CREDIT expansion to the private sector continues to exhibit a downward trend-the situation that may trigger investments in the country.
The Bank of Tanzania (BoT) monthly economic review for December last year states that the period ending November last year registered credit growth of 18.3 per cent, which is below the rate of 22.6 per cent recorded in the corresponding period 2022.
“Though exhibited a downward declining path, private sector credit growth remained robust, growing at 18.3 per cent in last November above the target of 16.4 per cent set by the end of December last year,” stated the Bank of Tanzania (BoT) monthly economic review for December.
“The performance reflects the high demand for new loans consistent with the growth of economic activities supported by an increasingly favourable business environment,” stated the BoT report.
In November last year, agricultural activities continued to record the highest growth of credit, at 38.9 per cent compared to 34.6 per cent registered in the preceding period.
The credit flow to the agriculture sector is paramount as per the agriculture ministry’s statistics the sector provides 65 per cent of all industrial raw materials used in the country.
Also, agriculture contributes over 28 per cent to the Gross Domestic Product (GDP) and almost 70 per cent of the country’s workforce.
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 transport and communication while personal and trade sectors were at their annual average.
During the period under review, the transport and communication sectors’ credit grew by 25.3 per cent.
Personal loans remained dominant in the share of outstanding credit, accounting for 37.6 per cent, followed by trade, at 13.7 per cent.
The extended broad money supply grew by 13.7 per cent in November last year compared with 12.4 per cent in the preceding month and 12.7 per cent in the corresponding month in 2022.
The growth was relatively lower compared to the levels registered in the preceding eight months driven by a slowdown in private sector credit growth.