The Evolution of Banking Sector in Tanzania: Key Trends and Opportunities for Lawyers

It has been almost two decades since the enactment of the Bank of Tanzania Act No. 4 of 2006 (BoT Act), and the Banking and Financial Institutions Act No. 5 of 2006 (BFI Act). These two pieces of legislation were introduced in response to the growing financial sector, which followed the country’s trade liberalisation policies in the 1990s[1].

Since the introduction of the BoT Act and the BFI Act, the banking sector in Tanzania has undergone significant evolution driven by factors such as policy and regulatory reforms, market competition, climate change, and digital transformation, among other things. These factors have transformed financial services and created numerous opportunities for banking lawyers. Among the key areas which offer opportunities for lawyers are: -

a)?????? Local Content and Attractive Investment Climate

In 2024, the Tanzania Investment Centre set a target to register foreign capital investments worth USD 10 billion[2], underscoring the country’s favourable investment climate. The financial sector is among the sectors benefiting from the growing number of investors and local content regulations, following the enactment of the Petroleum (Local Content) Regulations, 2017 and the Mining (Local Content) Regulations, 2018.

The local content regulations require investors to engage local banks for financial services, creating opportunities for the banking sector. A notable example is the US$ 179 million financing deal between Black Rock Mining Limited, CRDB Bank Plc, the Development Bank of Southern Africa (DBSA), and the Industrial Development Corporation of South Africa (IDC) for the Mahenge Graphite Project[3]. Collaborations like this between local banks and international financial institutions offer significant opportunities for local lawyers to provide local legal expertise in structuring and negotiating such deals.

b)?????? Consumer Protection

In 2014, the Standard Form (Consumer Contracts) Regulations were enacted under the Fair Competition Act to protect consumers against unfair terms in standard form contracts. This was followed by the Bank of Tanzania (Financial Consumer Protection) Regulations, 2019.

Despite the existence of these regulations, unfair consumer practices, such as the notorious “kausha damu loans”, continue to rise, with most of their victims being women. As a result, there is a growing need for consumer awareness in the market, presenting an additional opportunity for lawyers to offer legal expertise and guidance to both financial institutions and consumers.

c)?????? Sustainable Finance and Climate Change

Like many other parts of the world, Tanzania has already felt the effects of climate change. In response, the country has implemented various policy measures aimed at aligning with global efforts to combat climate change. These include the National Climate Change Response Strategy 2021-2026 and the Guidelines on Climate-Related Financial Risks Management, issued by the Bank of Tanzania in 2022, to help banks and financial institutions manage climate-related risks.

On the private sector front, CRDB Bank Plc has taken a leading role by securing accreditation with the Green Climate Fund in 2019[4], positioning itself as a key player in financing climate-related projects. This was further demonstrated by the launch of its sustainability bond (Kijani Bond) in 2023[5].

These developments present significant opportunities for legal professionals specializing in capital markets, environmental law, investment law, and sustainable finance. Lawyers in these fields can guide financial institutions and investors on regulatory compliance, the structuring of green bonds, and other environmentally responsible investment initiatives.

d)?????? Digital Transformation

The digital transformation has significantly transformed the banking sector in Tanzania, bringing about the rise of digital and mobile banking services. Furthermore, partnerships between financial institutions and mobile network operators have been very common.

Recognizing the growing role of technology in financial services, the Bank of Tanzania recently introduced the Bank of Tanzania (FinTech Regulatory Sandbox). This Regulation aims to foster innovation by providing a controlled environment for financial technology firms to test new products and services under regulatory supervision.

This also creates a demand for expertise in the areas of intellectual property, licensing, and technology agreements, as businesses seek to protect their innovations while adhering to regulatory requirements. Ultimately, the evolving fintech and mobile banking landscape in Tanzania provides a wealth of opportunities for lawyers to specialize in a rapidly growing and dynamic field.

As digital banking continues to expand, there is an increasing demand for legal professionals to assist banks, fintech companies, mobile network operators, and startups in navigating the complex regulatory landscape. On the other hand, the issues of artificial intelligence and data privacy will be a concern to consumers. Lawyers will be instrumental in ensuring compliance with intellectual property, data protection laws, consumer protection regulations, and anti-money laundering guidelines.

In conclusion, the evolution of the banking sector in Tanzania has already created and will continue to create numerous opportunities for legal professionals. As the sector grows and adapts to new technologies, regulatory changes, and financial innovations, lawyers will need to continually upgrade their skills. Legal professionals need to make deliberate efforts to be lifelong learners, stay informed, and continuously engage in re-skilling and upskilling. This will allow them to seize opportunities to guide banks and financial institutions on compliance with evolving regulations, assist fintech startups in navigating legal challenges, and support the development and structuring of innovative financial products.

[1] Bank of Tanzania (2011) Tanzania Mainland’s 50 Years of Independence: A Review of the Role and Functions of the Bank of Tanzania (1961—2011). Dar es Salaam: Bank of Tanzania available at https://www.bot.go.tz/Adverts/PressRelease/sw/202003130724034239.pdf

[2] Tanzania Investment Centre (2024), Quarterly Bulletin, January to March 2024, Tanzania Investment Centre, Dar es Salaam available at https://www.tic.go.tz/uploads/documents/en-1715082410-TIC%20Investment%20Bulletin%20-%20Jan%20to%20March%202024.pdf

[3] Black Rock Mining Limited (2024), Black Rock signs US$179m agreement with DBSA, IDC and CRDB to develop Mahenge, ASX Announcement, 16 September, available at https://blackrockmining.com.au/wp-content/uploads/BlackRockSignsUSD179mFacilitiesAgreement16Sep24.pdf

[4] The Citizen (2019), CRDB Bank secures new green finance accreditation, 14 November 2019, updated on 27 March 2021, The Citizen, available at https://www.thecitizen.co.tz/tanzania/business/crdb-bank-secures-now-green-finance-accreditation-2696988

[5] Capital Markets and Securities Authority, 'CRDB Green Bond', posted 31 August 2023, available at https://www.cmsa.go.tz/news/crdb-green-bond