Debt Recovery in Tanzania: Commercial Options Before Litigation

This page is the pre-litigation debt-recovery operating file: which demand you send, on which instrument, to which address, in what order.

• Terms set at launch: the first 90 days
• The ledger behind the figure: records that support returns
• Land as security: investment land due diligence
• Naming the right person: a name is not a trademark
• Credit reporting: credit reference bureau licensing

As at 14 September 2026. Confirm the debtor at brela.go.tz and court rules with the Judiciary. This file rests on the Law of Contract Act Cap. 345, the Law of Limitation Act Cap. 89 and the Companies Act Cap. 212.

The obligation, the debtor, and the registry that names them

A commercial receivable here is a contract claim. Cap. 345 supplies formation, breach and compensation, and decides how much of your default-interest clause survives: a court cuts back a sum that reads as a penalty.

Recovery turns on identity: you are owed by a legal person, not the manager who signed the delivery note. The BRELA extract fixes the registered name, the notice address and the directors. Search the charges register too: Companies Act Cap. 212 voids an unregistered charge against a liquidator, so it shows who ranks ahead of you.

Mainland and Zanzibar are separate files. A Mainland company answers in the High Court, whose Commercial Division takes disputes above its pecuniary threshold; below that the Magistrates’ Courts Act Cap. 11 applies. A Zanzibar company sits with BPRA and the islands’ own procedure. Income tax on a write-off stays with TRA; VAT on a Zanzibar supply belongs to ZRA.

What a non-citizen creditor may not do here

Restrictions come before process. The Land Act Cap. 113 confines non-citizen land holding to investment purposes through a derivative right. Force a sale under such a mortgage and the buyer must still be able to hold the land. Run the land due-diligence file first.

Representation is reserved to advocates holding a current practising certificate under the Advocates Act Cap. 341; a collection agency on quasi-legal letterhead weakens the file. Standing is third: Companies Act Cap. 212 requires a foreign company carrying on business here to register a place of business, so a creditor invoicing from abroad should expect a preliminary objection. Check the reserved list at GN No. 487A of 2025 against your own trade.

The limitation clock, and the signature that resets it

Six years is the period for a suit founded on contract under Cap. 89, the Law of Limitation Act. Time runs from the date the cause of action arose: the day payment fell due, not the day you gave up chasing. Money secured on land, and a judgment debt, run longer.

The same Act makes acknowledgement operative: a written acknowledgement signed before expiry restarts the period, and part payment does the same. It is the cheapest signature to obtain: a debtor who cannot pay will still sign a reconciliation. Electronic records are admissible under the Electronic Transactions Act, 2015, so a director’s message confirming the balance is evidence if preserved with its metadata and tied to the ledger behind the figure.

Five routes before a plaint

Creditors forget row four: bonds and on-demand guarantees expire, and the bank will not pay a week late. Where the security is a mortgage over registered land, Cap. 113 blocks a move straight to sale: the mortgagee serves a statutory notice and must allow the prescribed period, sixty days in the current text, to remedy the default. The mortgage must itself be registered under the Land Registration Act Cap. 334.

Three demands, three instruments

The advocate’s demand is written for a later reader: the contract and its date, the invoices, payments received, the balance, the interest claimed, and a deadline. It does not threaten criminal process: reporting a civil debt to the police under the Penal Code Cap. 16 turns a recoverable receivable into a malicious-prosecution counterclaim.

A statutory demand serves a different purpose. A company is deemed unable to pay its debts, in the Companies Act Cap. 212 sense, where a creditor owed more than the statutory sum serves written demand at the registered office and the company neglects it three weeks. The risk matches the power: on a debt genuinely disputed the court treats a winding-up petition as an abuse of process, with costs. Confirm the threshold, section and neglect period before service.

The third applies where the debtor is a ministry, agency or other body the Government Proceedings Act Cap. 5 covers: ninety days’ notice of intention to sue, before filing. That period is not dead time. It is the window in which an accounting officer clears a payment without a decree. Attach the reconciliation and address the accounting officer.

Mediation and arbitration: the clause picks the forum

Read the dispute-resolution clause first. If it is an arbitration agreement seated in Tanzania, the 2020 statute governs and a court asked to hear your suit will ordinarily stay it. That Act replaced the older framework, established the Tanzania Arbitration Centre, and introduced accreditation for arbitrators and mediators.

Mediation is compulsory once pleadings close under the Civil Procedure Code Cap. 33, even if you sue. Convening it early costs a mediator’s fee; after filing it costs the plaint, the court fee and the months between. Record what you settle as a deed carrying an acknowledgement, a payment schedule, acceleration on default and directors’ guarantees. Then stamp it: under the Stamp Duty Act Cap. 189 an unstamped instrument may be refused in evidence.

