The Bank of Tanzania (BOT) recently released its Economic Bulletin For The Quarter Ending March 2021 indicating that private sector credit grew by 2.3% in the first quarter of 2021.
However, the growth is slower compared with 8.6% in the corresponding quarter in March 2020.
This is partly associated with the adverse impact of the COVID-19 pandemic in Tanzania, which disrupted the demand and supply channels of some economic activities, particularly those directly exposed to external sector shocks.
These comprises of exports, such as tourism and traditional cash crops.
And in its Monthly Economic Review of April 2021, BOT indicates that in March 2021 credit extended by banks to the central government through the purchase of government securities increased by 8.7%, within the borrowing limit of one percent of GDP set forth in the Government budget for 2020/21.
The economic activities that exhibited strong growth of credit from banks were personal activities (largely representing lending to micro, small and medium enterprises), and hotels and restaurant.
In terms of shares of the outstanding stock of private sector credit by activity, personal activities continued to account for the largest share, followed by trade and manufacturing activities.
The BOT stresses that credit to the private sector is expected to increase in the future, in the wake of the recovery of global economic activity and rolling out of measures to remove constraints to lending.