The growth of extended broad money supply (M3) IN Tanzania slowed for the second month in a row in September this year, consistent with a less accommodative monetary policy stance.
Official data from Tanzania’s Central Bank shows that In September 2023, the annual M3 growth decreased to 14.5 percent from 17.4 percent registered in August 2023.
However, the recorded growth was slightly higher than the rate of 13.6 percent recorded in the corresponding period in 2022.
According to the Bank of Tanzania Monthly Economic Review for October, 2023, credit extended to private sector sustained a double-digit growth, growing at 19.5 percent in September, despite lower compared to rates registered in the preceding month and corresponding period in 2022 at 21 percent and 22 percent, respectively.
“The outturn was largely associated with improved business environment in tandem with supportive monetary and fiscal policies, and ongoing structural reforms,” the report shows.
In September 2023, agricultural activity continued to record the highest growth of credit, at 55.5 percent, followed by mining and quarrying at 33.4 percent.
Personal loans continued to account for the largest share of outstanding credit to private sector at 38.1 percent, followed by trade, agriculture and manufacturing at 15.4 percent, 10.4 percent and
9.2 percent, in that particular order.
Developments in the credit market reveal a promising adjustment in lending and deposit rates. During the month under review, interest rates charged on loans recorded a modest change. The overall lending rate decreased marginally to 15.53 percent from 16.07 percent in September 2022.
“The overall deposit rates also exhibited a slight decline, moving to 6.85 percent, in contrast to 7.62 percent in September 2022,” the report adds.
Notably, the spread between one-year interest rates contracted to 7.09 percentage points, signaling a reduction in the cost of borrowing within the mark.