Livestock, harvests, machinery and unpaid invoices can now support formal loans under a law passed by Parliament in Dodoma. Whether farmers actually benefit depends on what happens next.

By Kilimokwanza.org Correspondent

DAR ES SALAAM, 29 September 2026 — For decades, the Tanzanian farmer with 100 head of cattle, a warehouse full of maize or a tractor paid off over five seasons has walked into a bank and walked out empty-handed. The reason was rarely a lack of wealth. It was the wrong kind of wealth. Banks wanted a title deed to land or a building, and most rural producers hold neither in a form a lender will accept.

Parliament has now moved to change that. The Movable Property Security Rights Bill, 2026 — reported in some outlets as the Secured Transactions (Movable Property) Bill, 2026, and in Kiswahili as Sheria ya Mikopo kwa Dhamana za Mali Zinazohamishika – was tabled by Finance Minister Ambassador Khamis Mussa Omar on 31 August 2026 and approved by the House during the sitting that followed. It applies to Tanzania Mainland.

Its premise is simple: movable property has real economic value and should be able to secure credit. For agriculture, which accounts for most of the country’s livelihoods but a small share of its bank lending, that premise could matter more than for any other sector.

What the law covers

The law defines movable property broadly, taking in both tangible and intangible assets. For the farm economy, the relevant categories include:

• Livestock – cattle, goats, poultry and other animals;
• Agricultural produce – crops in store, in transit or awaiting sale;
• Machinery and equipment – tractors, irrigation kits, processing lines, milling machines;
• Vehicles – pick-ups, lorries and motorcycles used in aggregation and transport;
• Inventory – agro-dealer stock of seed, fertiliser and agrochemicals;
• Receivables – money owed to a farmer, cooperative or processor for goods already delivered.

The Bank of Tanzania, in consultation with the Minister, will declare which specific classes of asset are eligible as collateral. During debate, Thomas Kitima (Ikungi East) pointed to machinery, livestock and warehouse receipts as assets the law would bring into wider use.

The Collateral Registry: the heart of the system

The single most important institution created by the law is a Collateral Registry under the Bank of Tanzania, where lenders record their security interests over movable assets.

This addresses the core weakness of lending against movable property: a lorry can be driven away, a herd can be moved to another district, and a store of maize can be sold overnight. Until now, a bank had no reliable way to check whether a borrower had already pledged the same cattle or tractor to another lender.

Under the new system, a lender can search the Registry before advancing money. Priority between competing lenders will generally be settled by the date and time of registration. If Bank A registers an interest in a cooperative’s milk-cooling equipment on Monday, Bank B, approached on Wednesday for a loan against the same equipment, can see that claim.

MPs argued during debate that registration will reduce cases of borrowers pledging one asset for several loans, and will curb exploitative practices by some informal and microfinance lenders.

Why proceeds and receivables matter to agriculture

Two technical features of the law are especially relevant to farming.

The first is proceeds. Farm assets change form constantly: paddy becomes rice, raw cashew is sold, milk becomes yoghurt. Under the law, a security interest can follow identifiable proceeds when the original collateral is sold or transformed. A lender financing a processor’s stock of raw sunflower seed does not lose its security the moment that seed becomes oil and cash.

The second is receivables. A cooperative that has delivered TZS 100 million worth of coffee to a buyer who will pay in 60 days holds, in effect, a TZS 100 million asset. That right to payment can now support a secured loan, giving the cooperative cash to pay members promptly instead of making them wait for the buyer’s cheque.

For contract farming schemes, outgrower arrangements and aggregators that live on thin working capital between harvest and payment, this could be a significant change.

When a borrower defaults

The law sets out what happens if a loan is not repaid. Lenders may take possession of collateral and sell it, applying the proceeds to the debt. Enforcement without a court order is possible only where the borrower has agreed in advance to surrender possession; otherwise, the lender must go to court.

Before sale, the lender must generally give notice to the borrower and anyone else with a registered interest. There is an important exception for agriculture: perishable goods, assets that would lose substantial value if not sold quickly, and goods held for sale — including agricultural produce and livestock — may be sold without the usual notice period. A procedure designed for a tractor cannot be applied mechanically to fresh tomatoes or a herd that must be fed.

