In a promising turn of events, the agricultural sector has witnessed a substantial surge in credit growth, marking a significant milestone in the country's economic landscape. According to recent data released by the Bank of Tanzania (BoT) in their monthly economic review for August, credit extended to the agriculture sector soared to an impressive 46.4% in the year leading up to July. This remarkable increase, up from 37.8% during the same period the previous year, is attributed to the improved business and investment environment in the nation.
The upswing in agricultural credit assumes paramount importance considering its pivotal role in the country's industrial ecosystem. Statistics from the Ministry of Agriculture highlight that the sector provides a staggering 65% of all industrial raw materials used in the country. Moreover, agriculture holds a substantial stake in the national economy, contributing over 28% to the Gross Domestic Product (GDP) and accounting for nearly 70% of total employment.
The robust growth in agricultural credit has outshone other sectors, making it particularly attractive to commercial lenders. To sustain this momentum and ensure that agriculture continues to be a driving force behind economic development, the government has implemented a comprehensive national strategy. This strategic initiative, initiated in 2022 and set to continue until 2030, aims to bolster the agriculture sector's contributions to the economy.
Agriculture, which fulfills a staggering 95% of the country’s food requirements, also faces challenges. Approximately 8% of the food produced is derived from small-scale farmers, who heavily depend on rainfall and lack adequate access to resources and information that could enhance their yields.
Aside from agriculture, other sectors have also experienced notable credit growth. Building and construction, for instance, saw a substantial annual credit increase of 26.1% during the same period, a significant jump from the 10% recorded in the previous year. Transport and communication sectors similarly experienced a boost, with an annual credit growth of 22.2%, a considerable rise from the 5.8% reported in the corresponding period last year. The private sector, in particular, benefited from this credit surge, with personal loans being the primary driver of credit growth. These loans, constituting a major portion of the total outstanding credit to the private sector, remained robust. They were closely followed by credit in trade, agriculture, and manufacturing activities, indicating a diverse spectrum of economic growth.
The credit influx into the private sector has been underpinned by a heightened demand for loans, spurred by the favorable business and investment climate. On an annual basis, credit to the private sector exhibited a strong growth rate of 20.8% in July, mirroring the rates observed in the preceding month and the corresponding period of the previous year. This trend underscores the overall positive trajectory of the nation’s economic prospects, driven by strategic investments and prudent financial policies.