VICOBA, SACCOS or a microfinance lender?

Three places to borrow, and who supervises each

Say you need TZS 1,500,000 to finish a roof, and three places could lend it. The savings group (chama) you belong to at church lends to members from a pooled fund. The staff SACCOS at work lends to its members. A microfinance office on the main road lends to anyone who qualifies. The law puts the three in different categories, and that decides what you can ask of each.

Section 5 of the Microfinance Act, 2018 sorts them into tiers. A group that saves and lends among its own members, such as a VICOBA, is a community microfinance group in Tier 4. A SACCOS is Tier 3. A lender that takes no deposits, such as a credit company, another licensed organisation or an individual money lender, is Tier 2. The Act applies to Mainland Tanzania only (section 2), and so do the regulations made under it. In Zanzibar, ask a group or lender which law it works under.

The counts in the last row come from the Bank's own Banking Supervision Annual Report 2024, which also confirms that the Bank has delegated Tier 3 to TCDC and Tier 4 to local government authorities. To check one particular lender or society, see how to check a lender is licensed.

Does your VICOBA have to register?

That depends on what the group does with money. Section 3 of the Act defines a community microfinance group as one formed and managed by its members that takes savings from members and lends to members. A group doing that must apply for registration (section 28). Doing that business without registering is an offence (section 31(3)), punishable by a fine of TZS 1,000,000 to TZS 10,000,000, three months to two years in prison, or both (section 52(b)).

The same definition leaves three kinds of group out:

• welfare and self-help groups that do not take savings and make loans;
• clubs and associations registered under the Societies Act that collect contributions but do no microfinance business;
• groups formed now and then to raise money for religious purposes, a wedding or another family occasion.

So a group that only collects for a member's wedding has nothing to register under this Act, while one that keeps members' savings and lends them out does. Registered groups are spread very unevenly. The regional table in the Bank's 2024 report, whose totals match its end-2023 count, shows 15,150 in Arusha, 11 in Dar es Salaam and 1 in Katavi.

What registration takes

The rules are in the Community Microfinance Groups Regulations, 2019, GN 678:

• the group has 10 to 50 members with a common bond (regulation 4(2));
• it applies on Form No. 2 with two copies of the constitution and two copies of the formation-meeting minutes, all signed by every member, plus the members' resolution on Form No. 1, the proposed structure and leaders, the member list, proof that the first members paid their subscriptions, and a reference letter from the ward or village authority (regulation 8);
• "Community Microfinance Group" has to appear in the name, and "bank" must not (regulation 9);
• the local government authority must decide within 14 days of receiving complete documents (regulation 10); a refusal comes with written reasons within 7 days (regulation 13), and the group may appeal to the Bank within 30 days (regulation 15);
• a registered group must start operating within three months (regulation 18).

Once registered, the group becomes a body corporate (section 31(2) of the Act), so it can own property, sign contracts, and sue or be sued in its own name.

What to look for before you join a group

Ask to see the group's registration certificate, then these records. GN 678 requires all of them from a registered group:

• a copy of the constitution for you to keep, setting out how members join and leave, how loans are made and how any surplus is shared (regulation 23(e) and the First Schedule);
• an account for the group's money at a bank or other financial institution, or a mobile money wallet, which the regulations count as an account (regulations 3 and 20(1)(c));
• minutes of meetings and a register of members (regulation 20(1)(h));
• a person in charge of internal control, appointed at an official meeting and holding at least an ordinary-level secondary certificate, who checks the records but may not approve loans, take contributions or keep the group's money (regulation 26);
• the reports sent to the council every quarter, covering subscriptions, loans, earnings and how any surplus was shared (regulation 21 and the Third Schedule).

Two further rules protect your contributions. The group may not accept savings from non-members or open a branch (regulation 19(2)). If it borrows from a bank or other lender, every member must accept the terms, and the loan may not exceed the group's total assets unless collateral covers it in full (regulation 24(2)).

The group must also keep members' credit records for the credit bureaus, and each member signs a consent to that (regulation 27). A group loan you leave unpaid can therefore appear on your credit report, and the free credit report guide shows how to get yours.

How a SACCOS is licensed, and what happens to your savings

A SACCOS is registered first as a cooperative society, and then needs a Tier 3 licence before it may do microfinance business (section 18 of the Act; regulation 4 of the SACCOS Regulations, 2019, GN 675). There are two licence categories:

TCDC has published questions and answers on SACCOS licensing in Kiswahili. The FAQ says the licence is issued once and carries no yearly fee. It also says applications are made online and that licences are issued by the Registrar of Cooperative Societies at TCDC headquarters, but the document carries no date, so check with TCDC that this is still how it works.

TCDC's list of licensed SACCOS runs only to 30 June 2022, so if a society licensed after that date is missing from it, ask TCDC to confirm its licence.

