AfricaPress-Tanzania: THE ongoing accommodative monetary policy and measures implemented to improve the business environment has contributed to decline of lending rates in the year ending February compared to the corresponding period 2019.
According to the Bank of Tanzania (BoT), latest report lending rate on average, declined to 16.96 percent from 17.28 percent in the period ending February 2019.
The one-year lending rate fell to 16.56 percent from 17.98 percent in corresponding period 2019.
The falling lending rate contributed to the increase of the credit to the private sector by 1.47tri/-to 19.90tri/-, equivalent to an annual growth rate of 8.0 percent in the period under review.
The strong credit growth was a reflection of an increase in loanable funds linked with accommodative monetary policy and expansion of economic activities.
The high growth of credit to the private sector was mostly absorbed by building and construction, agriculture, transport and communication and personal loans.
During the reference period, banks credit to building and construction sectors was higher by 48.8 per cent compared to negative 7.7 per cent in the corresponding period 2019. Banks’ credit to transport and communication grew by 16.3 per cent compared to 0.1 registers in the other period.
Also banks’ credit extended to personal declined by 13.6 per cent compared to 15.5 per cent of the corresponding period 2019.
The banks’ credit to manufacturing sector contracted to negative 3.7 per cent compared to 13 per cent in 2019.
In terms of shares to total credit outstanding, personal loans and trade accounted for the largest share at 29.9 percent and 17.7 percent, respectively. Personal loans are usually used by borrowers for financing small and medium-sized activities.
Domestic credit grew by 5.8 percent in the year ending February 2020, compared with 8.3 percent in the corresponding period in 2019.
The overall time deposit rate averaged 7.18 percent from 7.92 percent in February 2019, whereas one-year deposit rate was 8.86 percent, up from 8.48 percent.
The spread between one-year deposit rate and one year lending rate narrowed to 7.70 percentage points from 9.50 percentage points.
