Private sector lending climbs to 17.2 per cent

DAR ES SALAAM: PRIVATE sector credit growth remained strong, rising to 17.2 per cent in June this year from 16.5 per cent registered in the preceding month on account of high demand for financing and supporting investments and other economic activities.

However, year on year, the latest Bank of Tanzania (BoT) monthly economic review for June shows that the rate was lower than the 21.3 per cent documented in the corresponding period in the previous year.

“The steady credit growth underscores the private sector’s continued demand for financing to sustain economic activities and support investments,” the BoT report highlighted.

Money supply continued to grow, albeit at a slower pace, aligning with the current monetary policy stance.

The extended broad money supply expanded by 10.9 per cent, down from 12.2 per cent in the previous month and significantly lowers than the 18.8 per cent growth recorded in the same period in 2023.

The deceleration reflects measures taken by the Bank to moderate liquidity to maintain inflation in the targeted levels.

Credit extended to agricultural activities continued to register the highest growth, trailed by manufacturing, mining and quarrying.

During the period under review, credit growth in Tanzania’s agriculture sector year on year remained strong at 53.1 per cent compared to 40.6 per cent in the corresponding period last year.

However, on month to month, the BoT report shows that for three consecutive months credit growth slowed down, signalling a weakening demand for loans within the industry.

For example, last April credit growth to agriculture was strong credit at 60.6 per cent the highest since December 2019, in May was 55.7 per cent and in June it was 53.1 per cent.

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The BoT attributes this robust credit growth to government measures aimed at improving the sector’s environment and creating favourable conditions for investment.

Personal loans, largely utilised by micro, small and medium-sized enterprises (MSMEs), remained the major driver of private sector credit growth and accounted for the largest share of total credit extended to the private sector at 37.2 per cent.