The same FAQ says members' savings and deposits do not count as the society's capital, because they are debts the SACCOS owes its members. The society lends your savings (akiba) out to other members and still owes that money to you. GN 675 makes it tell you in writing the terms of each share and savings product, including any limits on withdrawals, and give you a statement when you ask (regulations 72 and 74). A dividend on your shares (hisa) can be paid only after capital, reserve and provision requirements are met, and only with the approval of the general meeting and of TCDC or the Bank (regulation 22(2)).

How much a SACCOS can lend you, and on what terms

Each SACCOS must have a lending policy covering who may borrow, loan limits, acceptable security, rates and fees, and no loan in it may run longer than five years (regulation 28(2)). Ask for a copy. The credit committee may not approve a loan unless it is at least partly secured (regulation 30(2)). Voluntary shares, savings, time deposits or goods can be the security (dhamana), but membership shares cannot (regulation 33).

The society's own size also caps any one loan. Under regulation 33, a loan fully secured by voluntary shares, savings, time deposits or goods may not exceed 10% of the SACCOS's core capital, and any other loan may not exceed 5%.

You can work out core capital from the audited accounts, which must be on display at the office all year (regulation 53): it is the fully paid membership shares, the statutory reserve fund, retained earnings, and grants or donations held as permanent capital (regulation 3). Or ask the SACCOS for the figure.

COASCO (the Cooperative Audit and Supervision Corporation) or another approved auditor checks the accounts every year and presents them to the annual general meeting (regulations 59 and 62). The year ends on 31 December and audited accounts are due to the supervisor within four months (regulations 51(3) and 52), so from May the accounts on display should be last year's.

Rates, fees and penalties are the board's decision unless the general meeting directs otherwise (regulation 36), and GN 675 sets no ceiling. It does require a written agreement showing the yearly rate, every fee, the effective annual rate including fees, a schedule of each installment (rejesho), the total of all payments and the late penalty (regulation 31(2)). One item is in the SACCOS list but not in the Tier 2 one: whether your required savings or shares may be used to pay missed installments (31(2)(l)). Read that line before you sign.

If a colleague asks you to be a guarantor (mdhamini), the SACCOS must explain your liability before you sign and give you a written statement with the loan number, the borrower's name, the amount and the date (regulations 34 and 78). A guarantor needs adequate security of their own, such as voluntary shares or savings (regulation 34(1)). What you can lose through collateral and guarantees covers the wider risk.

A loan counts as delinquent once a payment is short or missed (regulation 39(1)), and a member in default gets no new loan until the old one is repaid (39(3)). Before starting recovery, the society must send you a written notice and wait 14 days. It may not harass or threaten you, or collect interest or charges missing from your agreement (regulation 79).

Paying a SACCOS loan off early

Under regulation 37 a member may clear all or part of a loan before it is due, on any business day, and cannot be penalised for it. Clear it in full and you owe no interest for the months that were left.

Imagine you borrow TZS 3,000,000 from your staff SACCOS over 24 months, and the board's rate is 1.5% a month on a reducing balance. That rate is only for the example; ask your own SACCOS for its rate. Each installment is about TZS 149,772, and the loan costs TZS 594,535 in interest if you run it to the end. After 12 installments you still owe TZS 1,633,642.

Clearing it then saves you TZS 163,625. That is well under half the interest, because on a reducing balance most of it falls in the early months: TZS 430,910 of the TZS 594,535 is paid in the first year. The loan calculator shows the full schedule for your own figures.

A Tier 2 borrower has the same right under regulation 42(3) and (4) of GN 679. The Bank's 2024 fee guidelines, which apply only to Tier 2 lenders (guideline 4), also allow an early-settlement fee when the loan agreement spells it out clearly (guideline 15). Fees a lender cannot charge explains how to raise that with a lender.

Borrowing from a Tier 2 microfinance lender

A Tier 2 lender is licensed by the Bank, and the interest you pay is its income, not a surplus shared among members. You don't need to join or save there first, since it may lend to individuals, groups and small businesses (GN 679 regulation 21(a)). It decides against its own lending policy and your ability to repay (regulation 39(1)), not against a fund members have built.

Unless the Bank authorises it, it may not take deposits from the public (regulation 22(a) of GN 679). If it asks for cash collateral, a cash guarantee or compulsory savings, it must hold that cash in its own separate bank account, not use it for lending, and refund it once the loan is repaid (regulation 23). An individual money lender may not ask for any of those at all (23(3)).

Its agreement must state the effective annual rate with all fees included and the total of all payments (regulation 39(2)(d) and (f)). Those two figures let you set its offer beside a SACCOS loan; what a loan really costs shows how to read them. You can search Tier 2 lenders by region and district in Kopesha's directory, which is built from the Bank's register dated 14 August 2026. SACCOS and registered groups are not in it.

