SACCOS Licensing in Tanzania: Category A or B Sets the Capital

This page is the SACCOS licensing operating file: who may hold the licence, which category a society’s deposit model puts it in, and the capital that category carries.

• The lender’s route, a different tier entirely — the microfinance licence tiers
• What the central bank licenses itself — Bank of Tanzania licensing
• The account the society needs on day one — corporate account KYC

As at 21 September 2026. Confirm the live position on ushirika.go.tz and bot.go.tz; this file rests on the Cooperative Societies Act, 2013 (Cap. 211), the Microfinance Act, 2018 and GN 675/2019.

Only a registered society can hold this licence

Regulation 3 of GN 675/2019 defines a SACCOS as a savings and credit cooperative society registered under the Cooperative Societies Act, and section 18(2)(a) of the Microfinance Act, 2018 requires that certificate inside the licence application. A company limited by shares cannot apply. Neither can a partnership, a trust, an NGO or an individual moneylender — the moneylender belongs in Tier 2, under a separate instrument.

Section 20(1) sets the entry number at twenty persons, and section 20(2) tests each of them: eighteen years and of sound mind, a trade or occupation relevant to the society’s object, a common need the society exists to satisfy, and capacity to pay fees and acquire shares. Control is capped by statute — section 42 gives every member one vote whatever the shareholding, and section 45(1) forbids any member other than a registered society from holding more than one fifth of the share capital. A promoter intending to fund the floor alone has misread the vehicle.

The Registrar registers; the Commission licenses for the Bank

Registration is the Registrar of Cooperative Societies’ act: section 30(1) takes four copies of the proposed by-laws signed by the applicants and a feasibility study, and section 35(1) then makes the society a body corporate. Section 36(3) caps probationary operation at two years.

The licence is separate and later. Section 5(1) of the Microfinance Act puts SACCOS in Tier 3, and section 14(1) lets the Bank of Tanzania delegate Tier 3 functions to the Commission by notice in the Gazette — done through the Microfinance (Delegation of Powers and Functions) (Tier 3) Notice, GN No. 887. The Commission issues the licence, supervises, approves branches and reports to the Bank. Registration authorises nothing on its own: regulation 4(1) bars microfinance business without a licence, and section 16(1) makes it an offence.

Savings or deposits: the word that picks the category

Regulation 13 turns the money model into a legal category. Category A permits membership and voluntary shares, accepting savings from members, lending to members and making investments. Category B adds accepting deposits, loan participations, microleasing, microinsurance agency, agent banking with prior approval, equity investment and debit cards.

Societies routinely draft by-laws promising a fixed-term product at a stated rate, call it savings, and apply for Category A because the capital is twenty times lighter. That product is a deposit, regulation 13(2)(b) is engaged, and the society is trading outside its licence — a revocation ground under regulation 12(1)(b), not a drafting quibble.

Regulation 13(3) draws the outer boundary for both: no current accounts, no deposits from non-members, no foreign exchange, no trust operations, no credit cards, no funds transfers, and no business other than financial services to members. Debit cards sit inside a Category B licence; credit cards outside both.

The capital each category carries

Regulation 18(1) requires a Category A society to commence operations with, and maintain at all times, a minimum core capital of ten million shillings; regulation 18(2) sets two hundred million for Category B. This is not a launch target to be reached and then spent.

Core capital is defined in regulation 3 as fully paid up membership shares, the statutory reserve fund, retained earnings, and capital grants and donations that are not transitory and not payable out except on liquidation. Savings are not core capital. Deposits are not core capital. A society adding its savings balance to share capital to clear TZS 200,000,000 has counted the liability as the cushion.

Three ratios run alongside the floor under regulation 18(3): core capital of not less than eight percent of total assets, institutional capital of not less than six percent, and net institutional capital of not less than six percent. Past TZS 125,000,000 of total assets it is the eight percent ratio, not the ten million floor, that binds a Category A society.

Category A against Category B, line by line

What the capital floor does to the loan book

Regulation 33 ties every loan to core capital, not to cash in hand. A loan secured by voluntary shares, savings, time deposits or goods shall not exceed ten percent of core capital; one not fully secured shall not exceed five percent.

At core capital of TZS 10,000,000 the largest fully secured loan is TZS 1,000,000 and the largest partly secured loan TZS 500,000. At the Category B floor of TZS 200,000,000 the same percentages give TZS 20,000,000 and TZS 10,000,000. A society of civil servants expecting a TZS 5,000,000 salary-backed loan needs core capital of TZS 50,000,000 before that loan is lawful, in either category. Regulation 48(1)(b) also holds external borrowings to twenty five percent of total assets.

