Private sector credit records robust growth

Credit extended to the private sector recorded a year on year growth of 22.5 per cent in the year ending May compared to 15 per cent recorded in the corresponding period on account of improved business conditions and supportive fiscal and monetary policies.

According to the Bank of Tanzania (BoT) monthly economic review for June agricultural activities continued to record the highest growth at 40.9 per cent, followed by transport and communication.

Loans extended to personal undertakings, primarily for small and medium enterprises, remained one of the major contributors to credit growth during the reference period.

Apart from agriculture, personal loans continued to account for a significant share of the total credit, followed by trade and manufacturing activities.

Personal loans attracted 23.5 per cent of credit during the period compared to 20.6 per cent registered in the preceding period last year.

During the reference period, credit extended to transport and communication fell to 26.7 per cent compared to 27.4 per cent in the previous year.

Commercial banks credit offered for trade activities declined to 16.4 per cent in the period under review compared to 19.7 per cent recorded in the preceding period.

Building and construction attracted 14.4 per cent credit during the period, which is down compared to 18.7 per cent registered in the year before.

Credit extended to manufacturing activities decreased to 11.4 per cent in the year to May compared to 16.5 per cent offered in the other period.

In May this year, the conduct of monetary policy aimed at cautiously balancing supply of shilling liquidity with the demands from various economic activities, while containing inflation within the target amidst the ongoing global shocks.

The policy stance supported growing demand for loans, attributable to the sustained recovery of private investment owing to the ongoing improvement in the business climate.

Correspondingly, the extended broad money supply grew by 17.5 per cent in the year ending May compared with 9.1 per cent in the corresponding period last year.