The financial sector in Tanzania demonstrated significant growth in Q1 2025, as outlined in the National Bureau of Statistics report, with bank deposits rising by 18.5% to TZS 43.0 trillion from TZS 36.3 trillion in Q1 2024, reflecting enhanced savings and trust in the banking system, as noted in Figure 8. This surge, coupled with a 14.7% increase in bank loans to TZS 39.1 trillion from TZS 34.1 trillion, indicates a robust expansion in credit availability, supporting investment and consumption across key sectors like manufacturing and mining, which contributed 10.4% and 15.4% to GDP growth respectively. However, the loan-to-deposit ratio declined from 94.0% to 90.9% (-3.1 percentage points), suggesting a more cautious lending approach, potentially strengthening financial stability but possibly limiting credit flow to the private sector, as highlighted in the sector’s 15.4% growth rate and 3.5% GDP share. This cautious stance, amid a stable 5.4% GDP growth (up from 5.2% in Q1 2024 per Figure 3), positions the sector to bolster economic resilience, though it may necessitate targeted policies to ensure broader credit access, especially for SMEs, to sustain long-term growth momentum.
1. Financial Sector (TZS Trillion)
The banking system shows healthy growth in deposits and loans, but lending is becoming more cautious relative to deposits.
| Indicator | Q1 2024 | Q1 2025 | Growth/Change | Key Implication |
| Bank Deposits (TZS Trillion) | 36.3 | 43.0 | +18.5% | Enhanced liquidity; supports investment |
| Bank Loans (TZS Trillion) | 34.1 | 39.1 | +14.7% | Boosts private sector activity; aids GDP |
| Loan-to-Deposit Ratio | 94.0% | 90.9% | -3.1pp | Promotes stability; may limit credit flow |
1. Implications of Bank Deposits Growth (18.5% to TZS 43.0 Trillion)
The 18.5% surge in bank deposits from TZS 36.3 trillion in Q1 2024 to TZS 43.0 trillion in Q1 2025 signals robust financial deepening and increased public confidence in the banking system, driven by rising household savings amid stable inflation (around 3.2% year-on-year in April 2025) and economic recovery. This liquidity boost enhances banks' capacity to fund economic activities, contributing to the financial sector's 15.4% growth rate and 12.0% share of overall GDP expansion in Q1 2025. Economically, it supports monetary policy transmission, as noted in the Bank of Tanzania's (BOT) April 2025 Monetary Policy Report, where money supply (M3) grew by 15.1%, fostering a stable environment for investment and potentially lowering borrowing costs if channeled effectively. However, uneven distribution— with personal and corporate savings concentrated in urban areas—could exacerbate regional inequalities, limiting inclusive growth in rural economies reliant on agriculture.
2. Implications of Bank Loans Expansion (14.7% to TZS 39.1 Trillion)
The 14.7% increase in bank loans to TZS 39.1 trillion from TZS 34.1 trillion indicates expanding credit access for businesses and households, bolstering investment in key sectors like manufacturing (7.2% growth) and mining (16.6% growth), which together drove much of Tanzania's 5.4% GDP rise. This credit growth, estimated at 13.2% for private sector lending in Q1 2025 per investor briefings, aligns with high demand for capital projects and consumption, potentially accelerating job creation and productivity. According to the IMF's June 2025 Staff Report, the banking sector's profitability and adequate capitalization (with non-performing loans at 3.6%, below the 5% threshold) underpin this expansion, reducing systemic risks and supporting fiscal stability. Yet, slower loan growth relative to deposits may signal selective lending, prioritizing high-return sectors and possibly constraining SMEs, which could hinder broader diversification away from resource dependence.
3. Implications of Loan-to-Deposit Ratio Decline (to 90.9%)
The drop in the loan-to-deposit ratio (LDR) from 94.0% to 90.9% (-3.1 percentage points) reflects a more conservative banking approach, where deposit inflows outpaced lending, possibly due to stricter credit assessments amid regulatory emphasis on stability post-2024 reforms. This prudence strengthens financial resilience, as highlighted in Fitch Solutions' 2025 analysis, by building buffers against shocks like global trade tensions, and maintains liquidity ratios above BOT thresholds, contributing to the sector's sound profile. Positively, it mitigates risks of over-leveraging, with personal loans comprising 37.6% of credit in early 2025, but it could slow private sector financing, particularly for infrastructure and agriculture, potentially capping GDP growth below the 6% target for FY 2025/26. In a subdued economic context, as per NCBA Group's Q1 2025 report, this caution might preserve stability but delay stimulus effects from monetary easing.
