Tanzania’s Banking Sector: BoT Oversight, Market Power, and Emerging Trends

The Bank of Tanzania (BoT) is central to Tanzania’s banking ecosystem. It has been entrusted with the responsibility to licence, regulate, and supervise other banks, microfinance service providers, mortgage finance institutions, financial leasing companies, bureau de change, credit reference bureau, and foreign bank representative offices. Additionally, the BoT is authorised to regulate and supervise the financial activities of social security schemes.

Notably, Tanzania’s financial sector consists of five sub-sectors: banking, social security, insurance, capital markets, and microfinance. According to the 2024 Banking Supervision Annual Report, the banking sub-sector makes up 70.2% of the sector’s total assets. Banking institutions include commercial banks, development banks, microfinance banks, and community banks. 

The Annual Report also shows that, as of December 2024, there were 34 commercial banks with 929 branches, representing 97.3% of the total assets in the banking sector. Of these, 12 banks were locally owned, comprising 65.7% of the commercial banks’ assets, while 22 were foreign-owned, accounting for 34.3% of the assets. The sector also included three community banks, four microfinance banks, and two development banks. 

The Report further revealed that the banking sector remained robust and profitable, with net profits increasing by 39% and non-performing loans falling to 3.4%. The ratio of gross loans to deposits stayed at 92.5%. Financial inclusion grew substantially, driven by a 37% rise in agent banking, expansion of digital platforms, and microfinance services reaching 765 non-deposit-taking providers, 80 SACCOS, and 10,642 community microfinance groups.

Quite notably, Tanzania’s two largest banks, the National Microfinance Bank (NMB) and the Cooperative Rural Development Bank (CRDB), maintained their dominance in the industry, controlling nearly half of the market share, leaving limited room for smaller players. The NMB held a 30% market share in terms of profitability, while CRDB held 25%. This dominance not only emphasises the high barriers to entry but also grants the two banks significant bargaining power and influence over industry dynamics. As a result, they play a pivotal role in shaping access to policies and the overall trajectory of the country’s financial services sector.

In recent developments, the African Development Bank (AfDB) Group’s Board of Directors approved a USD 10 million trade finance transaction guarantee facility for Exim Bank Tanzania Limited, Tanzania’s fourth-largest bank, which operates in Uganda, Djibouti, and the Comoros. 

The new facility is expected to support up to USD 60 million in trade transactions over a three-year period. It will provide up to 100% guarantees to international confirming banks against the risks of non-payment. This support will release trade finance lines for Exim, expand access to essential imports, and strengthen Tanzania’s private sector. 

This project also aligns with the AfDB’s 2024-2033 10-Year Strategy. It also aligned with the 2021-2025 Tanzania Country Strategy Paper, which prioritised an improved private sector business environment for job creation through improved private sector access to finance, and the government’s Tanzania Vision 2025, which emphasises a strong, competitive economy.

Exim Bank’s developments have been among the major changes in the country’s banking sector. Looking back at 2024, the BoT approved several mergers and acquisitions to enhance efficiency and compliance in the industry. Kilimanjaro Co-operative Bank and Tandahimba Co-operative Bank merged to form Co-operative Bank Tanzania. Access Bank (Nigeria) Plc acquired African Banking Corporation Tanzania and rebranded it as Access Bank Tanzania. Selcom Paytech purchased Access Microfinance Bank and renamed it Selcom Microfinance Bank Tanzania. Exim Bank Tanzania also acquired Canara Bank Tanzania. 

Conclusion 

Although NMB and CRDB continue to dominate the market and shape the industry’s competitive landscape, recent developments such as the African Development Bank’s trade finance facility for Exim Bank and a series of mergers and acquisitions are fostering gradual diversification and transformation within the sector. These shifts highlight a financial system that is consolidating its stability while steadily increasing access and inclusivity. Looking ahead, it remains to be seen how the sector will evolve as market dynamics change and the economy expands under Tanzania’s strategy to attract more foreign direct investment and revitalise the economy.