Tanzania Private Sector Credit Surges to Sh43.42 Trillion, Reaching 21% of GDP
Dar es Salaam. The stock of private sector credit in Tanzania rose to an estimated Sh43.42 trillion by the end of December 2025, accounting for more than 21 per cent of gross domestic product (GDP), marking a deeper phase of financial expansion, analysts say.
According to the Bank of Tanzania (BoT) monetary policy report released in January 2026, private sector credit had stood at 17.4 per cent of GDP a year earlier.
The central bank noted that the expansion broadly mirrors trends across East and Southern Africa, although the pace and composition of growth differ depending on domestic conditions.
"Credit to the private sector expanded robustly by 20.3 per cent. Personal loans, largely representing credit extended to small and medium-sized enterprises (SMEs), continued to account for the lion’s share of private sector lending and remained the principal driver of overall credit growth, followed by trade and agriculture," the report stated.
Finance and investment experts indicate that the pace of growth suggests Tanzania’s credit market still has considerable room for expansion.
"With growth above 20 per cent and total credit exceeding Sh43 trillion, this level of expansion suggests the market could potentially double in the coming years," financial analysts noted.
"Our economy is largely driven by the private sector, and most businesses are privately owned. Growth in private credit is therefore a positive signal for economic activity."
Experts emphasize that personal loans should not be viewed purely as consumer spending, as a significant portion is channeled into business activities, which benefits the economy.
Business consultants say the current credit-to-GDP ratio reflects a financial system that is expanding but remains within a manageable range.
"With private sector credit at about 21 per cent of GDP, Tanzania is experiencing financial deepening while staying within a relatively moderate and sustainable range," industry observers noted.
The significant share of personal loans has helped translate credit growth into higher household consumption, supporting aggregate demand, trade, and service-sector activity.
However, analysts warn that the structure of lending carries longer-term risks.
"The combination of a low-to-moderate credit-to-GDP ratio and a high concentration of personal loans indicates that much of the available credit is directed toward consumption rather than productive investment," experts cautioned.
"Over time, such a credit structure could weaken the growth impact of financial deepening and pose financial stability risks if income or employment conditions deteriorate. This constrains long-term growth, industrialisation, and employment creation, while increasing household indebtedness and potential inflationary pressures if consumption outpaces domestic production."
Sector-by-sector data show uneven but strong expansion. Credit to mining and quarrying posted the fastest growth at 30.1 per cent, reflecting increased investment in extractive activity, while lending to agriculture rose by 29.8 per cent.
The central bank noted that agricultural lending was partly supported by financing through its Sh1 trillion special loan facility and the SMR relief window, policy tools designed to ease access to credit and support productive sectors.
Interest rates on loans and deposits remained broadly unchanged in 2025. Overall lending rates hovered between 15 and 16 per cent, while deposit rates were around 8 per cent.
Negotiated lending rates for prime customers stood at around 12 per cent, and negotiated deposit rates averaged 11 per cent, levels still relatively lower than most East African Community countries.
Recent reforms, including broadening the scope of eligible collateral and introducing a price comparator system to increase transparency in financial services, are expected to promote competition in credit pricing. These initiatives complement ongoing efforts to improve financial literacy across the country.
