Commercial banks in Tanzania were increasingly shifting from loaning the productive sector to individual persons and traders in order to remain profitable in the market amid a biting liquidity situation, said a new study released on Wednesday.
The study titled: The Assessment of the Effects of the Measure Taken by the Government to Withdraw its Accounts from Commercial Banks in Tanzania, showed that commercial banks were now increasing the amount in loans they issue to individuals and traders in the hope that they would repay more easily than manufacturers, contractors, agriculture and other major investment projects.
The study by the Tanzania Private Sector Foundation (TPSF) said major projects were being perceived as too risky by bankers who were still finding it hard to come to terms with the outcomes of the government decision to transfer more than 400 million U.S. dollars that was being held in accounts at various commercial banks to a Single Treasury Account (STA) at the Bank of Tanzania.
Gilead Teri, TPSF Director of Policy, said: “The shift of the focus poses a challenge to the private sector accessing loans to implement various development projects and other investment projects while individuals and traders are enjoying.”
“Lending people who do not produce or invest poses a danger to the future of the development projects and job creation,” Teri told a news conference in the commercial capital Dar es Salaam.
The findings could be a wakeup call to policymakers as available official data show that the value of manufactured goods’ exports dropped to a six year-low during the year ending May 2017 as manufacturers grappled with a couple of challenges amid an uncertain global environment.
The value of manufactured goods’ exports crossed the 1 billion U.S. dollars mark in 2012 when they reached 1.037 billion U.S. dollars from 861 million dollars in 2011.
The Bank of Tanzania (BoT) says in its June 2017 Monthly Economic Review (MER) that the value of manufactured goods exports dropped by a cool 46.5 percent to 811.4 million U.S. dollars on the prevailing exchange rate) during the year ending May 2017 from 1.516 billion U.S. dollars recorded during a similar period last year. Enditem