01 — OverviewExecutive Summary
Tanzania's MSME sector sits at the centre of the country's financial-inclusion strategy on paper — it is one of NFIF3's five named priority segments, and MSME-specific indicators are tracked across all four dimensions of the framework (Access, Usage, Quality, and Welfare). TICGL/TERI isolated every one of those MSME-only rows from the June 2026 Mid-Term Evaluation Report to build a picture of the sector on its own terms, rather than as a footnote inside broader Access or Usage numbers.
The resulting picture is genuinely mixed, and more cautionary than the framework's overall "on track" narrative suggests. On one hand, MSME loan accounts in the banking sector more than doubled (+104.8%) in two years, and MSME credit's share of total bank credit rose from 12.0% to 22.7%. On the other hand, the total value of MSME lending fell by 20.7% over the same period, MSME account ownership barely moved (11.0% to 11.6%, against a 2025 target of 13%), and formal business registration — the single foundational indicator for everything else — sits at just 12.5%. Financial-health indicators for MSMEs, while all technically "above target," describe a sector where only around one in eight businesses can reliably pay its obligations on time or carries insurance.
- More borrowers, smaller loans — MSME loan accounts +104.8% to 578,692; total loan value −20.7% to TZS 10,409.1 billion — average loan size per MSME borrower has shrunk substantially.
- Account ownership is nearly flat — MSMEs with an account at a formal financial service provider moved from 11.0% to just 11.6%, even as loan accounts surged — a direct contradiction the evaluation itself flags between two of its own indicators.
- Formalisation remains the binding constraint — only 12.5% of MSMEs are formally registered, against a 2028 end target of just 15%, meaning formalisation itself, not only access to finance, is the deeper structural gap.
- Personal loans are substituting for MSME credit — personal loans used for business purposes grew 189.7% in value, which the evaluation attributes directly to MSMEs avoiding "strict MSME lending requirements."
- Financial health is improving off a very low base — MSMEs able to pay obligations on time rose from 3.0% to 11.8%; insurance coverage from 4.4% to 11.4% — both technically beat target, both still describe a small minority of businesses.
- Institutional attention to MSMEs lags other segments — MSME-targeted activities were only 43.3% complete at the Mid-Term point, and stakeholders rated MSME inclusion at 3.82 out of 5, with over a third of respondents saying MSMEs receive only "moderate attention."
About TERI — TICGL's Research Institute
This MSME-focused analysis was prepared by the Tanzania Economic Research Institute (TERI), TICGL's dedicated research arm covering financial-sector policy, financial inclusion, and Tanzania's broader economic development. TERI's work spans two complementary strands: collecting and analysing primary data directly from the field — through surveys, key-informant interviews, and site-level data collection, as in TICGL/TERI's own city-level and sector-specific studies — and analysing official statistics published by institutions such as the Bank of Tanzania (BOT), NBS, and the Ministry of Finance, as this page does with the NFIF3 Mid-Term Evaluation. Together, this combination of original fieldwork and rigorous analysis of official data is what allows TERI to produce research that helps policymakers, investors, and development stakeholders make better-informed decisions. This report is part of TERI's ongoing series of Tanzanian economic and financial-policy analysis.
Visit TERI — teri.ticgl.com →Read this alongside TICGL's flagship Dira 2050 policy-gaps analysis
MSMEs are the backbone of the private-sector-led growth Dira 2050 depends on — but a sector where loan value is shrinking even as loan count grows, and where formalisation sits under 13%, is not yet positioned to be that engine. TICGL/TERI recommends reading the two pieces together.
