Banking system expands credit after 6pc shrinkage

Wednesday December 19 2018

The Bank of Tanzania headquarters in Dar es

The Bank of Tanzania headquarters in Dar es Salaam PHOTO|FILE 

By The Citizen Reporter @TheCitizenTZ news@tz.nationmedia.com

Dar es Salaam. Domestic credit by the banking system expanded by 6.4 per cent during the year to October 31, 2018 compared to a contraction of 6.1 per cent in the corresponding period in 2017.

The Bank of Tanzania’s economic review for November shows that much of the increase emanated from the recent recovery in credit to the private sector.

Credit to the private sector grew by 4.8 per cent in the year to October 31, 2018, largely on sustained accommodative monetary policy stance, ongoing improvement of the business environment by the government and credit risk management by banks to realise low ratios on nonperforming loans.

Most of the loans extended to the private sector were directed to personal-related undertakings, which are traditionally used for small and medium financing, trade, and manufacturing activities.

Credit to personal-related activities entails loans to households and salaried employees.

The review shows that personal loans accounted for 29.2 per cent of the share of all loans extended by banks to major economic activities in October this year, higher than 26.6 per cent in September this year, and 19.5 per cent in October last year. Loans to manufacturing also gained to 19.4 per cent of total loans in October from 19.3 per cent in September this year.

However, the October, 2018 share was lower than 20.9 per cent recorded in October 2017.

The increase was also experienced by manufacturing whereby its share slightly gained to 19.4 in October this year from 11.2 per cent during the previous month.

The share of credit to agriculture slowed to 5.5 per cent of total loans in October from 5.6 per cent in September this year.