Dodoma. Prime Minister Mwigulu Nchemba has criticised the banking system for selling borrowers’ collateral without considering the outstanding loan balance, saying the practice is unfair and requires urgent review.
He also raised concern over cumbersome loan procedures, noting that borrowers seeking large loans are often subjected to the same paperwork requirements as those applying for much smaller amounts.
According to him, the situation discourages some borrowers and pushes them towards informal lenders with fewer procedures.
Speaking on Tuesday, May 19, 2026, during celebrations marking the 20th anniversary of the Warehouse Receipts Regulatory Board (WRRB) in Dodoma, Dr Nchemba said the practice of selling collateral despite substantial loan repayments was hurting many Tanzanians.
“For example, someone borrowed Sh37 million using a tractor as collateral. After repaying part of the loan, only Sh10 million remained, yet the bank went ahead and sold the entire tractor. This is unfair,” said Dr Nchemba.
He urged the Governor of the Bank of Tanzania to establish a framework and lending window that would allow movable assets to be used as collateral.
The Prime Minister also reiterated his position that academic certificates should be recognised as security for loans.
On the warehouse receipts system, Dr Nchemba said Tanzanians should embrace reforms, arguing that informal trust-based arrangements had become outdated.
He said many successful individuals had achieved progress by adhering to proper systems rather than seeking shortcuts.
However, he acknowledged challenges facing the warehouse receipts system, including long distances between farming areas and warehouses, as well as delays in payments after produce is delivered.
According to him, such challenges have contributed to negative perceptions of the system among farmers.
Dr Nchemba proposed the construction of warehouses closer to farming communities and the introduction of advance payments for produce purchases to help farmers meet immediate household needs while waiting for full payments.
Minister for Industry and Trade Judith Kapinga said the success of the warehouse receipts system depended largely on reliable markets.
Ms Kapinga said competitive markets ensured better prices and higher returns, urging farmers and other stakeholders to continue supporting the system.
