THE measures taken by the government to address the effects of Covid-19 on economic activities have contributed greatly to increased credit to the private sector and thus enhancing its contribution to the economy.
Presenting the economic survey 2021 report and the National Development Plan 2022/23, the Minister for Finance and Planning, Dr Mwigulu Nchemba said the strong growth was largely attributed to improved business conditions and supportive fiscal and monetary policy measures implemented to address the effects of Covid-19 on economic activities.
"The credits to the private sector have continued to grow at a satisfactory rate due to the implementation of accommodative fiscal and monetary policies, the ongoing implementation of policy measures taken by the government to improve the business environment as well as the measures by the BoT (Bank of Tanzania) that aims to stimulate credit growth and lowering of interest rate," he said.
The growth of credit to the private sector has increased to 13.4 per cent for the year ended April this year.
For the period between July 2021 to April this year, credits to the private sector grew by an average of 8.4 per cent compared to 4.3 per cent in the same period in 2020/21.
The government expects that the average target of 10.6 per cent for 2021/22 will be achieved following policy measures and an improved business environment in the country.
The largest share of the credits was directed to personal activities which accounted for 39.3 per cent of total credits, followed by business activities at 16.7 per cent, manufacturing at 10.1 per cent and agriculture at 7.9 per cent.
According to the BoT monthly economic report for May, the money supply growth increased in response to sustained implementation of accommodative monetary policy, coupled with private sector credit growth.
In April 2022, the extended broad money supply grew at an annual rate of 10 per cent compared with 7.8 per cent in April last year, consistent with the target of 10 per cent for 2021/22.
The broad money supply registered an annual growth of 13.9 per cent, compared with 7.1 per cent.
Domestic credit extended to the private sector and central government by the banking system grew by 17 per cent in the year ending April 2022, compared with 12.9 per cent in April last year.