Which one fits your situation

• You don't belong to a group or a SACCOS. Both lend only to members, so of the three, only a Tier 2 lender can lend to you as things stand. Compare at least two on the effective annual rate and the total repaid.
• You already save in a SACCOS. Get the lending policy and the audited accounts, work out the core-capital limit, and check whether the agreement lets the society use your savings to cover missed installments.
• Your group's fund covers what you need. Interest you pay becomes the group's income, and any profit is shared among members as the constitution says (GN 678 regulation 20(1)(e)). Check the group is registered and keeps the records listed above before you rely on it.
• You need more than the group's fund or the SACCOS limit allows. That leaves a Tier 2 lender or a bank; the kinds of loan you can get shows which lenders offer what.

If you borrow from more than one of these at once, add up every installment before taking the next loan, and test the total against your income with the affordability tool. The Act requires all three tiers to report loans to credit bureaus (section 43(3)), and section 43(4) lets lenders look up that information, so a new lender may be able to check what you already owe.

Where to complain about each one

A registered group. Use the complaints procedure the constitution must contain (GN 678 regulation 23(a)). If that fails, go to the local government authority that registered the group. The authority is required to review complaints and disputes brought to it and to visit groups, and it can direct a group in writing to put problems right within 21 days or another period it sets (regulation 25).

A SACCOS. Start at its complaints desk, whose procedure and phone or email contacts must be posted at the office in Kiswahili, or in Kiswahili and English (GN 675 regulation 77). A member may also ask TCDC to hold an inquiry into the society's operations or finances (regulation 66). TCDC's postal address for SACCOS matters is Mrajis wa Vyama vya Ushirika, Tume ya Maendeleo ya Ushirika Tanzania, S.L.P. 201, Dodoma.

A Tier 2 lender. Start with the lender's complaints desk. If it does not settle the matter, escalate to the Bank online through Sema na BoT. The time a lender has to answer you is in your rights as a borrower.

Sources

• Microfinance Act, 2018 (Act No. 10 of 2018): sections 2, 3, 5, 14, 17, 18, 28, 31, 43 and 52 — Bank of Tanzania
• Microfinance (Community Microfinance Groups) Regulations, 2019, GN 678: regulations 3, 4, 8–10, 13, 15, 18–27 and the Schedules — Bank of Tanzania
• Microfinance (Savings and Credit Cooperative Societies) Regulations, 2019, GN 675: regulations 3, 4, 5, 13, 15, 18, 22, 24, 28, 30–34, 36, 37, 39, 51–53, 59, 62, 66, 72, 74, 77–79 and 83 — Bank of Tanzania
• Microfinance (Non-Deposit Taking Microfinance Service Providers) Regulations, 2019, GN 679: regulations 21, 22, 23, 39, 40, 41 and 42 — Bank of Tanzania
• Guidelines on Fees and Charges for Microfinance Service Providers, 2024: guidelines 4 and 15 — Bank of Tanzania
• Banking Supervision Annual Report 2024: sections 1.2.2 and 3.2.2 and Appendix VII — Bank of Tanzania
• Maswali na majibu kuhusu Sheria ya Huduma Ndogo za Fedha kwenye usimamizi wa SACCOS — Tanzania Cooperative Development Commission
• Orodha ya SACCOS zilizopewa leseni hadi kufikia 30 Juni 2022 — Tanzania Cooperative Development Commission
• Sema na BoT (complaints) — Bank of Tanzania

What changed

• 29 September 2026: Rewritten with sources. Corrected: a SACCOS needs a Tier 3 licence from TCDC in addition to its cooperative registration (Act s.18; GN 675 reg 4), not only registration. A VICOBA that takes members' savings and lends them must register with its local government authority as a community microfinance group (Act s.28, s.31(3); GN 678), so its rules are not only whatever the group writes down. A SACCOS dividend needs the general meeting's and the supervisor's approval and may be paid only once capital and reserve rules are met (GN 675 reg 22), so a surplus is not automatically returned. The old text said the directory carries every registered Tier 2 provider in the country; it is built from the Bank's Tier 2 register as of 14 August 2026, which covers Mainland Tanzania only, and it does not cover SACCOS or groups. Removed claims we could not source: three keyholders, a one-year cycle, SACCOS rates being usually lower or the cheapest formal credit, SACCOS loans being a multiple of savings, notice periods for withdrawing savings, and groups failing on bookkeeping more than bad luck. Added a side-by-side table of the three tiers, 2024 counts from the Bank's supervision report, GN 678 registration and record rules, SACCOS licence categories and the core-capital loan limit (GN 675 reg 33), a worked early-repayment example under GN 675 reg 37, and where to complain for each tier. Moved from the cost category to options.
• 22 September 2026: First published.

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