Am an investor from abroad doing dairy farming and have recently established my company in Tanzania with my offices in Mufindi, Iringa. Once my company is fully operational, I expect to be one of the main producers and exporters of dairy products such as milk, cheese, curd, cream and other dairy products. I have arranged a loan from abroad but am told that the loan needs some form of registration. What do I need to do?
First of all welcome to Tanzania and we hope your business will succeed and as you have set up your goal become one of the main producers and exporters of dairy products in Tanzania. The Government has been encouraging private sector participation in economic activities including through external borrowings.
However, the Government has also been careful in monitoring the private sector external debt so as to ensure the economy has the capacity to honor its debt obligations and to monitor legitimacy of source of funds. In that line, the Foreign Exchange Regulations of 2022 requires that any foreign loan to a resident with a tenure of more than 365 days needs to be registered with the Bank of Tanzania (BoT) and assigned a Debt Registration Number (DRN). That DRN will be the reference for disbursement, debt service and any other transaction related to such loan. The regulations require a borrower to submit the loan agreement to its local bank or financial institution within 14 days from the date of signing for such local bank or financial institution to facilitate registration of such loan with the B0T. That Bank or financial institution is supposed to submit such a loan agreement to the BoT within 7 days from receiving it from the borrower. If the borrower fails to submit the required information for registration of the loan with the BoT as required by the regulations, the borrower shall be subject to a penalty of TZS 1 million for each day that the loan remains unregistered. The bank or financial institution which also fails to submit the said required information for registration shall be subject to a penalty of TZS 1 million for each day that the loan remains unregistered.
Moreover, in case you do not have a DRN, your bank will be unable to remit the funds back to the lender. We suggest you quickly work on your loan registration with the BoT.