Financial risk: Zanzibar saccos lack regulations

Zanzibar. Despite the existence of 7,131 Savings and Credit Cooperative Societies (Saccos) operating in the financial sector, the government has revealed that there are still no regulations governing these institutions in Zanzibar.

As a result, there has been no official assessment conducted to evaluate their performance, according to the government.

This was disclosed on Monday, February 2025, by the minister of State, President’s Office—Finance and Planning, Dr Saada Mkuya, during a session of the House of Representatives in Chukwani.

She was responding to a query from Mwanakwerekwe Representative, Ameir Abdalla Ameir, who sought clarification on the number of financial service providers registered and supervised by the Bank of Tanzania (BoT) and an assessment of their compliance with regulations.

Dr Mkuya said that no assessment had been conducted regarding regulatory compliance, as the regulations were still under preparation within her ministry. 

She said the President’s Office (Finance and Planning), in collaboration with the Bank of Tanzania (BoT), has been conducting annual financial literacy workshops and seminars to educate citizens on budgeting, financial rights, and responsibilities when using financial services.

“Despite having 7,131 Saccos, there has been no assessment on compliance, as the regulations are still under development within the ministry,” she said.

As of December last year, financial service providers in Zanzibar included 14 commercial banks with 43 branches (10 in Pemba and 33 in Unguja), nine microfinance institutions registered and supervised by the ministry, and 7,131 Saccos, overseen by the Cooperative Development Department under the President’s Office (Labour, Economy and Investment).

Dr Mkuya said that customer complaints regarding financial services are handled under the Financial Consumer Protection Regulations, 2019, set by the Bank of Tanzania. Every financial institution, she said, is required to have a designated office or desk to handle customer complaints, implement a customer rights and complaints policy, and allow customers to escalate unresolved complaints to the Bank of Tanzania.

Additionally, the BoT has introduced an online complaints platform, “Sema na Benki Kuu ya Tanzania”,” to simplify the resolution process for financial service consumers.

During a follow-up question, Representative Ameir enquired about the government’s stance on online lending platforms and their regulatory framework.

Dr Mkuya responded that commercial financial institutions operate in full compliance with BoT regulations, whereas regulations for smaller financial institutions are still in progress.

She advised the public to seek loans only from registered financial institutions and report suspicious lenders to the government to avoid falling into fraudulent schemes.