Borrowers keep a right to redeem the collateral before final disposal by paying the secured debt and permitted costs. Collateral must be sold for reasonable value, not dumped. Any surplus after the debt and costs are cleared belongs to the borrower; any shortfall may remain owed under the loan agreement. A TZS 100 million loan secured by livestock that fetches TZS 70 million at sale does not become a TZS 70 million debt.

The law also creates offences, with fines and imprisonment, for registering false or fraudulent information, because a registry is only as useful as its data is trustworthy.

What the law does not do

The law does not oblige any bank to lend. A farmer with a tractor worth TZS 50 million is not entitled to a TZS 50 million loan. Lenders will still weigh the borrower’s ability to repay, the asset’s value and liquidity, depreciation, insurance, existing claims, financial records and the purpose of the loan.

What the law provides is legal infrastructure. It makes movable collateral visible, ranks competing claims and sets rules for enforcement. It does not remove credit risk.

The target: financial inclusion

Presenting the Bill, Ambassador Omar tied the reform to raising the use of banking services from 22 per cent of Tanzanians in 2023 to 50 per cent by 2030. He cited the absence of a central registration system for movable collateral and weak procedures for enforcing lenders’ and borrowers’ rights as the gaps the law closes.

MPs linked the reform to Tanzania’s Development Vision 2050 and to job creation, singling out youth, women, farmers and livestock keepers as the groups most likely to gain.

The law also amends other statutes, including legislation on the Bank of Tanzania, companies, chattels transfers and cooperative societies, so that the new system fits into the wider framework governing agricultural businesses and cooperatives.

The hard part: implementation

The law answers the legal question. It leaves open the practical ones that will decide whether a pastoralist in Monduli or a rice grower in Mbarali ever sees a loan:

• Commencement — when does the law take effect, and when does the Collateral Registry open?
• Cost and access — what will registration and searches cost, and can a SACCO or AMCOS in a rural district reach the Registry online?
• Livestock identification — how will a lender prove which animals are pledged? Tanzania’s livestock identification and traceability system becomes central.
• Valuation — who will value standing crops, stored grain or a herd, and to what standard?
• Warehouse receipts — how will the new Registry interact with the existing warehouse receipt system and other asset registries?
• Receivables — how will lenders verify that a buyer’s payment obligation is genuine?
• Insurance — will affordable livestock and crop insurance develop alongside, so that lenders can accept assets exposed to drought and disease?
• Disputes — how quickly will courts and the appeals mechanism resolve contested enforcement?

A new language for rural credit

The old rule in Tanzanian lending was simple: collateral meant land and buildings. The new rule is broader: collateral can be any eligible movable property, and the rights attached to it, that secures an obligation under the law.

For agriculture, that is a substantial shift. Cattle, harvests, tractors, agro-dealer stock and a cooperative’s unpaid invoices are all real wealth. The law gives that wealth a legal route into the formal financial system.

The challenge now moves from Parliament to the Bank of Tanzania, the lenders, the valuers, the insurers and the cooperatives. If they build the systems and products the law makes possible, the 2026 Act could become one of the most important agricultural finance reforms in a generation. If they do not, it will remain a good statute on the books, and the farmer with 100 cattle will keep walking out of the bank empty-handed.

AGCOT’s Next Frontier: Turning Agricultural Relationships into Bankable Assets

There is one dimension of the new movable-property framework that deserves particular attention: Tanzania does not have to start from zero.

For years, the Agricultural Growth Corridors of Tanzania (AGCOT), building on the experience of the Southern Agricultural Growth Corridor of Tanzania (SAGCOT), has been developing a different approach to agricultural finance. Rather than asking farmers and cooperatives to rely on land titles, the model reduces risk through structured value chains, market linkages, off-take arrangements, Commodity Compacts and partnerships with financial institutions. This is sometimes called relational de-risking. The lender looks beyond the farmer’s land to the whole economic relationship around the farmer: the cooperative, the production plan, the buyer, the input supplier, the repayment mechanism and the expected cash flow.

ISOWELU AMCOS in Njombe shows what this looks like in practice. By organising its members, production, markets and repayment, the cooperative secured major CRDB financing for its potato programme. Farmers obtain inputs through the cooperative and repay from the following harvest. The Tanzania Cooperative Development Commission has publicly cited the cooperative’s TZS 1 billion financing as evidence of its strength and repayment capacity. The asset that made this possible was not a piece of land. It was an organised agricultural business.

