Tanzania's lending rate up, deposit down

BANK rates for lending and deposit take different directions after the former went north while the latter south, the Bank of Tanzania (BoT) has said in its latest report.

The central bank said in its Monthly Economic Report for May that overall lending rate edged up to an average of 16.21 per cent in April from 16.11 per cent of previous month.

On other hand, overall time deposit rate decreased to 7.91 per cent from 9.18 per cent.

“Banks’ lending rates generally increased while deposit rates declined in April relative to the preceding month,” the report shows.

Short term lending rates — up to one year — decreased to 13.66 per cent in April, from 14.32 in the preceding month, while 12 month deposit rate fell to 9.76 per cent from 11.00 per cent.

“As a result, the spread between one year deposit rate and short term lending rate widened to 3.90 percentage points from 3.32 percentage points in the preceding month,” the report shows.

Though the lending rate went up, credit growth to all major economic activities increased in the year ending April, with trade activity recording the highest growth of 39.3 per cent.

The trade borrowing was followed by transport and communication 24.5 per cent each, and building and construction by 22.4 per cent.

While, credit to agriculture grew by 2.8 per cent compared with 5.5 per cent in April 2014, but improved relative to a decline of 0.9 per cent recorded in the preceding month.

In terms of share to total outstanding credit, trade and personal loans continued to dominate, accounting for about 40 per cent, followed by manufacturing and agriculture activities.

Source: Daily News, reported from Dar es Salaam, Tanzania

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