SectionTitle
Loan services / factoring / loan broking / finetrading
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FinTechs belonging to this category act as a loan creditor (even short and very short-term loans), are broking loans or receivables or conduct factoring of loans, which were given to private or business customers. In this business area you also find “peer-to-peer” (P2P) services, in which FinTechs enable a multitude of users to give loans (and brokered by the FinTech-platform) to other users or companies.

Finetrading is hereby a financial service of FinTechs, where they buy due receivables and grant the debtor an extension of payment time.

As an ancillary service some FinTechs offer alternative credit assessment services to check the solvency of a borrower.

Introduction

Attitude of the country towards loan-giving-, factoring-, brokerage-, finetrading- and ancillary services

Loan services provided by FinTechs are used as an alternative to financing models by traditional credit or financial institutions in Tanzania. There are instances where traditional credit or financial institutions are not interested in providing the required loan. Then, a person can get a loan through mobile. These alternatives recently became more and more attractive to a broad audience and this trend is expected to continue over the next couple of years.

Legal affairs

Obligations and requirements to provide loan-giving-, factoring-, brokerage-, finetrading, and ancillary services described above

Loan, loan broking, factoring and finetrading services are governed by the Bank of Tanzania. An institution that is not a financial institution that has a license from the Bank of Tanzania is not allowed to issue loans. The said loans are to be complied with The Payment Systems (Electronic Money) Regulation, 2015, Anti-Money Laundering Act and its Regulations.

For an Institution to be issued a license of Electronic Money Issuance, it must make an application through Form C accompanied with the following documents:

    i. Copy of Memorandum and Article of Association.
    ii. Copy of Memorandum and Article of Association.
    iii. An original letter from the Registrar of Companies listing names of shareholders, their addresses, their nationalities, shares held by each, names of directors and whether directors are nominees or not or whether non shareholder directors.
    iv. Reference letters from two individuals who are not relatives vouching for the good moral character of each of the applicant’s shareholders, proposed directors, and managers.
    v. A duly filled Fit and Proper Person Form E, for shareholders, directors, and manager.
    vi. A duly filled Fit and Proper Person Form E, for shareholders, directors, and manager.
    vii. Proposed services to be offered.
    viii. Proposed locations where money services will be conducted.
    ix. Certified copy of valid network services or application services licence from Tanzania Communications Regulatory Authority.
    x. Proof of payment of a non-refundable application fee provided in First Schedule to these Regulations.
    xi. Evidence of holding the minimum capital set out in the First Schedule.
    xii. Documented procedures and policies for detecting and reporting incidences of money laundering in line with anti-money laundering and combating the financing of terrorism laws.
    xiii. Governance arrangements including internal controls, risks management, accounting procedures; automated issuance of electronic money process; administrative controls, operational risks management with disaster recovery plans and business continuity arrangements, that demonstrates that the arrangements, control, and procedures are appropriate, sound, and adequate.
    xiv. Documented business plan for the intended use of agents and merchants including issuing, acquiring and redemption me

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