Leading banks in Tanzania have recorded significant growth in profits over the past four years, with combined nine-month profits increasing from Sh1.12 trillion in 2023 to Sh2.02 trillion in the same period this year. This represents an increase of at least 80.4 percent, although the comparison involves a different number of banks. The growth in profits has raised questions about whether customers are benefiting from affordable financing, competitive savings returns, and accessible financial services.
The banking industry's growing financial strength has not necessarily translated into cheaper loans, lower banking charges, and better returns for ordinary customers. In the nine months to September 2026, the 16 top banks recorded total loans, advances, and overdrafts over Sh55.12 trillion, an increase of 8.12 percent from Sh50.98 trillion at the end of June. However, borrowers continue to face high interest rates, while depositors question whether the interest earned on their savings adequately reflects the returns banks generate from lending.
Prof Haruni Mapesa, Rector of the Mwalimu Nyerere Memorial Academy, attributes the industry's rising profitability to several factors, including technological investments, reduced operational costs, increased economic activity, and charges imposed on customers. He notes that banks have increasingly adopted digital systems and technology in service delivery, reducing their dependence on large numbers of employees and enabling them to manage operational expenses more efficiently.
However, Prof Mapesa also notes that lenders have introduced charges across almost every service they provide, creating additional revenue streams beyond interest income. He questions whether customers are receiving a proportionate share of the benefits, particularly in the cost of borrowing and returns on deposits. Prof Mapesa argues that borrowers face several costs beyond the interest charged on loans, including processing fees and other administrative charges, which increase the overall cost of financing.
Dr Tobias Swai, a finance and investment expert at the University of Dar es Salaam, acknowledges that rising profitability is an important feature of a healthy banking industry, given the sector's contribution to economic development. He notes that banks play a central role in mobilising savings, financing investments, and facilitating economic activities, making their financial stability important to the wider economy. However, Dr Swai also notes that borrowing from commercial banks remains expensive, presenting challenges for individuals and businesses seeking financing.
According to Dr Swai, borrowers should exercise financial discipline by assessing their repayment capacity before taking out loans, while considering alternative financing arrangements such as savings and credit cooperative societies (Saccos). He also calls for closer collaboration between the Bank of Tanzania (BoT) and higher learning institutions to examine challenges in the financial sector and identify ways of improving access to affordable credit.
The Bank of Tanzania's data shows that lending and deposit rates have moved differently over time, raising questions about how changes in monetary policy and banks' funding costs are reflected in the prices offered to customers. In December 2023, the overall lending rate declined to 15.34 percent, while the average deposit rate fell to 7.45 percent. More recent BoT figures show that the overall lending rate increased to 15.54 percent in September 2026, while the overall deposit rate increased to 9.02 percent.
Key points
- Tanzanian banks' profitability has raised questions about whether customers are getting a fair deal in terms of affordable financing, competitive savings returns, and accessible financial services.
- The banking industry's growing financial strength has not necessarily translated into cheaper loans, lower banking charges, and better returns for ordinary customers.
- Experts are calling for closer collaboration between the Bank of Tanzania and higher learning institutions to examine challenges in the financial sector and identify ways of improving access to affordable credit.
