CREDIT extended to key economic activities accelerated sharply in the year ending June with most sectors recording double-digit annual growth, signalling stronger bank financing of productive activities and business operations.
According to the latest Bank of Tanzania Monthly Economic Review, credit to transport and communication recorded the fastest growth, rising by 66.0 per cent in June this year, up from 56.5 per cent in May and 59.5 per cent in April.
The strong expansion suggests increasing financing demand in transport and communication, sectors that remain critical to trade, connectivity and economic activity.
Credit to mining and quarrying also recorded a notable acceleration, growing by 65.2 per cent in June, compared with 39.9 per cent in May and 39.7 per cent in April.
The sharp increase points to growing financing flows into mining-related activities amid continued investment in the sector.
Trade credit grew by 43.5 per cent in June, up from 46.4 per cent in May but slightly below the 44.2 per cent recorded in April.
Despite the moderation, the sector continued to attract substantial bank financing, reflecting sustained working capital and inventory requirements among businesses.
Credit to building and construction expanded by 38.9 per cent in June, compared with 34.4 per cent in May and 20.6 per cent in April, indicating strengthening financing activity in construction and related businesses.
Agriculture recorded annual credit growth of 37.3 per cent in June, up from 30.1 per cent in May and 30.5 per cent in April.
ALSO READ: PwC calls for banking tax reforms to support credit growth
The continued increase could support investment in agricultural production, inputs and value-chain activities.
Credit to hotels and restaurants grew by 25.1 per cent in June, compared with 20.0 per cent in May, while personal credit expanded by 24.7 per cent, up from 21.8 per cent.
Manufacturing credit, however, recorded the slowest growth among the sectors shown, at 5.1 per cent in June, although this was an improvement from 3.3 per cent in May and 4.2 per cent in April.
The broad-based expansion in sectoral credit points to increasing bank participation in financing economic activity, although the sharp differences between sectors show that credit growth remains uneven.
The particularly strong growth in transport and communication, mining and quarrying, construction and agriculture suggests that financing is increasingly flowing towards sectors linked to investment, infrastructure and production.
However, the relatively subdued growth in manufacturing highlights a potential financing gap in a sector central to Tanzania’s industrialisation ambitions.
Sustained growth in manufacturing credit could be important for expanding productive capacity, supporting value addition and strengthening domestic supply chains.
The post Credit growth accelerates across key economic sectors appeared first on Daily News.