The sequence, from promoters’ meeting to licence

1. Settle the common bond and the roll of members. Twenty qualifying persons, each tested against section 20(2).
2. Choose the category first. By-laws, products and capital call follow from it; a later change means an amendment under section 53(1).
3. Register the society. Four copies of by-laws and a feasibility study to the Registrar, under section 30(1).
4. Raise the floor as core capital. Paid-up shares and the statutory reserve fund, never savings balances.
5. Appoint a board and manager who survive scrutiny. Regulation 25(2) disqualifies board members for dishonesty, conflict of interest, or obligations delinquent beyond ninety days.
6. Lodge the licence file with the Commission with the non-refundable fee under regulation 5(4).
7. Expect a determination within sixty days under regulation 6(1). The clock runs from completeness, not lodgement.
8. Commence business within six months. Regulation 8(3) expires a licence where the business has not started in that window.
9. Start the reporting clock. Returns under regulation 67; audited accounts within four months of the year end under regulation 52.

What the licence application carries

• Certified copies of the current by-laws and of the certificate of registration.
• Names, addresses, curricula vitae, certified certificates, identity documents and two photographs for the board, supervisory committee and senior officers.
• The lending policy, and the general meeting resolution authorising the application.
• Proof of an internal auditor, a management information system, and safekeeping over cash and records.
• Category B only: a three-year business plan with projections, the investment, savings, liquidity, finance and collections policies, and evidence of insurance cover.

The supervision that starts the day the licence issues

Regulation 46(1) requires liquid assets of not less than fifteen percent of members’ total deposits, savings, short term borrowings and other short term liabilities. Regulation 40 grades delinquency mechanically: especially mentioned from thirty-one days at ten percent, substandard from ninety-one at thirty percent, doubtful from one hundred and eighty-one at fifty percent, and loss beyond a year at one hundred percent. Regulation 41(1) stops interest accruing at ninety days.

Distributions are gated. Regulation 22(2) blocks any dividend unless the institutional capital ratios are met, the statutory reserve fund covers accumulated losses, the provisions and share transfer fund are set aside, and both the general meeting and the Commission have approved. Members expecting a payout regardless of ratios should be told before they subscribe.

Illustrative arithmetic: what each category costs to stand up

Take a staff-based society of forty members choosing Category A. Core capital of TZS 10,000,000 across forty members is TZS 250,000 of paid-up shares each, and section 41(1) withholds member rights until half of that is paid. The application fee is TZS 100,000. Zatra’s work on the file is charged at TZS 300,000 per hour on a scoped estimate of six to twelve hours — TZS 1,800,000 to TZS 3,600,000, the spread driven by by-law drafting and existing governance evidence.

Category B changes the capital call, not the professional fee: TZS 200,000,000 over forty members is TZS 5,000,000 each, twenty times the Category A subscription, on an application fee of TZS 300,000. What the members buy is the right to take deposits, open branches, run microleasing and agency business, and a single-member lending ceiling of TZS 20,000,000 rather than TZS 1,000,000. Illustrative arithmetic, not a quotation; fees and floors move by instrument.

The Commission’s own performance report records 1,283 registered SACCOS against 884 licensed as at 31 December 2023; of the 882 licences active after two revocations, 741 were Category A and 141 Category B. The Category B population is small because the floor is real.

Where these files stall

• Savings counted as core capital. The floor is tested on paid-up shares, reserves and retained earnings, and the shortfall surfaces at the first prudential return.
• By-laws promising a deposit product under a Category A application, which puts the society outside regulation 13(1) from the day it opens.
• A society registered for years and trading on savings without the licence regulation 4(1) requires.
• A licence left idle past six months, expiring under regulation 8(3) while promoters raise the balance of the capital.
• A Category A society opening a second office, which regulation 15 does not permit at all.

Mandate-holders this file does not replace

The Registrar of Cooperative Societies owns registration, by-law amendment, inquiry under section 91(1) and inspection under section 93(1). The Commission owns Tier 3 licensing, supervision, branch approval and sanctions, exercising delegated powers and reporting to the Bank of Tanzania. The Bank owns the delegation itself and the tiers a SACCOS does not enter. An external auditor owns the audit required by section 55 and regulation 52. Zatra prepares, structures and coordinates the file, grants no licence and does not practise law or audit.

What to confirm before the Client acts

• Whether twenty qualifying members exist on paper, each meeting section 20(2).
• Whether the intended product is savings or a deposit, because that single word chooses the category.
• Whether the capital raised is core capital under regulation 3, or member liabilities in disguise.
• The current fee and licensing practice on the Commission’s own portal.