Tanzania: Private Sector Grew By 5.5 Pc in June

THE private sector credit grew by 5.5 per cent in June, from 5.1 per cent in the preceding month and down from

7.6 per cent registered in the corresponding period last year.

According to the Bank of Tanzania (BoT) monthly economic review for July, the increase is attributable to the subdued demand for new loans, particularly in trade activities; following lockdown of economies of the country's trading partners due to the Covid-19 pandemic.

The credit to the domestic economy from the banking system, comprising of credit extended to the government and private sector, grew at an annual rate of 2.5 per cent in June compared with 17.4 per cent in the corresponding period, and 3.5 per cent in May this year.

Activities that registered strong growth of credit in the year ending June include building and construction, transport and communication, and personal related activities including small and medium enterprises.

Much of the share of credit to the private sector was in personal related activities, trade and manufacturing accounting for 32.1 per cent, 16.7 per cent and 11.1 per cent, respectively.

During the period under review, money supply growth remained within the target, reflecting accommodative monetary policy and measures adopted to limit adverse impact of Covid-19 on the economy.

The policy stance and measures adopted ensured adequate liquidity in the economy to steer economic activities and lending the private sector.

As a result, extended broad money supply grew at an annual rate of 9.5 per cent in June, compared with 7.7 per cent in June 2019.

The broad money supply grew by 10.5 per cent compared with 10.8 per cent in June last year. The growth in M3 was mainly on account of accumulation of foreign assets by the banking system and growth of credit to the private sector.