The recovery sequence

1. Reconcile the account to one figure the ledger supports: invoices, delivery notes, credit notes, receipts.
2. Pull the registry extract: BRELA on the Mainland, BPRA for Zanzibar, and fix name, notice address and charges.
3. Date when time began to run against the limitation Schedule, and diarise the expiry.
4. Obtain the signed acknowledgement from a signatory who can bind the debtor, with a schedule and acceleration clause.
5. Audit the security: guarantee expiries, retention balances, registered charges, mortgages, before any lapses.
6. Instruct an advocate on the correct demand: contractual, statutory at the registered office, or the ninety-day notice.
7. Open the clause: mediation or arbitration notice, and only then a plaint, weighing attachment before judgment.

The file the desk asks for

A file an advocate can act on this week holds the following, in originals or certified copies.

• Signed contract or purchase order, every variation, and the dispute clause.
• Tax invoices bearing the debtor’s TIN and VRN, with EFD receipts for cash.
• Delivery notes, goods-received notes or completion certificates signed on the debtor’s side.
• Statement of account and the general-ledger extract producing it.
• Correspondence in date order, messaging threads preserved with metadata.
• A current registry extract showing directors and the charges register.
• Guarantee or bond with its expiry, deed of mortgage with registration particulars.

For a foreign counterparty add shipping documents, the letter of credit and the bank advice. A receivable invoiced in USD is claimed in USD; a domestic supply is pleaded in shillings.

Illustrative arithmetic on a TZS 480 million receivable

A supplier invoices a Dar es Salaam contractor TZS 480,000,000 inclusive of tax. At the VAT Act Cap. 148 standard rate of 18%, that is TZS 406,779,661 of consideration and TZS 73,220,339 of VAT, declared and paid on the invoice date. The cash has gone; the debt has not arrived.

The contractor offers TZS 384,000,000, 80%, in full and final settlement, asking a waiver of TZS 96,000,000. The structure negotiated instead is TZS 192,000,000 within fourteen days plus eight monthly instalments of TZS 36,000,000, again TZS 480,000,000, on a signed acknowledgement with directors’ guarantees, accelerating on one missed instalment.

The waiver is not free: writing off TZS 96,000,000 is an Income Tax Act Cap. 332 question, and TRA will ask what recovery steps preceded it. A reduction in consideration takes effect by credit note; bad-debt relief carries conditions and a time window. Confirm the live schedule on tra.go.tz. Suing for the full sum carries ad valorem court fees and a decree still to be executed. Illustrative arithmetic, not a quotation.

Where recovery files stall

• The demand reaches a site office while the notice address sits elsewhere, so service is contested.
• The reconciliation comes off a spreadsheet nobody ties back to the audited accounts.
• The acknowledgement carries a procurement officer’s signature and no authority to bind.
• A winding-up route is taken on a debt disputed in writing for a year, and the petitioner pays costs.
• Default interest drafted as a penalty is cut back to what Cap. 345 allows.
• Six years pass in “he keeps promising”, and the claim is time-barred.

What moved since the Arbitration Act 2020

Mainland arbitration now sits under that statute, with accreditation for those who sit; Zanzibar uses its own instruments. Clauses naming the previous enactment, or an institution no longer administering cases, want rewriting at the next renewal. The Judiciary has moved filing onto electronic systems and tightened the mediation timetable. Check e-filing requirements against live guidance.

Mandate-holders this file does not replace

BRELA owns the company register and the charges filed against it; BPRA owns the Zanzibar equivalent. The Judiciary owns the courts, thresholds, mediation and execution; the Tanzania Arbitration Centre owns accredited arbitration. TRA owns the tax consequence of a write-off and the stamping of your settlement deed. The Bank of Tanzania licenses the credit reference bureaux, and TIRA the insurers placing trade-credit cover under the Insurance Act Cap. 394.

Zatra prepares, structures and coordinates: reconciliation, registry search, security diary, settlement structure, tax consequence. It does not practise law, audit or issue approvals: the signed demand, the petition and the plaint are advocate work.

What to confirm before you act

• The debtor’s registered name, notice address and directors on a current extract.
• When time began to run, and the Schedule row fixing your period.
• The dispute clause: forum, seat, institution, and whether it still works.
• The live threshold and neglect period for a statutory demand.
• Expiry dates on every guarantee, bond and retention, and particulars for each charge.
• Whether the Commercial Division takes your value, and the mediation timetable.
• Whether the Cap. 5 notice applies, and when its count started.
• Bad-debt and credit-note treatment with TRA before conceding a discount.