CONSUMER PROTECTION IN THE MICROFINANCE SECTOR IN TANZANIA: LEGAL AND PRACTICAL CHALLENGES IN PROTECTING BORROWERS
The growth of the microfinance sector in Tanzania has increased access to financial services, particularly for consumers who may have limited access to conventional banking services. This expansion has also created concerns relating to the protection of borrowers against unfair lending practices, inadequate disclosure of loan conditions, excessive charges, difficulties in lodging complaints and problematic debt recovery practices. Tanzania has established a legal and regulatory framework intended to protect consumers of microfinance services through legislation and regulations governing microfinance institutions, financial consumer protection and fair competition. However, the existence of these legal protections does not necessarily guarantee their effective implementation. This article examines the effectiveness of the legal framework governing consumer protection in the microfinance sector in Mainland Tanzania and identifies the practical challenges affecting its implementation. The article adopts a qualitative legal and socio-legal approach based on documentary review and findings from the study conducted in Mwanza Region. It argues that the principal challenge is not the complete absence of consumer protection laws, but the gap between legal protection and its practical enforcement. The article proposes stronger consumer financial education, clearer disclosure requirements, accessible complaint mechanisms, effective regulatory supervision and lawful debt recovery practices.
Keywords: Consumer Protection, Microfinance, Financial Consumer, Borrowers, Tanzania, Regulation, Financial Services.
