Q&A – 4 September 2023

Registration of microfinance loans

It has been my business since 2010. I buy new Chinese motorcycles (bodaboda) and enter into a contract with bodaboda drivers for them to pay back my cost price and add a mark-up within twelve months. Recently, a friend told me that I need to register that business as what I do now is illegal. He told me that there is a law regulating such a business. Is my friend correct? If my friend is correct, is there a penalty for undertaking such a business without a licence?
LT, Mwanza

The Microfinance Act, 2008 (the Act), recognizes commodity-based microfinancing. Under the Act, ‘commodity microfinance’ is defined as the undertaking of microfinance business in the form of commodity. This kind of microfinancing falls under tier 2 in the categorization of microfinance service providers. According to the Act, tier 2 service providers, comprise non-deposit taking microfinance service providers such as individual money lenders.

Based on the explanation above, your friend is correct. Your business falls under commodity microfinancing and is regulated by the Act. The Act requires a person who intends to carry a microfinance business as a microfinance service provider under tier 2, to apply to the Bank of Tanzania (the Bank) for a license. Depending on the size of your business, the Bank may delegate its licensing powers to a delegated authority. The procedure for getting a licence is provided under the Microfinance (Non-Deposit Taking Microfinance Service Providers) Regulations, 2019.

It is an offence to engage in a business you are doing now without having a valid license as a microfinance service provider. The Act prohibits a person to carry out any microfinance business, unless such person is licensed in accordance with the provisions of the Act. The Act provides that any person who provides microfinance services without having a valid license commits an offence and, upon conviction, in the case of the tier 2, is liable to a fine of not less than TZS 20M but not exceeding TZS 100M or to imprisonment for a term of not less than 2 years but not exceeding 5 years or to both. We recommend you to consider registering at the earliest.

Beneficiary of maintenance order earns more than parent

The District Court issued a maintenance order requiring me to take care of a child born out of wedlock. I have been abiding by the order since the year 2009, when the child was two years old. That child is now sixteen years old and, fortunately, was recently engaged by one of the blue chip companies for her to feature on the company’s billboards and in television adverts. She is recognized as a young celebrity and has secured a five-year contract with that company, which pays her on a monthly basis, almost ten times my earnings. I want to stop paying monthly maintenance allowance to her mother, mainly for two reasons. Firstly, because the child’s monthly income is now higher than mine and, secondly, because she refused to pursue university studies although she performed well in her secondary school. Unfortunately, her mother threatens me that I will be defying the Court order. Please advise me.
TK, Dar 

It is under the Tanzanian Law of Child (the Act) that a parent in respect of whom an order of parentage has been made, shall have a duty to contribute towards the welfare and maintenance of the child to supply the necessities for survival and development of the child. The Act, however, stipulates that a maintenance order issued by the Court expires when the child attains the age of 18, is gainfully employed or dies before attaining the age of 18. Further, according to the Act, the Court may continue to enforce a maintenance order after a child has attained 18 years if the child is engaged in a course of continuing education or training.

Given the circumstances that your daughter, though still a minor, is gainfully employed and is presently not engaged in a course of continuing education or training, we advise you to apply for a maintenance discharge order from the Court. Her mother’s intimidations are not justified under the Act if you have this discharge order in place. Your attorney can guide you further.

Water encountered during mining prospecting

Our company has a special mining licence. While prospecting for minerals we encountered soft ground water. Can we tap that water for use at our staff camp which is near the prospecting area?
SR, Songea   

The Water Resources Management Act, 2009, as amended in 2022, requires the holder of a special mining licence or a prospecting licence granted under the Mining Act, or a petroleum prospecting licence who encounters groundwater in any workings carried out under such licence to promptly notify the Basin Water Board of any such waters; submit any relevant data to the Basin Water Board; take all such measures necessary for the protection of groundwater against pollution; and comply with any directions of the Basin Water Board regarding the protection or disposal of such water.

Our research reveals that you can tap the soft water for use at your staff camp but only after getting directives and approval from the Basin Water Board.

Marrying a foreign woman

I am working with aorganisation in the Lake Zone. There is one beautiful expatriate lady who has fallen deeply in love with me. The lady is my officemate and her tenure in Tanzania will expire mid this year. She loves Tanzania very much and has proposed to marry me but one of her friends has informed us that a condition to get married to a Tanzanian and live here is to denounce her foreign citizenship. What should I do as I am about to lose the love of my life?
AR, Mwanza

There is no such law and you can get married to your beautiful girlfriend without her having to renounce her citizenship. If such a law existed, many Tanzanian men would have been in trouble! Your girlfriend’s friend is misleading you for reasons known to herself.