Agricultural credit growth signals sector confidence
DAR ES SALAAM: AGRICULTURAL activities sustained the highest growth in credit uptake, rising to 31.8 per cent from 30.2 per cent in the previous period, signalling strong demand and increased investment in the sector.
According to the latest Monthly Economic Review by the Bank of Tanzania (BoT), this trend reflects growing confidence in agriculture’s role as a key driver of inclusive economic growth and rural development.
“This upward trend underscores agriculture’s critical role in the economy and highlights growing confidence among financial institutions in supporting agribusiness as a driver of economic growth and rural development,” the Bank report stated.
The central bank report shows that the sustained growth in agricultural credit is highly significant for both farmers and the broader economy. For farmers, increased access to credit means greater ability to invest in modern inputs, expand production and adopt climate-resilient practices directly improving productivity and incomes.
At the macro level, this trend reflects rising confidence in the sector’s viability and its potential to drive inclusive economic growth, food security and rural employment.
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During the period under review, the BoT report said the private sector credit growth remained robust at 15.9 per cent, maintaining momentum in line with the rate recorded in the previous month an indication of sustained business confidence and ongoing expansion in economic activity.
“The steady growth in private sector credit reflects the continued easing of financial conditions and the effectiveness of accommodative monetary policies aimed at stimulating economic activity,” stated the report.
It also signals the increased borrowing by businesses to finance investment, expand operations and meet working capital needs key indicators of a recovering and resilient economy. Sustained credit expansion in this segment is critical for job creation, innovation and broader private sector-led growth.
Other sector’s performance are mining and quarrying, along with transport and communication that recorded strong credit growth of 26.2 per cent and 21.6 per cent, respectively.
Meanwhile, personal loans largely supporting micro, small and medium enterprises accounted for the largest share of private sector credit at 35.5 per cent, followed by trade (14 per cent) and agriculture (13.3 per cent).
The extended broad money supply grew at an annual rate of 19.9 per cent in July, up from 18.7 per cent in the previous month, reflecting alignment with the current accommodative monetary policy stance.
The expansion was primarily driven by sustained growth in private sector credit, indicating increased liquidity in the economy and stronger demand for financing across key productive sectors.
While this growth supports economic expansion by facilitating investment and consumption, it also requires close monitoring to ensure it does not exert upward pressure on inflation, particularly in the context of global price volatility and domestic supply constraints