The 2026 law could take this approach a step further.

From de-risked relationships to formal security

AGCOT and its partners have long worked towards financing structures in which the commercial relationship itself reduces risk. PASS Trust has developed guarantee and de-risking instruments and has been involved in Commodity Compact approaches. One example is a recent soybean compact in Ruvuma that brings together AGCOT, PASS Trust, TADB and other partners around production, markets and investment.

The movable-property framework gives such arrangements a legal foundation they previously lacked. A well-structured agricultural transaction can now draw security from the assets that actually generate repayment: produce, inventory, equipment, livestock and receivables. These can be recorded in the Bank of Tanzania’s Collateral Registry. Contracts do not become equivalent to land titles. What changes is that the financial system can begin to recognise and secure the economic assets and payment rights that already exist within organised value chains. In this way, relationships lead to contracts, contracts to cash flow, cash flow to security, and security to a bankable agricultural enterprise.

Financing the invoice

For many AMCOS, the binding constraint is not production but the gap between delivery and payment. A cooperative may deliver TZS 100 million of produce to a processor that pays in 60 or 90 days. Meanwhile it still owes its farmers, transporters and suppliers. It can be commercially successful and still be short of cash.

This is where receivables finance matters for AGCOT clusters. Examples include:

• sugarcane cooperatives in Kilombero delivering to processors;
• soybean AMCOS in Ruvuma supplying contracted volumes;
• avocado outgrowers in the Ihemi cluster delivering graded fruit to packhouses and exporters;
• rice, maize, sunflower and coffee cooperatives operating under structured market arrangements.

Any of them could use a verified invoice to raise short-term working capital and pay farmers promptly. The bank would then be repaid when the buyer settles. Agricultural finance would no longer stop at the production stage. It would extend to the value farmers have already created.

Machinery for climate-smart agriculture

The same principle applies to productive equipment. Tractors, solar pumps, irrigation systems, cold rooms, milk-cooling tanks and processing lines have long been hard for smaller agribusinesses to finance without land or buildings. Under the new framework, a young entrepreneur can build a financing case around the asset itself:

• a solar pump that enables irrigated production for a contracted market;
• a cold room that cuts post-harvest losses and raises sale values;
• processing equipment that adds value and margin.

In each case, the equipment and the cash flow it generates can form part of the security. This aligns directly with AGCOT’s climate-smart food-systems agenda. It could also speed up investment in irrigation, mechanisation, storage and cold chains across the corridors, particularly by youth-led enterprises.

Livestock: making Maziwa ni Pesa bankable

For many pastoralists and dairy farmers, the largest store of household wealth is not land but livestock. The new law recognises livestock as eligible collateral, which opens a possible new financing structure for the dairy value chain:

• a farmer could finance herd expansion against identifiable animals;
• a cooperative could finance milk-collection infrastructure;
• a collection centre could finance cooling equipment;
• a feed enterprise could finance its stock.

This fits with wider dairy-development efforts in outgrower systems, pasture, collection and processing. Each asset class will still need reliable identification, valuation and insurance before lenders take it seriously.

An agricultural finance stack

Taken together, these developments point to something larger than more collateral. They point to an agricultural finance stack in which different parts of the same value chain become financeable:

• production finance for inputs;
• asset finance for machinery and infrastructure;
• inventory finance for stored crops and stock;
• receivables finance against verified buyers;
• livestock finance;
• value-chain finance structured around contracts, off-take and cooperative cash flows.

AGCOT’s cluster and Commodity Compact model matters here because it builds the commercial architecture a bank needs to understand:

• who is producing, and who is buying;
• what infrastructure is required;
• where repayment will come from.

The 2026 law can provide the legal infrastructure beneath that architecture.

For decades, the question put to many African farmers has been “What land title do you have?” The emerging question is “What productive assets, contracts, receivables and cash flows does your business have, and can they be verified and secured?” That is a better question for a modern agricultural economy. If the reform is implemented well, its greatest significance may not be that a farmer can pledge a cow, a tractor or a stored crop. It may be that Tanzania’s financial system begins to treat the organised value chain itself as bankable.

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Sources: Office of the Attorney General (Bill No. 2 of 2026); Ministry of Finance statements; Parliament of Tanzania proceedings; Bank of Tanzania; Daily News; The Citizen; DLA Piper Africa / IMMMA Advocates legal analysis.