Foreign banks lending to borrowers in Tanzania should ensure
that local borrowers are aware of the requirements in the
foreign exchange circular no. 6000. This sets out the
conditions to be fulfilled by approving banks in Tanzania for
foreign loans whose tenure exceeds 365 days. One of the key
conditions is the requirement to submit the loan agreement and
disbursement and debt-servicing schedule to the BOT. The
approving bank should submit these documents at least 14 days
after approving the loan. The BOT then issues a debt record
number (DRN) to the borrower.
Although this circular is meant to apply to loans with a
tenure of 365 days or more, in reality, all foreign loans must
be registered as the DRN is required for the externalisation of
funds. That said, all banks lending to borrowers in Tanzania
must comply with Foreign Exchange Act no. 1 of 1992 as amended
and the Anti-Money Laundering Act, 2006 as amended.
b) There are four main categories of non-bank lenders. These
have distinct licensing requirements and approvals, namely:
i) microfinance companies and microcredit
institutions must be licensed by the BOT as stipulated in the
Banking and Financial Institutions (microfinance companies and
microcredit activities) Regulations of 2005;
ii) savings and credit cooperative societies
can only lend to borrowers if the BOT has licensed them to do
so as indicated in the Banking and Financial Institutions
(financial cooperative societies) Regulations of 2005;
iii) development finance institutions can
only lend upon being licensed by the BOT, as set out in the
Banking and Financial institutions (development finance)
Regulations of 2012;
iv) private persons and institutions that
fall outside the BOT's licensing purview are also to a limited
extent involved in money lending activities. These usually
obtain approval from the Ministry of Industry and Trade.
Foreign non-bank lenders should ensure that the borrower has
obtained a DRN. All lenders should abide by the provisions of
the 1992 Foreign Exchange Act as amended and the 2006
Anti-Money Laundering Act as amended.
1.2 Are any exemptions available and/or are any techniques
typically used to structure around such requirements?
The BOT only licences savings and credit cooperative
societies whose volume of savings and deposits meets the
threshold of 800 million Tanzania shillings (TZS). Savings and
credit cooperative societies below this threshold may not be
subject to licensing requirements.
Banks and financial institutions with a minimum core capital
of TZS 50 billion and have submitted a business plan for
development finance, do not require a license to lend as
development finance institutions.
Section 2: SECURITY INTERESTS
2.1 Can security be taken over the following asset classes
and what documentation or formalities are required to create,
perfect and maintain such security?
b) bank accounts
d) contractual rights
e) insurance policies
f) real property
g) plant and machinery
h) intellectual property
i) debt securities
j) future/after acquired property
k) floating charges over all assets
Yes, security can be taken over the above asset classes.
Where the security is granted over company assets, the charge
should be registered with the registrar of companies at the
Business Registration and Licensing Authority (BRELA) within 42
days. Where the borrower is a company, a floating charge may
cover all the above asset classes.
A pledge can be used to create a charge over shares, bank
accounts and receivables. Contractual rights and insurance
policies may be assigned through a deed of assignment. The Law
of Contract Act Cap 345 regulates pledges and assignment deeds.
Real property can be charged through registration of a mortgage
as provided under the Land Act Cap 113 as amended. Mortgages
may be registered over a right of occupancy. Mortgages may also
be registered over a residential license. Fixed charges can be
created over plants and machinery and intellectual property.
The Chattels Transfer Act Cap 210 provides for the registration
of security over movable assets such as plant and
Under the Companies Act no. 12 of 2002 (as amended), charges
over land, floating charges over property and intellectual
property have to be registered at BRELA. Registration of
security documents at BRELA costs TZS 33, 000.
It takes approximately 7 to 14 working days to register a
mortgage in Tanzania. Registration of mortgages at the Ministry
of Lands costs TZS 211,000. Registration of mortgages at the
Municipalities costs TZS 80,000 to 90,000.
2.2 Highlight any issues with securing obligations that may
arise in the future.
Future obligations, such as debts arising after the date of
the instrument securing such future debt, may substantially
exceed the value of the security provided.
2.3 Can a universal security agreement be used to grant
security over all assets in this jurisdiction?
Yes. This can be done through a floating charge. This should
take into account requirements under the Land Act Cap 113 as
amended and the Companies Act No 12 of 200 as amended.
2.4 Can security be granted for the benefit of different
classes of creditors under the same security agreement and if
so, are there any issues that creditors should be aware of in
adopting this approach?