Read: What's Next for Tanzania's Economy? The Policy Gaps Keeping $1 Trillion Out of Reach by 2050 →02 — At a GlanceEvery MSME Indicator in the Mid-Term Evaluation
| Dimension | Indicator | 2023 Baseline | 2025 Target | 2025 Actual | 2028 Target |
|---|---|---|---|---|---|
| Access | % MSMEs with formal registration | 10.0% | 12% | 12.5% | 15% |
| Access | % MSME borrowers with credit history in CRS | 19.0% | 22% | 100.0% | 25% |
| Access | % of MSMEs with an account at an FSP | 11.0% | 13% | 11.6% | 16% |
| Usage | % of MSMEs with an active FSP account | 31.0% | 38% | N/A — flagged for revision | N/A |
| Usage | % of MSME credit to total bank credit | 12.0% | 20% | 22.7% | 25% |
| Welfare | % of MSMEs able to pay obligations on time | 3.0% | 10% | 11.8% | 15% |
| Welfare | % of MSMEs with 30-day emergency-fund access | 71.0% | 75% | 76.0% | 80% |
| Welfare | % of MSMEs with insurance coverage | 4.4% | 10% | 11.4% | 15% |
| Welfare | % of MSMEs with contingent financing plans | 50.0% | 55% | 56.3% | 60% |
Source: BOT/NCFI, NFIF3 Mid-Term Evaluation Report, Annex 2 (Measurement Framework), indicators 1.1.3, 1.1.6, 1.2.2, 2.1.2, 2.2.5, 4.1.2, 4.2.2, 4.2.3, 4.3.3.
Nearly every MSME indicator in this table is marked "above the 2025 target" — but several of these targets were set low precisely because MSME baselines were so weak (e.g., only 3.0% of MSMEs could pay obligations on time in 2023). Beating a modest target is not the same claim as adequate performance; TICGL/TERI reads these results in absolute terms throughout this analysis, not only against the targets set for them.
03 — The Core FindingMore Borrowers, Smaller Loans: The MSME Credit Paradox
The single most important chart in this analysis is also the simplest: track MSME loan accounts and MSME loan value across the same three reporting dates. Accounts rise steadily. Value peaks in 2024 — and then falls.
MSME Loan Accounts vs. Total MSME Loan Value, Dec 2023 – Dec 2025
| Date | Loan Accounts | Total Loan Value (TZS bn) | Implied Average Loan (TZS mn) |
|---|---|---|---|
| Dec-23 | 282,514 | 13,130.9 | ≈46.5 |
| Dec-24 | 397,814 | 13,552.4 | ≈34.1 |
| Dec-25 | 578,692 | 10,409.1 | ≈18.0 |
Source: BOT, NFIF3 Mid-Term Evaluation Report, Table 9. Implied average loan size (TICGL calculation) = total value ÷ accounts; not reported directly by BOT.
On TICGL/TERI's calculation, the average MSME loan size fell from roughly TZS 46.5 million in December 2023 to roughly TZS 18.0 million by December 2025 — a decline of more than 60% in under two years, even as the total number of MSME borrowers more than doubled. This is consistent with two different, non-exclusive explanations: (1) genuine first-time inclusion — a wave of previously excluded, smaller MSMEs entering the formal credit system for the first time, which would mechanically pull the average down even if underwriting stayed constant; or (2) a systemic tightening of MSME loan sizes — banks rationing credit more conservatively per borrower amid the informality-linked risk premiums the evaluation itself cites as a driver of interest-rate rigidity. Distinguishing between these two stories requires loan-size-distribution data the published evaluation does not disaggregate; TICGL/TERI flags this as the single most consequential open question in Tanzania's MSME finance data right now.
04 — A Contradiction in the DataMSME Account Ownership Has Barely Moved
If MSME loan accounts more than doubled, a reasonable expectation would be that MSME account ownership at formal financial institutions — the base layer beneath any loan relationship — grew at a similar pace. It did not.
MSME Account Ownership at Formal Financial Service Providers, 2023 → 2025 → 2028 Target
The Mid-Term Evaluation's own Annex 2 measurement framework notes that indicator 2.1.2 ("% of MSMEs with an active account with FSPs," baseline 31.0%, target 38%) returned no usable 2025 figure because it "contradicts" indicator 1.2.2 (MSME account ownership, 11.6%) — two supposedly related MSME account metrics moving in inconsistent directions in the underlying supply-side data. TICGL/TERI treats this not as a minor data quirk but as a signal that MSME account-level data infrastructure — as distinct from MSME loan-level data, which is comparatively well tracked — needs its own dedicated reconciliation effort before it can support reliable policy conclusions.
