Dar es Salaam. Bank’s credit to the private sector has maintained a steady upward trend reaching an annual growth rate of 8 per cent in the year ending February 2019, the highest in eleven months.
“The continuing recovery of credit growth reflects the sustained accommodative monetary policy stance, on-going government efforts to improve business environment and credit risk measures taken by banks, including use of credit reference system prior to loan approval,” BoT states in its monthly economic review for March.
The increase in the credit extended to the private sector due to reduced cost of borrowing in February 2019 compared to the corresponding month in 2018.
It was reported that overall and one year lending rates were 16.8 per cent and 16.38 per cent respectively in February 2019, a decrease of 0.59 percentage points and 0.62 per centage points from the rates recorded in the corresponding month of 2018, respectively.
Similarly, overall and 12-month deposits rates declined to an average of 7.25 per cent and 8.51 per cent, from 8.91 per cent and 10.09 per cent in February 2018, respectively.
There was also an increase in money supply, BoT reported that extended broad money supply (M3) registered an annual growth of 4 per cent compared with 3.3 per cent in the preceding month.
However, largest share of the private sector’s credits were extended as personal loans, which are usually used for small and medium business which can have little impact on the economy.
Personal loans share of the banks outstanding credits was 28.4 per cent, followed by trade activities at 18.4 per cent.