Mobile-money and app loans: what the fee really costs

Borrow TZS 100,000, repay TZS 109,000: what rate is that?

A supplier offers you a good price on sugar if you pay today. Your phone offers TZS 100,000 now, to be repaid as TZS 109,000 within 30 days. The screen shows a fee (ada) of TZS 9,000. It does not show a rate.

One division gives you the rate: the cost over the cash you received. 9,000 ÷ 100,000 = 9%. That 9% pays for 30 days, so it belongs next to any lender's quote of "9% a month".

For a yearly figure, multiply by the number of 30-day periods in a year: 9% × 365 ÷ 30 = 109.5% a year, before any compounding. As an effective annual rate, which treats each period's charge as borrowed and charged again, it is about 185.3% a year.

For comparison, the Bank of Tanzania's Monthly Economic Review for March 2026 (Table 2.3.1) gives 15.41% a year as banks' average lending rate on loans of up to one year in February 2026. That is an average across bank borrowers, not a rate any bank has offered you.

Is the fee added at the end or taken off at the start?

Apps collect the charge in one of two ways. With the fee added, you receive the full amount and repay it plus the fee. With the fee deducted, you are approved for TZS 100,000, only TZS 91,000 reaches your mobile money wallet, and you repay TZS 100,000.

The fee is TZS 9,000 either way, but the deducted loan costs more because you had less money to use. So divide by the cash that reached your wallet, not by the amount on the approval screen.

If the deduction is interest (riba), an approved digital lender may not take it that way. In its 2024 guidance note for digital lenders, the Bank says such a lender shall not "require the borrower to pay interest amount upfront or before the loan repayment due date" (paragraph 5.1(p)).

A one-off management fee is a different item. The Bank's 2024 fee guidelines for microfinance lenders permit one if it is "reasonable and affordable" and disclosed in the agreement (guidelines 13(2) and 13(3)), and the guidance note does not say when a fee may be collected. The arithmetic above works whatever the lender calls the charge. Which charges are banned outright is covered in fees a lender cannot charge.

Why a 7-day loan costs more than it looks

A 10% fee sounds the same whether the loan lasts a week or a month. It isn't. On a 7-day loan you pay 10% for 7 days of use, on a 30-day loan for 30. Take TZS 50,000 repaid as TZS 55,000 over three different terms:

You can do this for any offer with the calculator on your phone:

1. Cost = the amount you repay minus the cash you received.
2. Rate for the term = cost ÷ cash received.
3. Rate per 30 days = rate for the term × 30 ÷ the number of days.
4. Simple yearly rate = rate for the term × 365 ÷ the number of days.

Before you set the per-30-days figure beside a lender's monthly rate, find out whether that lender charges interest flat or on a reducing balance. What a loan really costs explains the difference with worked schedules.

To set a phone loan beside a longer offer, enter it in the compare offers tool as one monthly installment (rejesho), or one weekly installment for a 7-day loan. The tool counts a month as a twelfth of a year, so for the 30-day example it shows an effective yearly rate of 181%, a little below the 185.3% worked out on 365 days.

What rolling one loan into the next really costs

Day 30 comes and the TZS 109,000 isn't there, so a new loan pays off the old one. That is a rollover, and it can happen in two ways that cost different amounts.

In the first, you find the TZS 9,000 fee from your own income each month and take the TZS 100,000 again. The debt stays at 100,000 and the fees add up in a straight line: TZS 27,000 after three months and TZS 108,000 after twelve, more than the loan itself.

In the second, the new loan covers the whole TZS 109,000, fee included. Now the fee is borrowed too, and each month's 9% is charged on a bigger debt:

Borrowing from a second app to repay the first works like the second case, with one more lender to answer to. An app may offer to move the due date for a charge instead: the questionnaire the Bank requires digital lenders to complete asks each one to state any "loan extension fee" it applies (guidance note, Annexure 2, item 5(a)(iii)). If yours does, ask what the extension costs in shillings and convert it over the extra days as you would a new fee.

When a phone loan makes sense, and when it doesn't

A phone loan suits a gap of a few days, with money you are certain of at the end of it, and an amount small enough that the fee is worth the speed. Imagine a welder in Arusha whose machine needs a part today, and who is owed for a finished gate on Friday. The loan keeps him working through those three days, and Friday's payment clears it.

