Tanzania's Secured Transactions Bill marks a significant shift in how intellectual property can be used in financing. For the first time, businesses will be able to formally use trademarks, patents and other IP rights as collateral for loans. We explain the implications.
Background: What Is the Secured Transactions Bill?
Tanzania's Secured Transactions Bill (the "Bill") is part of a broader package of reforms to modernise Tanzania's financial and commercial legal framework. The Bill establishes a comprehensive regime for security interests in movable assets — including intellectual property. It is modelled on international best practices, including the UNCITRAL Model Law on Secured Transactions, and is expected to significantly improve access to finance for Tanzanian businesses.
IP as Collateral: The Current Position
Under existing Tanzanian law, using IP rights as collateral for a loan is legally possible in theory, but practically difficult. There is no public registry for security interests in IP, making it hard for lenders to conduct due diligence or perfect their security interest. The Trade and Service Marks Act (Cap 326) provides for the assignment of trademark rights but is silent on security interests. This legal uncertainty has caused most lenders to decline IP as collateral.
What the Bill Changes
The Bill will create a centralised, publicly searchable register of security interests in movable assets, including IP. Key changes include: a clear mechanism for creating a security interest in IP rights; registration of security interests at a central registry to provide public notice; a priority system to resolve competing claims over the same IP asset; and enforcement procedures for lenders in the event of borrower default.
Which IP Rights Can Be Used as Collateral?
The Bill is expected to cover all forms of registered intellectual property in Tanzania, including: registered trademarks (BRELA and BPRA); patents; industrial designs; and copyright in certain circumstances. The key requirement will be that the IP right is registered and in good standing — lapsed or unregistered rights will provide limited or no collateral value.
Implications for Businesses
For businesses with strong brand recognition or valuable technology, the Bill opens up a new source of financing. A business that has invested in building a recognisable brand — even if it has limited physical assets — will be able to use that brand value as security for a loan. This is particularly significant for start-ups, creative businesses and SMEs in the technology and consumer sectors.
What IP Owners Should Do Now
The most important preparation is ensuring your IP portfolio is in order before the Bill comes into force. This means: registering all trademarks with BRELA, BPRA and ARIPO; ensuring all registrations are current and renewed; conducting an IP audit to identify unregistered rights that should be registered; and documenting ownership of IP clearly (including any assignments from founders, employees or contractors). Our team can assist with all of these steps — contact us for a confidential discussion.
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