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.

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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.