Annual credit growth to agriculture soars

TANZANIA: THE annual growth of credit extended to agriculture sector rose to 46.4 per cent in the year to July compared to 37.8 per cent in the corresponding period last year backed by improving business and investment environment.

The increased flow of credit to agriculture sector is of paramount as per the agriculture ministry’s statistics, it provides 65 per cent of all industrial raw materials used in the country.

Agriculture contributes over 28 per cent to the Gross Domestic Product (GDP) and almost 70 per cent of employment.

The Bank of Tanzania (BoT) monthly economic review for August shows that Agricultural activities continued to record the highest growth of credit and to be attractive to commercial lenders compared to other sectors.

To make sure agriculture remains the major driver of economic development, the government has prepared a national strategy whose implementation started in 2022 till 2030.

The agriculture sector meets 95 per cent of the country’s food requirements of which 8 per cent of the food produced comes from small-scale farmers, who rely on rainfall and have limited access to inputs and information that could help them improve yields.

Other sectors that enjoyed significant credit growth during the period were building and construction while personal and trade sectors were at their annual average.

During the period under review, the annual credit to building and construction was 26.1 per cent compared to 10 per cent registered in the previous year compared to 10 per cent registered in the previous year.

Transport and communication annual credit 22.2 per cent in the period under review compared to 5 .8 per cent posted in the corresponding period last.

Meanwhile, personal loans, which accounted for the major share of the total outstanding credit to the private sector, remained the main driver of private sector credit growth, followed by trade, agriculture and manufacturing activities.

Credit to the private sector remained strong, largely backed by higher demand for loans that is associated with improving business and investment environment.

On annual basis, credit to the private sector grew at 20.8 per cent in July almost the same as the rate registered in the preceding month and in the corresponding period last year.