Africa-Press – Tanzania. THE total credit extended to the private sector increased to 30tri/-in the year ending July this year, up from about 29tri/- during the same period last year, reflecting growing business confidence and increased demand for financing amid economic recovery.
According to the latest Bank of Tanzania (BoT) monthly economic report the increase in credit extended to the private sector also reflects the increased investment activities that could boost economic growth.
This growth suggests that companies across various sectors are more willing to borrow funds to expand operations, invest in new technologies and increase production capacity. Such increased lending activity is often a positive indicator of private sector dynamism, signalling stronger entrepreneurial activity and an expectation of higher future demand.
Furthermore, the rise in private sector credit underscores the ongoing economic recovery in the country after recent global and domestic challenges. Enhanced access to financing enables businesses to better manage cash flow, invest in capital projects, and maintain or create jobs, which in turn supports broader economic stability and growth.
This improved lending environment can also encourage innovation and competitiveness, helping the country’s economy to diversify and become more resilient to future shocks.
During the period under review, the private sector credit growth slowed to 15.9 per cent down from 17.1 per cent in the previous month, largely due to financial year obligations, mainly tax payments.
The credit extended to agricultural activities recorded the highest annual growth at 30.2 per cent, reflecting a strong demand within the sector. The increase in credit extended to agricultural activities highlights the sector’s increasing access to much-needed financing.
This surge indicates that farmers and agribusinesses are actively seeking capital to invest in inputs such as seeds, fertilisers, equipment and irrigation systems, which are critical for boosting productivity.
Enhanced credit availability can help improve crop yields, expand farming operations and increase overall food production, which is essential for ensuring food security and supporting rural livelihoods.
Moreover, the strong demand for credit in agriculture reflects the sector’s vital role in the broader economy and its potential for driving sustainable economic growth.
Agriculture remains a major source of employment and income for a large portion of the population of about 65 per cent, especially in rural areas.
By facilitating greater investment through credit, the financial sector can help stimulate rural development, promote agro-processing industries and increase export potential.
This trend also signals growing confidence in the sector’s profitability and resilience, encouraging further investments and policy support. Building and construction, along with transport and communication, followed closely, each registering growth rates of 25.7 per cent.
In terms of composition, personal loans remained the largest component of private sector credit, accounting for 35.3 per cent of the total. These loans are primarily extended to micro, small, and medium-sized enterprises for productive purposes and continue to be a major contributor to overall credit expansion.
Trade and agriculture sectors accounted for 13.6 per cent and 14 per cent of total private sector credit, respectively.
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