It suits a longer need badly, and the kinds of loan you can get sets out the longer options. Say you need TZS 100,000 for three months, and a microfinance lender offers 3% a month on a reducing balance, repaid in three monthly installments:

The 3% is a figure chosen for this example. We know of no official average microfinance rate to quote, and a real offer may add fees or charge interest flat, which costs more: 3% flat on the same loan comes to TZS 9,000 of interest. Get written offers and run each one through the loan calculator before deciding.

Which rules cover the loan on your phone?

That depends on who is lending, and the loan terms tell you, whatever the app is called. The guidance note and the 2019 regulations quoted in this guide bind Tier 2 lenders: non-deposit-taking microfinance lenders licensed by the Bank. A USSD menu inside your mobile money account can belong to one. The Bank's approved list includes Victoria Finance's KILIMOPESA, a USSD service on Mixx by Yas, and Kuza Capital's platform on Vodacom USSD as well as Google Play.

The Bank's consumer protection regulations (GN 884 of 2019) reach further than the guidance note. Regulation 2, as rewritten in 2025, applies them to all providers the Bank licenses, or supervises and regulates, unless it prescribes otherwise. The same amendment added regulation 23(2): a provider must disclose all information on fees and charges before you make any transaction, "in an electronic means or otherwise". That covers a bank's phone loan as much as an app's.

When we downloaded it on 28 September 2026, the Bank's list of approved digital lending platforms named 19 platforms. Its separate list of apps not approved, as of 28 February 2026, named 116. Some of those names differ from each other by only a space or a word, so match the exact name and the licensed company. Is this loan app approved? walks through the check against both lists.

The Microfinance Act, 2018 applies to Mainland Tanzania (section 2). So do the fees guidelines (guideline 4) and the guidance note, which the Bank's circular of 27 August 2024 brought into force that day for Tier 2 lenders on the Mainland. If you live in Zanzibar, ask the lender which regulator licenses it before relying on the rules in this guide.

What an approved app must tell you about cost

An app on the approved list has to meet these rules on price, all from the guidance note:

• Show, before you apply, what each product costs: its interest, its fees, the penalty for paying late, how often you pay, the most you can borrow and for how long, as set in the lending policy the Bank cleared (paragraph 3.1(f)).
• Run in Kiswahili by default, in simple words, with English allowed alongside (3.1(g)). You are entitled to read the price in Kiswahili.
• Never demand interest before the due date (5.1(p), quoted in the fee-deducted section above).
• Leave its pricing model unchanged unless the Bank has approved the change in advance (5.1(i)).
• Send an e-receipt or instant message for every payment you make (5.1(g)). Those messages are your proof of what you have paid.
• Issue loan agreements that meet regulation 39(2) of the 2019 Tier 2 regulations, GN 679 (5.1(d)).

The last of these does the most for you on cost. Regulation 39(2) says every Tier 2 loan agreement must state, among other things, all other fees charged, a yearly rate that counts every fee (the "effective annual interest rate") and the total of every payment until the loan is cleared (39(2)(c), (d) and (f)). Run the conversion from the first section on the agreement's figures and see whether they match what the app showed you.

The note also fixes how an approved app identifies itself: the licensed company's name on the landing page and in OTP and transaction messages (3.1(b)(iii) and (d)). It bars an approved lender from using the app to reach into your contacts, call logs, messages or photos to check who you are or to chase repayment (5.1(b)). Is this loan app approved? shows how to run the identity checks, and harassed by a loan app covers the data and collection rules.

Paying early, paying late and getting out of a rollover

If your lender is Tier 2, regulation 42(3) of the 2019 regulations lets you clear the loan early, fully or partly, "without advance notice and without being penalized". Under regulation 42(4), a full repayment before the due date means no interest is owed for the time left on the loan. An early settlement fee is allowed by the fees guidelines only where the loan agreement clearly states one (guideline 15).

So if part of your app's charge is interest, repaying on day 10 of a 30-day loan should cost less than repaying on day 30. Ask how the charge splits between interest and fees; the agreement has to show both (regulation 39(2)(b) to (d)).

