17 May 2017

Tanzania: Lending to Private Sector Falls to Historic Low Level

Banks' lending to private sector has registered a historical low level after growing by merely 3.7 per cent year-on-year ending March.

The sector low credit growth came at a time when banks are seen to prefer risk-free government instruments to private sector lending--putting GDP target growth at crossroad. International Monetary Fund projected the economy growth in 2016 at around 7.0 per cent.

According to the latest Bank of Tanzania (BoT) monthly economic review, credit to private sector dropped eight times to slightly over 2.0tri/- for the year ending March against almost 16tri/- some period last year.

"This development mirrors the slowdown in the growth of money supply," the report says. The deceleration of credit to private sector may lead to economic contraction and drive unemployment up, reducing government revenue collection.

The highly hit sector was transport and communication whose credit grew by negative 21.6 per cent compared to 27.4 per cent of last year. The second most hit was agriculture sector which grew down by negative 9.2 per cent against 11.2 per cent of last year.

The third was personal loan that grew down negative 4.9 per cent against 37.2 per cent. The best sector was trade that registers a positive growth of 22.1 per cent against 2.2 per cent of previous year, followed by hotel and restaurant which increased by 3.9 per cent though down from 16.2 per cent of last year.

Lending to manufacturer sector, a pillar of economy growth, increased by 2.2 per cent compared to 20.6 per cent of similar period last year. While banks' lending to private sector declined on other hand the industry appetite on treasury bonds and bills in the first quarter of this year increased rapidly.

The government debt securities were oversubscribed in the first three months to signal growing investors' thirst as they set aside about 2.36tri/- compared to 833.7bn/- offered by BoT.

Tanzania

President Warns Corrupt Ruling Party Cadres

THE ruling Chama Cha Mapinduzi (CCM)'s National Chairman, President John Magufuli, yesterday warned members of the… Read more »

Copyright © 2017 Tanzania Daily News. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 900 reports a day from more than 140 news organizations and over 500 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.