Read alongside the credit paradox in Section 03, the pattern that emerges is a formal-credit relationship growing faster than the formal-account relationship beneath it — precisely the reverse of what a healthy formalisation trajectory would look like, where account ownership typically leads credit access, not lags behind it.
05 — The Deeper ConstraintFormalisation: Still Under 1 in 8 MSMEs
Every other MSME indicator in this evaluation sits downstream of one foundational fact: only 12.5% of Tanzanian MSMEs are formally registered, up from a 10.0% baseline in 2023, against a 2028 end target of just 15%.
MSME Formal Registration Rate, 2023 → 2025 → 2028 Target
A formalisation rate under 13% means that even a perfectly functioning MSME credit system could, at most, formally serve roughly one in eight of the businesses that exist. The evaluation's own recommendations name this directly: it calls for TRA and local government authorities to introduce incentives for MSME formalisation, and for the Secured Transactions Law to be expedited specifically to expand MSME access to credit through movable collateral — recognising that legal and fiscal barriers to formalisation, not only financial-sector barriers, are binding constraints on MSME inclusion.
06 — A Workaround, Not a SolutionPersonal Loans Are Substituting for MSME Credit
While formal MSME lending value fell, one adjacent category grew sharply: personal loans used for business purposes.
Personal Loans for Business Usage vs. MSME Loan Portfolio Growth, Dec 2023 – Dec 2025
Personal-loan-for-business value grew nearly 190% — almost the mirror image of formal MSME credit's decline. The evaluation's own text states plainly that "some MSMEs rely on personal loans to finance business activities, to avoid some of the strict MSME lending requirements." This is a rational individual response to onerous underwriting requirements, but it is a policy-relevant workaround, not a solution: personal loans typically carry different (often less favourable) terms, do not build a business's own formal credit history, and are invisible to MSME-specific credit-risk and portfolio monitoring — meaning a meaningful share of Tanzania's actual MSME financing activity may already be occurring outside the data this evaluation, and most MSME policy, is built on.
07 — Welfare DimensionMSME Financial Health: Resilient to Shocks, Not Yet Financially Healthy
NFIF3's Welfare (financial health) dimension tracks MSMEs on the same four measures used for households: obligation payment, emergency-fund access, insurance, and contingency planning. The pattern for MSMEs is more lopsided than for adults generally.
MSME Financial Health Indicators, 2023 Baseline vs. 2025
76.0% of MSMEs can access emergency funds within 30 days — a genuinely strong number, close to its 80% end target. But only 11.8% can reliably pay bills and debts on time, and only 11.4% carry insurance. Read together, this describes a sector that can survive a single shock (by borrowing or drawing down reserves) but lacks the underlying discipline, insurance cover, or cash-flow stability that would let it avoid needing that emergency access in the first place. Emergency-fund access is a resilience metric; obligation-payment and insurance are health metrics — and Tanzanian MSMEs are considerably stronger on the former than the latter.
08 — Institutional AttentionMSMEs Rank Mid-Pack in NFIF3's Own Priority-Segment Delivery
NFIF3 names MSMEs as one of five priority segments, alongside women, youth, smallholder farmers/fishers, and persons with disabilities. On the framework's own activity-completion tracking, MSMEs sit in the middle of that pack — ahead of the weakest-served groups, but well behind the strongest.
Priority-Segment Activity Implementation Rate, 2023–2025
Beyond the activity-completion numbers, the evaluation's stakeholder perception survey found MSME inclusion rated 3.82 out of 5 — behind women (4.24) and youth (3.85) — with "over a third of respondents" saying MSMEs receive only moderate attention in NFIF3 implementation. Stakeholders explicitly recommended establishing a dedicated coordination committee for MSMEs (alongside youth and PWDs), mirroring the Women Affairs Committee for Financial Inclusion (WACFI) that is widely credited with driving women's strong performance across every other section of this evaluation.