A short loan leaves little room for a late payment. The fees guidelines allow a late penalty only where the loan agreement provides for one (16(1)), and never when the delay came from the lender's own negligence (16(2)). For what follows a missed due date, see the guide to missed payments.

If you have already rolled a loan twice, stop taking new loans to repay old ones. Write down each app, what you owe it today and when it is due, and call each lender before that date. Regulation 43 allows a Tier 2 lender, within its lending policy, to restructure a struggling borrower's loan by changing the installment or the period. It allows this without requiring it, so ask.

Getting out of debt you already have covers which debt to pay first and how to put a restructure request in writing. If income alone cannot clear the total, the three-month table above shows how to weigh one longer loan from a licensed lender against another rollover.

Where to complain about a loan app

Start with the lender. An approved app must show, on its landing page, a complaints phone number and email that are the lender's own and can be reached (3.1(h)). Keep screenshots of the offer screen, the SMS messages and the e-receipts, with their dates.

If the lender rejects your complaint, or does not answer within the time the consumer protection regulations allow, take it to the Bank through Sema na BoT. Clause 25 of the Bank's complaint guidelines of 2025 lets you file there by website, chatbot, toll-free phone line or the Sema na BoT app. Your rights as a borrower gives the deadlines at each step.

An app that messages your contacts or threatens you raises a separate complaint with its own routes, set out in harassed by a loan app. A complaint does not cancel the loan, so keep talking to the lender about repaying it while the complaint runs.

Sources

• Guidance Note on Digital Lenders under Tier 2 Microfinance Service Providers, 2024 — Bank of Tanzania
• Circular on publication of the Guidance Note on Digital Lenders, 27 August 2024 — Bank of Tanzania
• Microfinance (Non-Deposit Taking Microfinance Service Providers) Regulations, 2019, GN 679 — Bank of Tanzania
• Guidelines on Fees and Charges for Microfinance Service Providers, 2024 — Bank of Tanzania
• Bank of Tanzania (Financial Consumer Protection) Regulations, 2019, GN 884
• Bank of Tanzania (Financial Consumer Protection) (Amendment) Regulations, 2025, GN 298
• Microfinance Act, 2018 (Act No. 10 of 2018) — Bank of Tanzania
• List of approved digital lending platforms operated by Tier 2 microfinance service providers — Bank of Tanzania (downloaded 28 September 2026)
• Orodha ya majukwaa na programu tumizi ambazo hazijaidhinishwa, hadi 28 Februari 2026 — Bank of Tanzania
• Monthly Economic Review, March 2026, Table 2.3.1 — Bank of Tanzania
• Guidelines for Handling Financial Consumer Complaints, 2025 — Bank of Tanzania
• Sema na BoT — Bank of Tanzania complaints portal

What changed

• 29 September 2026: Rewritten. Corrected the rollover figure: the old text said a TZS 100,000 loan at 9% a month, rolled for a year, costs about TZS 181,000 in fees, while also saying the principal does not move. Those conflict. TZS 181,266 is right only when each fee is borrowed as well; paying the fee from income each month costs TZS 108,000. Removed the unsourced claim that the better-known app cases involved messaging borrowers' families, and replaced the unsourced line that a longer licensed loan is "almost always cheaper" with a worked three-month comparison. Added: the fee-deducted case (TZS 9,000 on TZS 91,000 received is 9.89% for 30 days, not 9%); a table converting 7, 14 and 30-day fees to monthly and yearly rates; what the Bank of Tanzania's 2024 Guidance Note on Digital Lenders makes an approved app show and forbids (paragraphs 3.1 and 5.1, including no interest taken upfront); the loan agreement contents under Regulation 39(2); early repayment (Regulation 42(3)–(4)), late penalties (fees guideline 16) and restructuring (Regulation 43); the 2025 fee-disclosure rule in the consumer protection regulations (regulation 23(2)); which rules cover banks and which cover Tier 2 lenders; the approved and unapproved app lists with their dates; the Mainland-only scope; the Sema na BoT complaint route; and sources.
• 22 September 2026: First published.

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