Credit to private sector declines

BoT

The stock of credit extended to the private sector recorded 1.45tri/- in the year ending January 2013, which is 4.38 per cent decline, compared to an increase of 1.52tri/- recorded in the previous period.

Credit extended to economic activities recorded a substantial decline across all major activities except trade.

The Bank of Tanzania (BoT) monthly economic review for February, this year, shows credit growth to the private sector slowed down to 19.1 per cent compared to 25 per cent recorded in the corresponding period of 2012. 

However, that annual growth of credit to the private sector increased to 19.1 per cent in the period under review compared with 18.2 per cent recorded in December 2012.

“The increase was driven by credit growth in agriculture, building and construction, and trade activities,” stated the report. 

Meanwhile, a large proportion of banks’ credit continued to be held in trade and personal activities. Credit extended to the trade sector increased to 366.5bni/- in the period under review compared to 309.5bn/- recorded in the corresponding period last year.

The credit disbursed to manufacturing sector declined to 49.2bn/- compared to 134.5bn/- of the year before. In January 2013, overall lending rate rose to an average of 15.57 per cent from 14.84 per cent in the previous year, partly reflecting developments in the Treasury bills market. 

The overall time deposit rate averaged to 8.59 per cent compared to 8.45 per cent recorded in December last year and 7.56 per cent in January 2012.

The spread between 12-month deposit rate and one year lending rate narrowed to 3.90 percentage points in January 2013, from 4.06 percentage points recorded in December 2012 and 4.88 percentage points in January 2012. 

Annual growth of extended broad money supply (M3) decelerated to 12.1 per cent in January 2013 from 16.1 per cent recorded in the corresponding period last year.

The development was largely explained by continued contraction of Net Foreign Assets (NFA) of banks and a slow down in the growth of domestic credit. 

The NFA of the bank contracted 41 per cent, compared to the contraction of 8.4 per cent recorded in the corresponding period of 2012, partly associated with stability of the shilling against the US Dollar.

In the same period, the net government borrowing from the banking system was 474.4bn/-, compared to 957.6bn/- recorded in the year ending January 2012, reflecting improved government efforts in revenue collection.

Source: The Daily News, www.dailynews.co.tz, reported from Dar es Salaam

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