Yes. This is usually the case where several creditors lend
to one borrower using the same asset as security. Creditors
should negotiate their interests in the security and the
results of the negotiation, especially the appointment of a
security agent and priority of payment of proceeds from sale of
the security should be included in an intercreditor
2.5 Can security trustee or security agent structures be
used in this jurisdiction to secure obligations that are owed
to fluctuating creditor classes?
There is no law in Tanzania prohibiting the appointment of a
security trustee or a security agent.
2.6 Briefly outline any issues to consider when
transferring loans and accompanying security interests between
The lender holding security instruments should ensure that
the relevant fees are paid. As the lender is in possession of
the security documents, they must pay these fees and possibly
seek reimbursement from the borrower. Where the loan is secured
by a charge over company assets, the lender should ensure that
such a company files its annual returns at BRELA. The lender
transferring the loan should also sign documents discharging
their interest. Usually, loan agreements permit the transfer of
loans. However, this may require the borrower's consent.
The parties should also consider the tax payable on transfer
of the loans and security interests.
2.7 Can security be granted by third parties? Are there any
rights of contribution, subrogation or similar that might arise
as a result of granting/enforcing third party security that
ought to be/can be waived?
Yes, third parties can grant security. Third parties usually
act as guarantors for loans extended to borrowers. Rights of
contribution and subrogation may arise if they are included in
loan agreements between borrowers, lenders and guarantors. Such
rights may be waived, where provision for the waiver has been
made in loan agreements between the parties.
2.8 Briefly outline the registration requirements, if any,
applicable to security interests created in this jurisdiction,
including considerations such as the timing, expense and the
consequences of non-registration.
If a charge over company assets is not registered at BRELA,
it is void against liquidators, administrators and
2.9 Briefly outline any regulatory or similar consents that
are required to create security (other than board/shareholder
Generally, the registrar of companies at BRELA has to
approve any security granted by a company. This also applies to
cases where the company intends to create a security over land
owned by the company. The registrar of companies must approve
creation of the security before it is approved and registered
at the Ministry of Lands.
Sector-specific approvals may be required before a licensee
grants a security.
Section 3: GUARANTEES
3.1 Briefly explain the downstream, upstream and
cross-stream guarantees available, with reference to any
particular restrictions or limitations.
All intercorporate guarantees are available in Tanzania.
They are subject to agreement between the parties.
Consideration is a key requirement in all guarantees.
Intercorporate guarantees may be restricted by insolvency
proceedings against one of the parties to the guarantee.
3.2 What regulatory or other consents are required to grant
downstream, upstream and cross-stream guarantees (other than
3.3 Briefly outline any enforceability concerns associated
with the granting of downstream, upstream and cross-stream
guarantees that lenders should be aware of (for example, any
exchange controls or similar obstacles).
The lender should ensure that there is consideration in all
intercorporate guarantees. Solvency of the guarantor should
also be examined.
Section 4: ENFORCEMENT
4.1 Do the local courts generally recognise and enforce
foreign-law governed contracts?
4.2 Will the local courts generally recognise and enforce a
foreign judgment that is given against a domestic company in
foreign courts (particularly the New York or English courts)
without re-examining the merits of the decision?
Yes. The Reciprocal Enforcement of Foreign Judgment Act 2002
provides for the procedure to be followed in enforcing foreign
judgements. While judgements from the UK are recognised under
the law, those of the US are not recognised and cannot be
enforced in Tanzania.
4.3 Will the local courts recognise and enforce an arbitral
award given against the company without re-examining the merits
of the decision?
Yes, under the Arbitration Act Cap 15, the High Court will
recognise and enforce foreign arbitral awards without
re-examining the merits of the decision. The enforcement of
these foreign arbitral awards should not offend public policy
or the laws of Tanzania.
4.4 When enforcing security, what factors significantly
impact the time such enforcement takes and the value of the
proceeds received from such enforcement? For example, are there
any statutory requirements such as (a) holding a public
auction; (b) court involvement; or, (c) obtaining regulatory
Yes, statutory requirements such as the factors listed above
significantly impact time and value of proceeds received from
a) Public auction: there is no statutory requirement to
enforce security through sale by public auction. The Land Act
provides for sale other than by public auction. Where the sale
is through a public auction, it should be advertised publicly
and can only be conducted after 30 days notice of the sale has
been provided to the mortgagee. This impacts the time required
to enforce security.
b) Court involvement: there are no statutory requirements to
involve the court in enforcing security. However, it is now a
common practice for mortgagors to seek court injunctions, as
soon as the notice of sale is served on them. This impacts the
time required to enforce security.
c) Sector-specific regulatory consents may be required for
the enforcement of security in the: banking and financial
services sector; oil and gas sector; and, telecommunications
sector. See 2.9. This impacts the time required to enforce
4.5 Are there any restrictions that apply specifically to
foreign lenders when taking enforcement action?
