Credit to agriculture sector slightly up

TANZANIA: CREDIT extended to agriculture sector grew slightly by 43.6 per cent in the year ending January compared to 43.5 per cent posted in the corresponding period a year before.

The latest Bank of Tanzania (BoT) monthly economic review report for February shows that the robust credit growth to agriculture is attributed to measures taken by the government to create a friendly environment to make the sector commercially viable for lenders to extend loans.

Due to the measures taken by the government, agriculture’s contribution to the country’s economy followed an upward tendency.

For example, one of the measures was for the BoT to reduce the statutory minimum reserve (SMR) amount equivalent to the loan extended by a bank that extends credit to the agriculture sector.

According to BoT, a bank is required to submit evidence of lending to agriculture at an interest rate not exceeding 10 per cent per annum.

This move and other government measures contributed largely to increasing credit growth to the agriculture sector.

The agriculture sector in the country employs about 70 per cent of the Tanzanian workforce and accounts for almost 26 per cent of GDP.

During the reference period, the credit to the mining and quarrying increased by 29.9 per cent down from 36.4 per cent extended to the sector in the corresponding period in the preceding year.

Credit extended by commercial lenders to the transport and communication sector rose by 21.8 per cent in the year ending January compared to 17.7 per cent in the previous period.

The manufacturing sector attracted credit of 18.9 per cent in the period under review, slightly up compared to 15.6 per cent extended in the year before.

During the period under review, the private sector credit growth remained almost unchanged at 17.7 per cent from the preceding month though lower than 23.1 per cent registered in the corresponding period last year.

The growth continued to be attributable to the improved business environment and supportive policies leading to high demand for new loans.

Meanwhile, personal loans that are mostly for micro, small and medium businesses continued to account for the largest share of outstanding credit at 37.6 per cent, followed by trade (13.5 per cent) and agriculture (10.3 per cent).

Money supply and private sector credit portrayed stable growth, supporting economic activity through lending to various sectors.

Growth of the extended broad money supply slightly slowed to 12.8 per cent in January this year from 14.1 per cent in December last year matching the growth rate of January last year.

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