The Union of Tanga Business People (JWT) has called on banks and financial institutions to adopt more flexible debt repayment procedures for borrowers, instead of seizing assets to recover debts.

Speaking at the annual Business Club 2024 forum, which gathered numerous SMEs in Tanga, JWT Secretary General Masoud Ismail emphasized the need for more considerate debt recovery measures. 

He proposed the formation of loan committees in each district, composed of bank officials and business representatives, to assess the reasons behind payment delays and help businesses find solutions.

Ismail also urged the Tanzania Revenue Authority (TRA) to engage with traders who are struggling to pay taxes on time. He suggested that such dialogue would help address challenges and foster better relations between traders and tax authorities.

"If these recommendations are implemented, I believe it would provide a better way to resolve debts," Ismail said. 

"For instance, if someone has repaid a significant portion of their loan but faces unforeseen circumstances preventing them from settling the remaining balance, fellow businesspeople could step in to raise funds instead of resorting to asset seizures."

He added that the current business environment is highly competitive and challenging, with small traders (commonly known as "Machinga") competing with larger businesses. 

Ismail expressed concern that this dynamic, coupled with inflationary pressures, is disrupting supply chains and negatively affecting tax collection, as smaller traders are not subjected to the same tax obligations as larger businesses.

"Entrepreneurs make up about 60 percent of the retail sector in the country, yet many of us are struggling due to inflation and an uneven tax burden," Ismail said. 

"We're required to pay taxes, but smaller businesses with capital under 100 million shillings are not, which squeezes our profit margins and hampers our ability to meet tax deadlines."

Another trader, Jamal Hussein, highlighted the growing importance of mobile phones in financial transactions, noting that banks are experiencing reduced cash flow as a result. 

He urged banks to update their policies and technologies to ensure even non-account holders can conduct transactions through banks, which would expand their customer base and support those in need of loans.

Some bank officials who attended the meeting expressed appreciation for the constructive feedback. 

One financial institution committed to implementing the suggestions in order to improve the business environment and promote economic stability.