Key Takeaways and Broader Economic Implications
Tanzania's financial sector in Q1 2025 demonstrates healthy expansion, with deposits and loans fueling liquidity and credit for growth, yet the lower LDR underscores a shift toward stability over aggressive expansion, aligning with BOT's neutral monetary stance. This balance supports Tanzania's resilient 5.4% GDP trajectory amid Sub-Saharan Africa's projected 3.8% growth, attracting FDI (e.g., in banking via digital lending platforms like Weza and Mgodi, disbursing billions in Q1). However, challenges include potential credit gaps for underserved sectors, which could widen inequality if not addressed through inclusive policies like mobile money integration. Overall, a stable sector positions Tanzania for sustainable development, with projections for 13-15% credit growth in 2025, but requires vigilant oversight to avoid liquidity risks in a volatile global environment.
Rising Transaction Values and Growing USD Dependence
From 2020 to 2024, Tanzania’s payment system saw significant shifts in transaction patterns. TISS transactions in Tanzania Shillings (TZS) grew in value by 68.6% (from TZS 186,369 billion in 2020 to TZS 314,233 billion in 2024) despite a 2.92% drop in volume in 2024. Meanwhile, USD-denominated transactions surged—the volume increased by 204%, from 227,894 in 2020 to 692,271 in 2024, while the value rose by 108%, from TZS 16,440 million to TZS 34,215 million. These trends indicate a shift towards high-value transactions in TZS and a growing preference for USD in financial settlements, reflecting deeper integration with global trade and potential shifts in monetary dynamics.
The trends in both Tanzania Shilling (TZS) and United States Dollar (USD) transactions reveal important insights about Tanzania’s financial system, monetary policy, and economic activities.
1. TZS Transactions: High Value Growth Despite Volume Decline
What It Means:
✅ Higher transaction values but fewer transactions indicate a shift toward larger-value transactions. This suggests:
2. USD Transactions: Strong and Consistent Growth
What It Means:
✅ Increased reliance on USD transactions suggests:
3. TZS vs. USD Transactions: A Shift Toward Dollarization?
Final Thought
The trends suggest that while local currency transactions remain dominant, foreign currency transactions are growing faster. This could indicate:
TISS Transactions Denominated in Tanzania Shillings (TZS)
Trend: A steady increase in volume from 2020 to 2023, but a slight decline in 2024.
Trend: Despite a drop in 2021, the value of transactions has shown consistent growth from 2022 to 2024.
TISS Transactions Denominated in United States Dollars (USD)
Trend: Continuous growth in transaction volume every year, indicating increased dollar transactions.
Trend: The value of USD transactions has steadily increased each year, with the highest growth rate in 2024.
Key Insights:
Tanzania’s financial transactions landscape is undergoing a significant digital transformation, with Electronic Fund Transfers (EFT) surging by 44.7% in volume from 14.57 million in 2020 to 21.08 million in 2024, while cheque transactions continue to decline. The value of EFT transactions grew by 77%, reaching TZS 16,769.88 billion in 2024, signaling a strong shift toward digital payments. Conversely, TZS cheque usage dropped by 36% in volume and 17% in value, while USD cheque transactions plummeted by 44% in volume and 35.7% in value over the same period. This trend reflects the increasing adoption of faster, more secure electronic payment methods, reducing reliance on traditional cheques in Tanzania's financial system.
The data from Electronic Fund Transfers (EFT), Tanzanian Shilling (TZS) cheque transactions, and United States Dollar (USD) cheque transactions highlight key shifts in Tanzania's financial landscape, indicating a preference for digital payments while traditional cheque usage declines.
1. Electronic Fund Transfers (EFT): Strong and Consistent Growth
What It Means:
✅ Rising preference for digital payments as more businesses and individuals shift from paper-based payments to electronic fund transfers.
✅ Higher transaction values indicate increased economic activity, financial inclusion, and confidence in digital banking infrastructure.
