PRIVATE sector credit registered strong growth in the year ending July at 20.1 per cent significantly higher than 4.1 per cent in the corresponding period last year on account of the improved business environment.
According to the Bank of Tanzania (BoT) monthly economic review for July this year, the increase in private sector credit growth is backed by improved business environment in the country, recovery of private sector activities from the effects of Covid-19, and supportive fiscal and monetary policy conditions.
During the period under review, the total domestic credit, which comprised of credit extended to the private sector and central government by the banking system, grew at an annual rate of 22.6 per cent in July compared with 8.9 per cent in the same period last year.
During the year ending July all major economic activities recorded positive growth of credit, save for hotels and restaurants.
It is worth noting that credit extended to agriculture sector recorded the highest growth for the second consecutive month.
This is attributed to additional monetary policy measures that were rolled out by the Bank in July last year to support credit growth to agriculture activities.
Other economic activities that registered strong growth of credit include mining and quarrying, manufacturing and personal business undertakings.
Meanwhile, personal undertakings continued to account for a lion share at 38.3 per cent of outstanding credit followed by trade, manufacturing and agriculture activities.
The war in Ukraine has complicated the conduct of monetary policy, especially through commodity price shocks that are slowing growth and exacerbating cost of living.
In July this year, the BoT continued to lessen the magnitude of monetary policy accommodation, in order to reduce the second-round effects of rising commodity prices on domestic inflation.
Extended broad money supply recorded an annual growth of 7.9 per cent, compared with 11 per cent recorded in July last year and the target of 10.3 per cent for 2022/23.
Similarly, broad money supply grew by 9.7 per cent compared with 12.2 per cent in July last year.