DAR ES SALAAM, Tanzania; November 9, 2026 – The Bank of Tanzania (BoT) has issued credit guarantees worth TZS 1.6 trillion, facilitating access to loans totalling TZS 2.1 trillion for businesses and entrepreneurs across various sectors of the economy.
The initiative is part of government-backed credit guarantee schemes managed by the central bank to improve access to financing, particularly for businesses with commercially viable projects but insufficient collateral to secure loans from banks and other financial institutions.
BoT Moves to Address Collateral Challenges
Speaking during a seminar for journalists, BoT Senior Financial Analyst Gloria Chellunga said the credit guarantee schemes were established to address one of the major barriers facing entrepreneurs and small and medium-sized enterprises (SMEs) seeking financing.
She explained that many businesses have viable investment projects and meet banks' lending requirements but struggle to access credit because they lack sufficient assets to offer as collateral.
"Some businesses have viable projects and meet the lending requirements of banks, but they fail to secure financing because they do not have sufficient collateral," Chellunga said.
"These schemes were established to bridge that gap and enable such businesses to access loans," she added.
Two Government-Backed Schemes Supporting Businesses
The government established two credit guarantee schemes to strengthen access to financing for businesses and entrepreneurs.
The Export Credit Guarantee Scheme (ECGS), introduced in July 2002, was designed to support exporters seeking financing for commercially viable business activities.
The Small and Medium Enterprises Credit Guarantee Scheme (SMECGS), launched in September 2005, focuses on improving access to credit for SMEs that face difficulties meeting conventional collateral requirements.
Both schemes are administered by the Bank of Tanzania and aim to bridge the financing gap between viable business opportunities and the capital required to develop sustainable enterprises.
By providing guarantees to participating financial institutions, the schemes help reduce collateral-related lending constraints and encourage financing for eligible businesses.
How Businesses Access Credit Guarantees
Under the arrangement, businesses seeking financing apply for loans through banks or other participating financial institutions.
Where an applicant meets the lending requirements but lacks sufficient collateral, the financial institution may submit a credit guarantee application to the Bank of Tanzania.
The central bank then evaluates the proposed project to determine its financial viability and ability to generate sufficient revenue to repay the loan.
Once the assessment is completed and the project satisfies the required conditions, BoT approves the guarantee, allowing the respective financial institution to proceed with lending.
"After satisfying the project viability, we approve the guarantee and allow the respective bank to proceed with lending to its customer," Chellunga explained.
Low SME Participation Remains a Challenge
Despite the substantial financing facilitated through the schemes, participation among SMEs remains relatively low, even though they are among the primary intended beneficiaries.
According to Chellunga, the challenge is partly attributed to the large number of businesses operating informally, which makes it difficult for entrepreneurs to meet the legal and administrative requirements necessary to qualify for financing under the guarantee arrangements.
The situation highlights the importance of business formalisation, proper record-keeping and compliance with regulatory requirements in expanding access to formal financial services.
Strengthening Financial Inclusion and Business Growth
The TZS 2.1 trillion in loans facilitated through BoT's credit guarantee schemes underscores the role of government-backed financial interventions in addressing financing constraints within Tanzania's business sector.
Improved access to credit can enable eligible businesses to expand operations, invest in productive activities, strengthen competitiveness and contribute to economic growth.
However, increasing participation among SMEs will remain important in ensuring that the benefits of the schemes reach more entrepreneurs, particularly those operating outside the formal financial system.
The continued implementation of the ECGS and SMECGS provides an opportunity to strengthen financial inclusion while supporting the development of Tanzania's private sector.
Source: Daily News Tanzania
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