THE annual growth rate of banks credit to the agriculture sector went up to 47.2 per cent in the year ending May compared to negative 5.6 per cent registered in the corresponding period 2018, thanks to the Bank of Tanzania (BoT) accommodative monetary policy and measures implemented by banks to improve asset quality.
In this outstanding performance, agriculture sector that once considered as being too risk by commercial lenders, has outpaced all other sectors in registering highest growth rate of banks credit.
According to the BoT monthly economic review for June, mining and quarrying sector followed after recording 31.2 per cent of annual growth rate of banks credit compared to 29.2 per cent in the corresponding period.
Other sectors are namely personal with 19.8 per cent compared to 49.2 per cent, building and construction 13.4 per cent compared to negative 6.7 per cent, manufacturing 6.5 per cent compared to 1 per cent.
During the period under review, credit to the private sector expanded by 9.0 per cent compared with 2.7 per cent, partly reflecting initiatives to improve business-enabling environment and reduction of non-performing loans.
Credit to major economic activities increased during the year ending May, except transport and communication, trade and hotel and restaurants. It is worth noting that loan extended to building and construction activities recorded annual growth of 13.4 per cent, a sharp contrast to a negative growth rate since July 2018.
Personal loans, usually used for small and medium undertakings and trade activities remained the major beneficiaries of loans held by the private sector, accounting for 29.7 per cent and 17.9 per cent of credit outstanding in May, respectively.
The total domestic credit including credit to the private sector and central government by the banking system (BoT and commercial banks) grew at an annual rate of 18 per cent in May.
Money supply and private sector credit expanded at varying speed in response to a combination of various factors. Extended broad money supply grew by 5.8 per cent in the year ending May 2019, higher than 4.9 per cent and 4.8 per cent in April 2019 and May 2018, respectively.
The expansion in M3 was driven by strong growth in domestic credit in the wake of liquidity easing through accommodative monetary policy compared to a contraction of 7.3 per cent a year earlier.