Credit guarantee firm seeks to transform access to SME financing

He told The Citizen recently that the consultations are aimed at collecting views and technical input to ensure the new institution is properly structured, inclusive and financially sustainable over the long term.

The initiative is part of BoT’s broader plan to ease access to financing for SMEs by reducing lending risks faced by banks and other financial institutions.

By doing so, the company is expected to stimulate business growth, create jobs and strengthen the national economy. Mr Tutuba aid the proposed company would help unlock credit for entrepreneurs, particularly small business owners who struggle to access loans due to limited collateral.

He cited Malaysia’s more than five decades of experience with a similar credit guarantee system, noting that Tanzania aims to replicate such success to fully tap into the potential of its SME sector.

“The initiative is expected to accelerate the growth of small businesses, create employment, increase government revenue and enhance the economy’s resilience to external shocks,” said Mr Tutuba.

He added that the company is also projected to attract new investment and improve Tanzania’s competitiveness at the global level. He emphasised that the ultimate objective is to establish a financially sustainable and self-reliant company that can operate independently of the central bank.

During the consultation phase, stakeholder feedback will be consolidated and used to prepare the company’s Memorandum and Articles of Association.

Once completed, the documents will be submitted to the Business Registrations and Licensing Agency (BRELA) for formal legal registration. Following registration, the company will be capitalised through the sale of shares to banks and other financial institutions.

According to the BoT governor, this ownership structure is designed to strengthen the firm’s capital base, enhance governance and ensure long-term sustainability. Once fully capitalised, the company will commence independent operations.

Currently, BoT oversees existing credit guarantee schemes, but Mr Tutuba said the long-term plan is to transition these functions into a standalone corporate entity.

“This will allow the central bank to concentrate on its core mandate as a regulator, avoid potential conflicts of interest and improve overall operational efficiency,” he said.

Under the proposed structure, the Credit Guarantee Company will provide guarantees to businesses—particularly those lacking sufficient collateral—making it easier for them to access financing.

By mitigating lending risks, the company is expected to support business expansion, promote financial inclusion and contribute to broader economic development. “Globally, many credit guarantee corporations begin with central bank support before evolving into independent, self-sustaining institutions,” Mr Tutuba said.

“Our approach follows international best practice to ensure the company is professionally governed, financially viable and able to support the private sector effectively over the long term.”

The Tanzania Bankers Association (TBA) chairman and NBC Bank chief executive, Mr Theobald Nsabi, welcomed the initiative, saying commercial banks are ready to work with BoT in establishing the company and supporting the growth of the financial sector.

At present, credit guarantee services in Tanzania are provided through the Export Credit Guarantee Scheme (ECGS) and the SME Credit Guarantee Scheme (SME-CGS), both administered by BoT.

The establishment of a dedicated Credit Guarantee Company is expected to expand the reach and impact of these schemes.

Independent financial analyst Mr Oscar Mkude said supporting SMEs and start-ups requires more than the provision of loans alone.

“Many financial institutions combine funding with technical assistance to help businesses become sustainable,” he said.

However, he noted that in Tanzania, access to such support remains limited. Most banks require cash guarantees before releasing funds, while extensive documentation and strict eligibility requirements further constrain access to credit. As a result, entrepreneurs—particularly start-ups—often struggle to secure financing.

Banks, he added, tend to favour clients with an established financial track record, leaving new businesses with limited options for raising capital.

“With the Credit Guarantee Company, there should also be room for developing additional products to support start-ups that need seed funding or growth capital,” Mr Mkude said.

He noted that many young businesses operate with newly opened accounts and limited financial records, making it difficult for them to access the resources required to grow and thrive.