Credit to private sector has dropped eight times to slightly over Tshs 2.0trillion for the year ending March against almost Tshs 16trillion some period last year.

“This development mirrors the slowdown in the growth of money supply,” according to the latest Bank of Tanzania (BoT) monthly economic review.

The deceleration of credit to private sector may lead to economic contraction and drive unemployment up, reducing government revenue collection.

The highly hit sector was transport and communication whose credit grew by negative 21.6 per cent compared to 27.4 per cent of last year. The second most hit was agriculture sector which grew down by negative 9.2 per cent against 11.2 per cent of last year.

The third was personal loan that grew down negative 4.9 per cent against 37.2 per cent. The best sector was trade that registers a positive growth of 22.1 per cent against 2.2 per cent of previous year, followed by hotel and restaurant which increased by 3.9 per cent though down from 16.2 per cent of last year.

Lending to manufacturer sector, a pillar of economy growth, increased by 2.2 per cent compared to 20.6 per cent of similar period last year. While banks’ lending to private sector declined on other hand the industry appetite on treasury bonds and bills in the first quarter of this year increased rapidly.

The government debt securities were oversubscribed in the first three months to signal growing investors' thirst as they set aside about Tshs 2.36trillion compared to Tshs 833.7billion offered by BoT.