Strong credit growth fuels extractive industries

DAR ES SALAAM: MINING and quarrying recorded the highest credit growth, expanding by 32.4 per cent in the year ending October, signalling rising investment and confidence in the extractive industries amid growing demand for construction materials and energy resources.

This surge in credit growth is significant because it points to renewed momentum in sectors that play a key role in driving industrialisation, job creation and infrastructure development.

It also reflects how financial institutions are increasingly channeling funds toward productive sectors, which could boost economic growth and export earnings.

According to the latest Bank of Tanzania (BoT) Monthly Economic Review, the sector’s strong performance outpaced agriculture, which grew by 27.6 per cent and trade, which recorded 24.8 per cent growth.

Personal loans largely used to finance micro, small and medium-sized enterprises (MSMEs) continued to command the largest share of private sector credit, accounting for 36.7 per cent, followed by trade and agriculture at 13.6 per cent and 12.9 per cent, respectively.

This trend is significant because it highlights the crucial role of personal and MSME financing in driving economic activity, job creation and household income growth.

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The dominance of personal loans also suggests that access to credit among small businesses and individual entrepreneurs remains a key engine for private sector expansion and financial inclusion.

During the period under review, improved liquidity conditions also influenced broader monetary aggregates.

The extended broad money supply (M3) grew by 20.8 per cent in the year ending September 2025, remaining broadly unchanged from the previous month, driven mainly by strong credit expansion to the private sector.

Credit to the private sector maintained a robust growth rate of 16.1 per cent, nearly matching the pace recorded in the preceding month.

This steady growth in money supply and private sector credit is significant because it reflects sustained confidence in the economy and continued support for business expansion.

Strong credit growth typically fuels investment and consumption, which in turn stimulates economic activity, while stable liquidity conditions help maintain financial sector stability and ensure adequate funding for productive sectors.