Tanzania's credit to private sector remains strong

Credit extended to the private sector by banks remained strong, growing at 23.5 per cent in July 2015 compared to 20 per cent posted in the previous month, giving positive signal of increased economic activities.

“It is worth noting that, due to substantial changes in exchange rate there was large increase in revaluation account which partly dampened the impact of the large increase in foreign and domestic assets on money supply,” the Bank of Tanzania (BoT) said in its latest report.

BoT said in its monthly economic review for August that the credit growth to major economic activities was mixed but remained positive in the year ended July 2015. 

Manufacturing activity recorded the highest growth of 30.7 per cent, followed by personal loans, transport and communication, trade, and building and construction.

In terms of shares to outstanding credit, trade continued to dominate, accounting for about 21 per cent; followed by personal loans by 17.2 per cent and manufacturing at 12.5 per cent. 

The growth of credit to the agriculture sector slowed to 6 per cent from 7.6 per cent in July this year from 6.0 per cent recorded in the preceding month.

During the period under review, the percentage share of banks credit to agriculture sector declined to 8.5 per cent from 8.6 per cent in July. 

Similarly, the annual growth of extended broad money was 16.7 per cent in July 2015 compared with 12.9 per cent in July 2014 and 13.2 per cent in June 2015.

The growth of extended broad money growth was accounted for by net foreign assets (NFA) and net government borrowing from the banking system, as well as banks’ credit to the private sector.

The NFA of the banking system grew significantly by 26.7 per cent from 5.6 per cent in the year ending July 2014, largely due to valuation gains resulting from depreciation of the shilling against the US dollar.

Net government borrowing from the banking system grew by 27.4 per cent compared with 15.9 per cent during the same period.

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