Dar es Salaam, March 7 -- Dar es Salaam. Tanzanias microfinance sector, long seen as a lifeline for small businesses, farmers and low-income borrowers, is facing mounting pressure from liquidity constraints, regulatory demands and rising loan repayment challenges.

Industry players warn that these factors are slowing the sectors growth and limiting its ability to meet the increasing demand for credit among entrepreneurs who often lack access to traditional banking.

Microfinance institutions play a critical role in expanding access to finance, particularly for micro and small enterprises in rural and peri-urban areas. However, many lenders say limited access to capital is restricting their ability to extend new loans.

With reduced liquid...