Why women lead in snapping up loans from digital platforms

Women account holders surged from 11.3 million to nearly 120 million during the same period, overtaking men for the first time.

While controlling more than 60 percent of the nation’s digital loan accounts, In 2024, women took out Sh152 billion worth of loans, or 67 percent of total lending through digital channels, far outstripping men’s Sh74 billion.

The total loan value increased by almost 80 percent in the year to December 2024, reaching Sh226.7 billion.

According to the central bank these are the instant digital loan services, disbursed as e-money directly into customers’ mobile money wallets.

These loans were facilitated through strategic collaborations between banks, microfinance institutions, and mobile network operators (MNOs).

Analysts point to several factors behind women’s surge in digital lending, as they are more active in Tanzania’s informal economy, running food stalls, tailoring businesses, and small farms that require frequent injections of working capital.

Digital loans, often disbursed within minutes, suit these needs perfectly.

Chief Executive Officer of the Institute of Management and Entrepreneurship Development. Dr Donath Olomi says the trend reflects realities on the ground.

“Women already dominate Tanzania’s SME sector and are the backbone of lending groups. What we’re seeing with digital loans is simply the same reality shifting into the mobile era.

Because these loans are accessible without collateral, they’ve become a natural fit for women entrepreneurs who are often excluded from formal credit lines,” he said.

By unlocking access to credit, women can grow businesses, support families, and strengthen their economic independence.

But analysts warn that many loans are being used for consumption rather than productive investment. That could leave households vulnerable, especially if borrowing becomes habitual.

Dr Olomi cautions that the very ease of access can be dangerous.

He said: “Interest rates are high, sometimes punitive, and the convenience of having a loan just a few clicks away means many people borrow without a clear repayment plan.

It’s incredibly easy to take a loan and spend it on something unproductive. That’s where debt stress begins to build”.

Seasoned banker and financial advisor, Mr Kelvin Mkwawa echoes the warning.

“The accessibility of digital loans is both their biggest strength and their biggest weakness. On the one hand, they’ve opened the door for financial inclusion, particularly for women and young people who previously had no access to credit,” he said.

Mr Mkwawa added: “On the other hand, the same accessibility encourages people to over-borrow. It’s not uncommon to find a single individual juggling loans from multiple digital lenders and savings groups at the same time. This leads to financial strain — you’re borrowing here just to repay there.”

Mr Mkwawa stresses the need for safeguards, as he said that interest rates and hidden fees can be very high, making the cost of borrowing extremely expensive.

“Most borrowers don’t have sufficient protection or transparency about what they’re signing up for. We need a stronger framework to manage these loans so they don’t harm households and the economy,” he said.

He added that banks, fintechs, and regulators must work together to create responsible lending standards, while scaling up financial literacy so that people truly understand the risks of borrowing.

Consumer protection advocates agree that stronger safeguards are needed to prevent exploitation.

Transparency on pricing, caps on punitive fees, and better oversight of data use are among the priorities.

According to the Bank of Tanzania (BoT) a total of six banks and financial institutions actively provided digital credit services through mobile network operators (MNOs).

This collaboration significantly enhanced financial inclusion by improving accessibility to credit across the country

The increase was also supported by an improved internet connectivity, which reached over 90 percent, allowing more individuals, including those in remote areas, to apply for and receive digital loans.