Credit to Tanzania’s private sector grew by 4.1 percent in July compared with 3.6 percent in the preceding month, this is according to the Monetary Policy Committee (MPC).

The Bank of Tanzania (BoT) monthly review for August shows that private sector credit growth is projected at 11.6 percent in 2021/22. The demand for credit is expected to increase owing to policy measures taken by the bank in July to reduce lending rate and promote credit to private sector.

In July, BoT introduced special loan amounting to Tsh1.0 trillion ($432 million) to banks and other financial institutions for on-lending to the private sector.

Other policy measures taken were reduction of risk weight on loans, limitation of interest rate paid on mobile money trust accounts, relaxation of agent banking eligibility criteria and reduction of statutory minimum reserve requirements.

“The ongoing implementation of measures to improve the business environment and recovery of the global economy will add impetus to private sector growth momentum,” the BoT report added.

“The overall and one-year lending interest rates were around 17 percent, while negotiated lending rate to prime customers was 14 percent,” said the report.

BoT Governor Prof Florens Luoga in a statement said money supply growth was 11 percent in the year ending July 2021, broadly in line with the targeted average growth of 10 percent for 2021/22. “Private sector credit growth improved, though the pace was slow at a rate of 4.1 percent,” said Prof Luoga

Tanzania Mainland and Zanzibar economies performed satisfactorily in the first quarter of 2021. Mainland, growth was 4.9 percent, lower than 5.9 percent in the corresponding period in 2020, driven by construction, transport, agriculture, manufacturing, and mining and quarrying activities.

The Zanzibar economy grew at 2.2 percent, slightly lower than 2.5 percent registered in the first quarter of 2020. This is expected to continue, owing to ongoing public investment and normalisation of the global economy.

The external sector continued to face challenges caused by Covid-19, particularly in tourism. However, gold exports improved to about $3 billion in the year ending July 2021.