Tanzanian President John Magufuli said the captain is in custody and ordered the arrest of all the other operators of the ferry, which capsized Thursday. Officials on Friday said at least 40 people had been rescued.
Tanzania's Electrical, Mechanical and Services Agency, which is responsible for ferry services, said it was unknown how many passengers were aboard the MV Nyerere.
It now lies with only its rusted propellers and hull visible above the waters of the lake, just a few metres from the dock of its largest island Ukerewe.
An aerial image shows the capsized ferry MV Nyerere in Lake Victoria, Tanzania.
Works, Transport and Communication Minister Isack Kamwelwe said the government was sending sophisticated equipment to aid the rescue effort.
Mwanza regional governor John Mongella said search teams were awaiting the arrival of a "device" to turn the wreck over to speed up the search.
The ferry may have been carrying nearly 200 passengers, which is double its capacity, when it capsized close to the Ukara Island on Thursday, according to reports on state media.
More bodies are expected to be found on the capsized MV Nyerere
In a speech broadcast on TBC 1 public television, Magufuli said "it appears clear that the ferry was overloaded".
"This is a great disaster for our nation", Magufuli told the nation in a televised address late Friday, announcing four days of national mourning. It's thought that the ship tipped when passengers moved to one side when the ferry docked, NPR's Ofeibea Quist-Arcton reported.
"We try to make calls to friends, relatives", a local guide, Paschal Phares, told the AP.
"Since my birth, people have gone to their deaths on this lake, but what are we to do?" The man's condition was not immediately clear.
The country's opposition, however, accused the government of negligence. "We did not choose to be born here, we have nowhere to go", he said.
Capsizing is not uncommon in Lake Victoria, which is about the size of Ireland, and the number of fatalities is often high due to a shortage of life jackets and the fact many people in the region can not swim. "We have repeatedly denounced this negligence", said John Mnyika, deputy secretary general of the main opposition party Chadema.
More recently, hundreds of people were confirmed dead when the MV Spice Islander I sank off the coast of the archipelago of Zanzibar in 2011.
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