Generally, there are no restrictions applying specifically
to foreign lenders taking enforcement action. However, where
the enforcement is through court proceedings, foreign lenders
may be required to pay security for costs.
Section 5: BANKRUPTCY AND INSOLVENCY PROCEEDINGS
5.1 Briefly, outline the main bankruptcy/insolvency
processes in this jurisdiction, including any control or
influence that creditors can exert on the process, the
timeframes usually involved and any mandatory filing
The Bankruptcy Act Cap 25 regulates bankruptcy proceedings.
The court may issue a receiving order where a debtor or
creditor presents a bankruptcy petition. The official receiver
takes over the debtor's property. The debtor may thereafter
present a composition in satisfaction of debts or a proposal
for a scheme of arrangement. Where the debtor is adjudged
bankrupt, a trustee is appointed. The length of bankruptcy
proceedings varies and there is no statutory period within
which they should be concluded.
The Companies Act No 12 2002 as amended regulates insolvency
proceedings. These may include: compromise arrangements;
voluntary arrangements by a company; appointment of an
administrator; and, winding up (by court and voluntary winding
up by members or creditors). In most of these insolvency
proceedings, the creditors can influence the process through
initiating insolvency proceedings in court or persuading the
members to initiate insolvency proceedings. The timeframe for
the conclusion of insolvency proceedings varies.
Creditors can apply to court for a company to enter into a
compromise arrangement. They can also file in court a petition
for an administration order. Creditors can also present a
petition to the court to initiate winding up by court.
5.2 Are there any preference, fraudulent conveyance,
clawback, hardening periods or similar issues or preferential
creditor rights that lenders should be aware of?
Yes, the Companies Act No 12 2002 as amended provides
preferential status for government taxes, government rent and
payments due to employees of the company on winding up. In
cases where the company has created preferential debts, the
administrator or liquidator may apply to the court to
extinguish such preferences.
The Companies Act No 12 2002 as amended makes provision for
liquidators to apply to the court for orders to direct parties
who knowingly benefited from a fraudulent conveyance during
winding up, to contribute to the company's assets.
Administrators or liquidators may apply to the court to
restore the company to its original position by annulling
undervalue transactions executed two years before winding up or
5.3 Do bankruptcy/insolvency processes provide for any kind
of stay/moratorium on enforcement of lender claims? If so, does
the stay/moratorium apply to the enforcement of security
Yes, bankruptcy/insolvency proceedings may provide a
moratorium on enforcement of lender claims. However, this may
not affect security interests that have been registered with
the appropriate authorities.
Section 6: YOUR JURISDCITION
6.1 In no more than 200 words, outline any cross-border
financing trends specific to your jurisdiction.
Tanzania has continued to attract cross-border financing for
projects in various sectors. The World Bank has recently
extended financing to projects including electrification and
agriculture. Reports from the BOT also indicated an increase in
foreign borrowing by local banks in the first quarter of
Infrastructure projects, for example the Bagamoyo port,
continue to receive cross-border financing. China Merchants
Holding International and Oman Investment Fund are the key
partners financing this port project with an estimated cost of
$11 billion. The Hoima-Tanga oil pipeline, with an estimated
cost of $4 billion, is also expected to attract substantial
Syndicated loans to local borrowers continue to be dominated
by foreign lenders, with limited local participation. NMB's $35
million loan and Helios Tower's $95 million loan are good
Saidi Othman Yakubu
Managing counsel, Yakubu and Associates
Dar es Salaam, Tanzania
T: +255 762089225
Advocate Yakubu is a UK trained lawyer. He is a
fellow of the Chartered Institute of Company
Secretaries and Administrators (ICSA) and a founding
partner of the ICSA Tanzania branch. He is also a
member of the Association of International Petroleum
Negotiators. He is well-known in Tanzania's commercial
circles and has advised several foreign and local
companies and Forbes-listed individuals on corporate
finance matters. He has recently acted for clients from
various jurisdictions including: South Africa;
Singapore; Malaysia; the UK; India; Oman; Egypt; and,
Deputy managing counsel-business development,
Yakubu and Associates Chamber
Dar es Salaam, Tanzania
T: +255 718160095
Timothy Kyepa has advised clients on cross-border
finance and energy transactions in East Africa. He has
also published on oil and gas transactions in