2. TZS Cheque Transactions: Steady Decline
What It Means:
✅ Paper-based payments are rapidly declining, as businesses and individuals move towards faster, more efficient digital alternatives.
✅ Reduced cheque dependency indicates financial sector modernization, possibly driven by regulatory support and increased banking efficiency.
3. USD Cheque Transactions: Sharpest Decline
What It Means:
✅ Foreign currency cheque usage is declining even faster than local cheque transactions, signaling an even greater shift towards electronic payments in international trade and finance.
✅ Declining USD cheque usage could indicate improved international banking channels, such as wire transfers, mobile money, and SWIFT transactions.
The trends in TACH transactions clearly show that Tanzania is moving towards a digital payment ecosystem. Electronic Fund Transfers (EFT) are rising, while cheque transactions (both TZS and USD) are declining. This shift suggests:
The data from Electronic Fund Transfers (EFT), Tanzanian Shilling (TZS) cheque transactions, and United States Dollar (USD) cheque transactions highlight key shifts in Tanzania's financial landscape, indicating a preference for digital payments while traditional cheque usage declines.
1. Electronic Fund Transfers (EFT): Strong and Consistent Growth
| Year | Volume of Transactions (Million) | Value of Transactions (TZS Billion) | % Increase/Decrease in Volume | % Increase/Decrease in Value |
| 2020 | 14.57 | 9,479.10 | 54% | 57% |
| 2021 | 15.58 | 10,694.45 | 7% | 13% |
| 2022 | 16.81 | 12,079.17 | 8% | 13% |
| 2023 | 19.05 | 14,422.41 | 13% | 19% |
| 2024 | 21.08 | 16,769.88 | 11% | 16% |
Key Takeaways:
✅ Transaction volume grew by 44.7% from 14.57 million in 2020 to 21.08 million in 2024.
✅ Transaction value surged by 77% from TZS 9,479.10 billion to TZS 16,769.88 billion.
✅ The growth rate remained positive every year, with strong double-digit increases in 2023 and 2024.
What It Means:
2. TZS Cheque Transactions: Steady Decline
| Year | Volume of TZS Cheques Processed | Value of Transactions (TZS Billion) | % Increase/Decrease in Volume | % Increase/Decrease in Value |
| 2020 | 651,829 | 2,118.08 | 18% | 26% |
| 2021 | 604,367 | 2,025.61 | (7%) | (4%) |
| 2022 | 546,620 | 1,977.71 | (10%) | (2%) |
| 2023 | 485,972 | 1,893.47 | (11%) | (4%) |
| 2024 | 418,388 | 1,758.04 | (14%) | (7%) |
Key Takeaways:
❌ Cheque volume dropped by 36% from 651,829 in 2020 to 418,388 in 2024.
❌ Cheque value declined by 17%, from TZS 2,118.08 billion to TZS 1,758.04 billion.
❌ The decline accelerated over time, with 14% fewer cheques in 2024 compared to 2023.
What It Means:
3. USD Cheque Transactions: Sharpest Decline
| Year | Volume of USD Cheques Processed | Value of Transactions (USD Million) | % Increase/Decrease in Volume | % Increase/Decrease in Value |
| 2020 | 113,643 | 238.22 | (42%) | (43%) |
| 2021 | 97,545 | 219.24 | (14%) | (8%) |
| 2022 | 107,497 | 238.96 | 10% | 9% |
| 2023 | 88,041 | 192.41 | (18%) | (19%) |
| 2024 | 63,244 | 153.04 | (28%) | (20%) |
Key Takeaways:
❌ USD cheque volume declined by 44% from 113,643 in 2020 to 63,244 in 2024.
❌ USD cheque value dropped by 35.7%, from USD 238.22 million to USD 153.04 million.
❌ The biggest single-year decline happened in 2024, with a 28% drop in volume and 20% drop in value.
What It Means:
The TACH transaction trends from 2020 to 2024 clearly show Tanzania’s transition towards a digital payment ecosystem:
✅ Electronic Fund Transfers (EFT) are rapidly increasing, showing confidence in digital banking.
❌ Cheque transactions (both TZS and USD) are steadily declining, highlighting the phasing out of paper-based payments.