Africa-Press – Tanzania. THE private sector credit recorded an annual growth of 3.6 per cent in June this year, lower than 4.7 per cent and 5.5 per cent in May this year and June last year, respectively, due to adverse effects of coronavirus pandemic on businesses.
According to the Bank of Tanzania (BoT) monthly economic review for July this year, the deceleration in private sector credit growth was attributed to the repayment of loans that were extended to agricultural activities, coupled with subdued demand for new loans, following the adverse effects of the pandemic on some domestic businesses.
Despite this slowdown, domestic credit extended to both the private sector and central government has maintained a positive growth rate apart from the adverse effects of the Covid-19 pandemic.
During her meeting with the Tanzania Private Sector Foundation (TPSF) in June this year, President Samia Suluhu Hasan assured the sector of the government’s commitment to addressing challenges in the investment and business sector for the sake of building a stable and sustainable economy.
The demand for loans is expected to bounce back shortly owing to the ongoing measures implemented to improve the business environment, normalisation of the global economy, and measures adopted by the Bank to increase liquidity and reduce lending rates. In a bid to address the slow uptake of loans by the private sector in 2020/2, BoT pumped 1tri/- to commercial lenders that would bolster their lending capacity to the private sector at affordable interest rates.
During the period under review, personal activities largely representing lending by banks to micro, small and medium enterprises continued to register the strongest growth of credit. In terms of share of private sector loans, personal activities were dominant, followed by trade and manufacturing, respectively.
In the meantime, the annual growth of extended broad money supply maintained an upward trajectory, reflecting the impact of an accommodative monetary policy stance pursued by the Bank.
The money supply grew by 11.6 per cent in the year ending June 2021, compared with 7.9 per cent in the preceding month. This development was occasioned by an increase in holdings of foreign assets and domestic credit by the banking system.
Likewise, the broad money supply grew by 10.4 per cent compared with 7.7 per cent in the preceding month.
