AfricaPress-Tanzania: THE government is committed to enhance regulatory role in order to ensure that the lending rate is consistent with the set up expectations.
This was highlighted by the Minister of Finance and Planning, Dr Philip Mpango while presenting to the national assembly the estimates of government revenue and expenditure in Dodoma last week.
He said despite the various efforts as well as achievements reached the lending rate is still higher than expectations thus limiting access to finance which is essential in establishing various economic activities.
For example, during the period ending April this year, the overall lending rate decreased to 16.91 percent from an average of 17.25 percent for similar period in 2019.
Further, the annual lending rate decreased to an average of 16.37 percent from 16.94 percent.
Credit to private sector continued to increase, reaching 19.7 trillion shillings in April, 2020 from 18.6 trillion shillings in April 2019, equivalent to an increase of 5.8 percent.
The growth is consistent with the monetary policy stance which aims at increasing liquidity in the economy and implementing the government plan to improve the business environment.
According to Bank of Tanzania (BoT), monthly economic review for April, banks credit to the central government and private sector grew by 6.5 percent in March 2020, compared with 5.8 percent recorded in the preceding month and 6.9 percent in the corresponding month in 2019.
Much of the growth was credit to private sector, which recorded an annual growth of 8.6 percent compared with 8.0 percent in the preceding month and 9.6 percent in the corresponding month in 2019.
This partly reflects adequate supply of loanable funds following intensified liquidity easing monetary policy measures. The high growth of credit was observed in building and construction, agriculture and personal loans.
Personal loans and trade accounted for the largest share of credit outstanding, at 30.2 percent and 17.7 percent, respectively. The liquidity level reached 32.7 percent in April 2020, which is above the minimum regulatory requirement of 20 percent.
Further, the quality of banking sector assets was maintained in the same level as in 2019. The ratio of Non-Performing Loans (NPLs) to gross loans decreased from 11.10 percent in April 2019 to 11.04 percent in April 2020.
