COMMERCIAL banks’ lending to the private sector grew by four times to about 24tri/- in the year ending October compared to 6tri/- offered in the corresponding period last year, thanks to supportive monetary policy conditions.
According to the Bank of Tanzania (BoT) monthly economic review for November this year, agriculture credit maintained the highest growth rate, partly responding to monetary policy measures implemented to support cost-effective credit intermediation for agriculture and agri-business activities.
During the reference period, credit extended to the agriculture sector has increased by 57.7 per cent compared to a negative 14.0 per cent registered in the corresponding period last year.
The other sectors that attracted a substantial amount of credit are personal activities mainly small and medium-sized undertakings, which continued to account for the largest share of the total outstanding credit to the private sector at 38.4 per cent, followed by trade, manufacturing and agriculture activities.
The BoT report shows that credit extended to mining and quarrying activities grew by 46.7 per cent compared to 0.7 per cent in the corresponding period last year.
The credit extended to the manufacturing sector increased by 31.7 per cent in the period under review compared to 4.0 per cent registered in the same period last year.
The amount of credit extended by commercial banks to trade activities rose by 19.4 per cent in the reference period compared to 12.6 per cent recorded in the corresponding period last year.
Growth of credit extended by the banking system to the private sector and the central government remained high on account of sustained high growth of credit to the private sector.
Annual growth of 34.2 per cent was recorded in October this year, higher than 9 per cent in the corresponding period last year. Private sector credit recorded a year-on-year growth of 23.7 per cent, compared with 5.6 per cent in October last year and the target of 10.7 per cent for 2022/23.
Private sector credit performance is attributed to the normalisation of economic activities from the Covid-19 pandemic, coupled with supportive monetary policy conditions.
During the year ending October, all major economic activities recorded positive growth of credit, except hotels and restaurants.
Outstanding credit to hotels and restaurants shrunk by 4.5 per cent following the writing-off of non-performing loans to comply with regulatory requirements.