09 — What Is WorkingCredit Guarantee Schemes: A Genuine, If Small-Scale, Bright Spot
Not everything in the MSME-adjacent data is discouraging. Credit guarantee schemes — designed specifically to solve the collateral problem underlying much of the MSME credit paradox — showed real growth over the Mid-Term period, even if still small relative to the TZS 48.4 trillion national bank loan portfolio.
| Scheme | Focus | Latest Value | Growth |
|---|---|---|---|
| BOT Credit Guarantee Scheme | Cooperatives (AMCOS) and enterprises | TZS 185.72bn loans issued | +74% loans, +86% guarantees |
| SIDO Credit Guarantee Scheme | Agro-processing industries | TZS 425 million | +70% |
| TADB Smallholders' CGS | Farmers, fishers, agro-processors | TZS 117.65bn (11,722 beneficiaries) | +53% |
| PASS Trust CGS | Mixed (14.2% male, 31.1% female, 11.8% youth, 42.9% farmer companies) | TZS 110.15bn (27,910 beneficiaries) | — |
Source: BOT, NFIF3 Mid-Term Evaluation Report, Sections 4.1.5.1–4.1.5.3.
These schemes are precisely the instrument that should, in principle, resolve the credit paradox documented in Section 03 — by substituting a guarantee for the collateral an MSME lacks, they should let banks lend larger amounts to smaller businesses with more confidence. The fact that MSME loan values fell even as guarantee schemes grew suggests the schemes, while directionally correct and worth scaling, are not yet operating at a scale that can offset the broader tightening documented above. BOT-CGS and TADB's combined FY2025/26 guaranteed lending (well under TZS 250 billion) remains a rounding error against the TZS 2.7 trillion decline in total MSME loan value over the same two-year window.
10 — TICGL RecommendationsClosing the MSME Credit Paradox
Fix the data before fixing the policy
- Reconcile the contradiction between MSME loan-account growth and flat MSME account ownership (indicators 1.2.2 and 2.1.2) before drawing further policy conclusions from either.
- Publish MSME loan-size distributions, not just totals and averages, so the credit paradox in Section 03 can be attributed to genuine inclusion versus systemic loan-size rationing.
Attack formalisation directly, not just credit access
- Accelerate the TRA/local-government formalisation incentives the evaluation itself recommends — formalisation is the ceiling on every other MSME indicator in this report.
- Expedite the Secured Transactions Law to expand usable collateral for MSMEs lacking traditional assets, as recommended in the evaluation's own Chapter 7.
Scale credit guarantees to match the size of the gap
- BOT-CGS, TADB, SIDO, and PASS Trust are the right instrument but currently too small to offset the TZS 2.7 trillion two-year decline in MSME loan value — scale, not redesign, is the priority.
- Bring personal-loan-for-business substitution (Section 06) into formal MSME credit tracking so its true scale is visible to policymakers.
Give MSMEs the institutional attention women's inclusion received
- Establish a dedicated MSME coordination committee, as stakeholders themselves recommended, modelled on the Women Affairs Committee for Financial Inclusion.
- Target MSME insurance and obligation-payment indicators directly — both sit near 11%, the two weakest MSME welfare indicators in the entire evaluation.
"An MSME sector where loan accounts double while loan value shrinks is not a story of expanding financial inclusion — it is a story of a widening base being served with progressively thinner credit. Tanzania's MSME data doesn't yet tell us why. Answering that question, not celebrating the account-growth number on its own, should be the priority for the second half of NFIF3."
— TICGL / Tanzania Economic Research Institute (TERI)
11 — SourcesReferences and Data Sources
Bank of Tanzania / National Council for Financial Inclusion, The National Financial Inclusion Framework 2023–2028 (NFIF3): Mid-Term Evaluation Report (2023–2025), June 2026. Every figure in this analysis is drawn from that report's MSME-specific data rows (Tables 9–10, Annex 2 Measurement Framework, and Chapter 3 priority-segment data) unless otherwise stated.
Implied average MSME loan sizes (Table 2) and the framing of the "credit paradox" are TICGL/TERI's own calculations and interpretation of the source data, clearly marked as such throughout this page. This is an independent analysis of a Bank of Tanzania publication and is not itself a Bank of Tanzania or NCFI publication.
