Tanzania: Private Sector Credit Expands Over 5pc in July

PRIVATE sector credit expanded over 5.5 per cent which is higher than 2.5 per cent of the preceding month, but down than 8.3 per cent posted in the corresponding period last year.

According to the Bank of Tanzania (BoT), monthly economic review is consistent with the projection of 11.6 per cent by the end of June 2021. The growth rate was strong relative to many peer countries in sub-Saharan Africa.

Economic activities that registered strong credit growth included construction, transport and communications and personal loans often used for small and medium enterprises.

The annual growth of credit to the construction industry grew by 32.9 per cent in the year ending July compared to 5.6 per cent posted in the corresponding period last year.

The transport and communications sectors registered an annual credit growth of 17.6 per cent in the reference period compared to negative 4.7 per cent in the corresponding period last year.

In terms of share in the outstanding credit, personal loans, trade and manufacturing dominated by 32.4 per cent, 16.8 per cent and 10.9 per cent, respectively.

Money supply growth remained strong in line with accommodative monetary policy implemented to support lending to economic activities and cushioning the economy against the adverse impact of Covid-19.

Extended broad money supply (M3) grew by 8.9 per cent in the year ending July 2020 compared to 9.0 per cent in July 2019.

Broad money supply (M2) grew by 10.6 per cent compared to 11.7 per cent.

Foreign assets (net) of the banking system grew by 10.0 per cent compared to a contraction of 7.4 per cent in July 2019. This was on account of an increase in foreign exchange holdings, largely from export proceeds, particularly from gold and cashew nuts.