Dar es Salaam. Domestic credit market has continued to recover, after experiencing the double digit in December last year, in a time when costs of borrowing are falling down.
The Bank of Tanzania’s economic review for January has shown that total domestic credit grew by 10.1 per cent in December last year compared with 9.5 per cent in the preceding month, a decline of 3.4 percent.
Much of the growth manifested in growth of private sector credit, which grew at an annual rate of 4.9 per cent compared 1.7 per cent in the corresponding month in 2017.
This is being experienced when the Interest rates charged by banks on loans and those offered on deposits decrease in December 2018 from December 2017.
Lending rates averaged 16.72 per cent in December 2018 compared with 18.62 per cent in the December 2017, partly in response to accommodative monetary policy.
One-year lending rate averaged 17.83 percent in December 2018, lower by 64 basis points. Time deposit interest rates averaged 7.50 per cent compared with 9.62 percent in December 2017
“The recovery in private sector credit growth was due to accommodative monetary policy and credit risk measures instituted, including the use of credit reference system in loan approvals,” the review says.
Trade, manufacturing and personal loan-related activities used for small and medium financing remained the main beneficiaries of credit extended by banks Personal loans, which are usually for financing small-scale business undertakings, grew by 47.0 percent in the year to December 2018, followed by mining and quarrying, and transport and communication activities
The review shows that credit to manufacturing recorded an expansion after its share to total credit went up to 12.2 per cent in December last year from 11 per cent recorded in December 2017 while those of personal loans gained to 28.1 per cent from 20.1 per cent respectively.
The share of trade to total loans shrunk to 18.8 per cent in December last year from 20.4 per cent recorded during similar month in 2017.