Private sector credit in Tanzania saw a 22.5% increase in the year ending February, compared to 11.9% in the same period last year. This growth is attributed to supportive monetary policies, recovery from the Covid-19 pandemic, and an improved business environment.
The report highlights that the agricultural sector experienced the highest credit growth, primarily due to a special loan facility introduced by the Central Bank for on-lending to the private sector, with a focus on agricultural activities. In 2021, the Central Bank implemented policy measures to promote credit to the private sector and lower interest rates, aiming to help the economy recover from the pandemic's effects. As part of this initiative, the BoT introduced a 1.0 trillion TZS special loan for banks and other financial institutions to on-lend to the private sector. Banks accessing this special loan facility were required to charge an interest rate not exceeding 10% per annum on loans extended to the private sector. According to the March BoT report, credit to the agriculture sector grew by 41.8%, compared to the 2.2% in the corresponding period. However, this is slightly lower than the 47.4% disbursed to the sector in January. Credit to the manufacturing sector increased by 20.5%, while the transport and communication sector credit grew by 16.8%. Loans granted to personal micro, small, and medium enterprises increased by 22.7%. In terms of share to total outstanding credit, personal loans remained dominant, followed by trade, manufacturing, and agriculture. The central bank continued implementing a moderate liquidity-reducing monetary policy stance, focusing on balancing inflation control and supporting the recovery of economic activities. Consequently, the money supply recorded an annual growth of 11.5% in February, lower than the 17% in February last year but within the 10.3% growth target for 2022/23. Furthermore, the Monthly Economic Review reported mixed performance in government securities' primary auctions in February 2023, with Treasury bills auctions outperforming Treasury bonds auctions. The Bank conducted two Treasury bills auctions with a total tender size of 334.9 billion TZS, receiving bids amounting to 848.4 billion TZS, of which 410.9 billion TZS were successful. The weighted average yield decreased to an average of 6.34% from 6.78% in the preceding month.