12 — Quick AnswersFrequently Asked Questions
Did MSME access to credit improve under NFIF3?
MSME loan accounts grew 104.8% to 578,692 between December 2023 and December 2025, but total MSME loan value fell 20.7% to TZS 10,409.1 billion — meaning average loan size per borrower shrank considerably.
How many MSMEs in Tanzania are formally registered?
Only 12.5% as of December 2025, up from 10.0% in 2023, against a 2028 end target of just 15%.
Do more MSMEs have bank accounts now than in 2023?
Barely — MSME account ownership moved from 11.0% to 11.6%, even as loan accounts more than doubled, an inconsistency the evaluation itself flags.
How financially healthy are Tanzanian MSMEs?
Only 11.8% can reliably pay obligations on time and 11.4% carry insurance, versus 76.0% that can access emergency funds — suggesting resilience to shocks but not durable financial health.
Muhtasari kwa Kiswahili
Fumbo la Mikopo ya MSMEs: Uchambuzi wa TICGL wa Tathmini ya Katikati ya NFIF3 — Uchambuzi huu umejikita moja kwa moja kwenye takwimu za MSMEs pekee zilizomo kwenye Ripoti ya Tathmini ya Katikati ya NFIF3 iliyotolewa na Benki Kuu ya Tanzania (BOT) na Baraza la Taifa la Ujumuishaji wa Kifedha (NCFI), Juni 2026.
Matokeo makuu: Akaunti za mikopo za MSMEs ziliongezeka mara mbili (asilimia 104.8) kufikia 578,692, lakini thamani ya jumla ya mikopo hiyo ilishuka kwa asilimia 20.7 hadi TZS bilioni 10,409.1 — wastani wa mkopo kwa kila mkopaji ulipungua kutoka takribani TZS milioni 46.5 hadi milioni 18.0. Umiliki wa akaunti za MSMEs katika taasisi rasmi za fedha ulibaki karibu bila kubadilika (asilimia 11.0 hadi 11.6), na ni asilimia 12.5 tu ya MSMEs zilizosajiliwa rasmi. Mikopo binafsi inayotumika kwa biashara iliongezeka kwa asilimia 189.7 katika thamani — ikionyesha wajasiriamali wengi wanakwepa masharti magumu ya mikopo rasmi ya MSME.
Kiafya ya kifedha (welfare), ni asilimia 11.8 tu ya MSMEs zenye uwezo wa kulipa madeni kwa wakati na asilimia 11.4 tu zenye bima — ingawa asilimia 76.0 zinaweza kupata fedha za dharura. Hii inaonyesha kuwa MSMEs zinaweza kuhimili mshtuko mmoja wa kifedha lakini bado hazina afya ya kifedha ya kudumu. Kwenye utekelezaji wa shughuli za NFIF3, MSMEs zilikamilisha asilimia 43.3 tu ya shughuli zilizopangwa — chini ya wanawake (asilimia 78.1) — na wadau wanapendekeza kuanzishwa kwa kamati maalum ya uratibu wa MSMEs, kama ilivyofanyika kwa wanawake kupitia WACFI.
- Akaunti za mikopo za MSME: 578,692 (+104.8%); Thamani ya mikopo: TZS bilioni 10,409 (−20.7%)
- Umiliki wa akaunti za MSME: asilimia 11.6 tu (kutoka 11.0%)
- Usajili rasmi wa MSME: asilimia 12.5 tu
- Uwezo wa kulipa madeni kwa wakati: asilimia 11.8; Bima: asilimia 11.4
- Utekelezaji wa shughuli za NFIF3 kwa MSMEs: asilimia 43.3 tu
Chanzo: Benki Kuu ya Tanzania (BOT) / Baraza la Taifa la Ujumuishaji wa Kifedha (NCFI), Ripoti ya Tathmini ya Katikati ya NFIF3, Juni 2026. Uchambuzi umeandaliwa na Idara ya Utafiti ya TICGL / Tanzania Economic Research Institute (TERI).