Tanzania, November 13, 2023 - Private sector credit growth in Tanzania has exhibited a notable decrease, standing at 19.5% for the year ending in September, compared to the 22% growth observed during the same period last year. This decline is attributed to a more favorable business environment in the country.
The Bank of Tanzania (BoT) released its monthly economic review for October, shedding light on the factors behind this shift. According to the report, the supportive monetary and fiscal policies implemented by the government, coupled with ongoing structural reforms, have played a pivotal role in shaping the credit landscape.
One significant aspect highlighted in the report is the deceleration in the growth of extended broad money supply for the second consecutive month. This phenomenon suggests a less accommodative monetary policy stance. Notably, the agricultural sector has emerged as a standout performer during this period, experiencing the highest growth in credit at an impressive 55.5%. Following closely behind is the mining and quarrying sector, which saw a commendable growth rate of 33.4%. The agriculture sector, which attracts substantial interest from commercial lenders and employs a significant portion of the country's workforce, contributes nearly 30% to Tanzania's Gross Domestic Product (GDP).
Breaking down the types of credit, personal loans have taken the lead, accounting for the largest share of outstanding credit to the private sector at 38.1%. Trade, agriculture, and manufacturing sectors follow, representing 15.4%, 10.4%, and 9.2% of the total credit, respectively. In comparison to August 2023, the annual growth rate in private sector credit decreased to 14.5% from the previous 17.4%. Nevertheless, it is worth noting that this growth rate remains slightly higher than the 13.6% recorded during the same period last year.
Overall, Tanzania's private sector credit landscape reflects the impact of various economic factors and government policies, with the recent decline in growth attributed to an improved business environment and ongoing reforms. It remains to be seen how these dynamics will continue to shape the nation's economic landscape in the months ahead.