The private sector credit growth maintained a slow recovery pace despite the liquidity easing monetary policy stance reflecting low demand for new loans following adverse effects of the pandemic on some economic activities.
The Bank of Tanzania (BoT) monthly economic review for September shows that the annual growth of private sector credit was 3.2 per cent in August this year down from 6.8 per cent in the corresponding period last year.
Domestic credit which comprises of credit to the private sector and central government by the banking system grew by 8.9 per cent in the year ending August compared with 13.2 per cent in the corresponding period of 2020.
The demand for credit is expected to recover owing to operationalization of policy measures rolled out by the Bank of Tanzania in July 2021 that are geared towards reducing lending interest rate and promoting credit to the private sector.
The recovery of the global economy and ongoing implementation of measures by the governments to improve business environment will add impetus to private sector growth momentum.
The extension of credit to the private sector was more pronounced in personal loans commonly referred to as lending to small and medium enterprises as well as hotels and restaurants and trade.
Meanwhile, a large share of credit extended to the private sector was held in personal activities, followed by trade, manufacturing and agriculture.
Money supply sustained strong growth in the year ending August this year consistent with implementation of accommodative monetary policy.
The extended broad money supply grew by 9.9 per cent in the year ending August compared with 10.5 per cent in the corresponding period last year.
Meanwhile, broad money supply grew by 12.6 per cent compared with 10.2 per cent in August last year.