SELF Fund rolls out Sh300 billion plan to empower small entrepreneurs

Dar es Salaam. The Self Microfinance Fund (SELF Fund), a state-owned institution under the Ministry of Finance, has unveiled a five-year strategy to expand services for small entrepreneurs across Tanzania.

The initiative targets poverty reduction while curbing exploitative lending practices that have trapped many citizens in chronic debt.

Established in 2015, SELF Fund was created to extend affordable loans to small-scale producers and traders, while addressing the crisis of unregulated micro-lending.

This trend has driven many Tanzanians into predatory schemes locally known as “Kausha Damu.”

“As a government institution, we are duty-bound to help reduce poverty by offering affordable loans to small entrepreneurs,” SELF Fund Chief Executive Officer Santiel Yona said during a media briefing organised by the Treasury Registrar’s Office on Friday.

“We are working to ensure citizens avoid painful loans such as Kausha Damu.”

The fund plans to raise its loan portfolio to Sh300 billion within five years, reaching more than 200,000 direct beneficiaries.

It also intends to expand its branch network from the current 12 to 22, achieving nationwide coverage.

Between 2021 and June 30, 2025, SELF Fund disbursed Sh196.9 billion in loans, maintaining a non-performing loan ratio of less than 10 percent, significantly below the threshold faced by most commercial lenders.

With annual interest rates ranging between 15 and 22 percent, the fund has reached 183,381 beneficiaries, 53 percent of them women.

“Our vision is to deepen outreach while providing financial education alongside credit. We want every Tanzanian entrepreneur, whether in farming, retail, or renewable energy, to know there is a safe, regulated, and affordable source of finance,” said Mr Yona.

Across the country, financial illiteracy has left many citizens exposed to unregulated lenders and informal groups that operate without proper oversight.

Interest rates in such schemes can be extortionate, repayment terms unclear, and failure to repay often results in humiliation or even loss of property.

Aligned with government priorities, SELF Fund has also started financing projects that support clean cooking technologies, considered vital for reducing deforestation, improving health, and lowering household energy costs.

SELF Fund’s Director of Business Development and Marketing, Mr Petro Mataba, said over Sh100 million has so far been issued to more than 100 beneficiaries engaged in the clean cooking value chain.

These loans are enabling entrepreneurs to buy and distribute improved cookstoves, biogas systems, and other clean energy solutions.

“Clean cooking is a government priority because it reduces reliance on charcoal and firewood, which are costly to families and harmful to the environment,” said Mr Mataba.

“This is not only a business opportunity for our clients but also a contribution to national development goals,” he added.

Energy analysts note that Tanzania’s target of ensuring at least 80 percent of households have access to clean cooking solutions by 2033 will require significant investment from both public and private sectors.

Affordable finance for dealers and distributors is regarded as critical.

The Bank of Tanzania (BoT) has tightened regulation of the microfinance sector since the Microfinance Act of 2018 requires all providers, from commercial banks to community savings groups, to be licensed and supervised.

Nevertheless, the informal lending market remains widespread, particularly in rural areas where formal financial services are scarce.

“Many Tanzanians still borrow from friends of friends, neighbourhood loan sharks or unregistered savings groups, not realising they have little legal protection if disputes arise,” said economist and financial literacy trainer, Dr Asha Mrema.

“Institutions such as SELF Fund are a safe alternative because they operate under BoT oversight and are bound by clear lending rules,” she added.

The fund also supports microfinance institutions, having provided credit and capacity-building to 549 registered providers over the past four years.

This dual approach, lending directly to individuals while strengthening the institutions that serve them, is intended to build a more stable and trustworthy microfinance ecosystem.

“One of our core roles is to educate microfinance institutions so they can deliver better services and fairer terms to clients,” said Ms Yona, adding.

“We believe financial literacy is key to reducing defaults and enabling borrowers to use credit productively.”

Experts stress that as Tanzania’s SME sector grows, entrepreneurs must be cautious about where they secure financing.

The BoT maintains a public register of licensed financial institutions, which borrowers can consult before taking loans.