Bankruptcy and alternative debt relief for consumers in Tanzania - a comparative investigation

Abstract

This article seeks to compare the Tanzanian consumer bankruptcy and debt relief procedures with those of South Africa. The purpose is to ascertain whether there are any lessons to be learnt by Tanzania from its fellow SADC country, and to indicate a way forward for future law reform in this regard. The research shows that the Tanzanian system, compared to the South African system, is in many respects more liberal towards debtors. So, for instance, the Tanzanian Bankruptcy Act does not require proof of advantage for creditors in order for a debtor to be adjudged bankrupt. However, the Tanzanian system does not provide for any significant alternative debt relief procedure. In 2001 the consumer debt committee of INSOL International recommended that legislators in countries undertaking law reform with regard to debt problems of individual debtors, should provide for alternative debt relief procedures which take into consideration the debtor’s specific needs. We suggest that the Tanzanian legislator, when designing such a procedure, should learn from the mistakes of its South African counterpart. The alternative procedure should be inexpensive and simple and should involve extra-judicial rather than judicial proceedings. Finally, it should offer the consumer a discharge from indebtedness and enable him or her to make a fresh start.