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Winners and losers as new data shows slowing bank lending

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  Published in Business and Finance on Monday, September 8th 2025 at 11:41 GMT by The Citizen
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Winners and Losers in Tanzania’s Lagging Bank‑Lending Landscape

A new statistical bulletin released by the Central Bank of Tanzania (CBT) has revealed a sharp slowdown in bank‑credit growth over the past year, sparking a debate among economists, policymakers and business leaders about which sectors will emerge as winners and which will bear the brunt of the contraction. The data, published in the CBT’s Q1 2024 Banking Statistics Review, shows that overall bank lending to the private sector grew by only 3.1 % in 2023 – a steep decline from the 8.7 % surge recorded in 2022.

What the Numbers Tell Us

According to the CBT, the total value of loans extended by commercial banks in 2023 reached TZS 5.4 trillion (≈US$1.4 billion), up only marginally from the TZS 5.3 trillion recorded in 2022. In contrast, the growth trajectory of bank lending in the two preceding years had been a consistent 8–9 % annually, propelled largely by consumer credit, real‑estate loans and a boom in agricultural financing.

The CBT’s bulletin also breaks down the slowdown by credit type:

While the absolute amount of lending has modestly increased, the growth rates suggest a tightening of credit conditions, especially in the real‑estate and construction segments. The slowdown is largely attributed to a recent series of regulatory measures aimed at curbing non‑performing loans (NPLs) and tightening the prudential framework.

Regulatory Context

The CBT’s tightening comes on the heels of a new Credit and Liquidity Policy published in 2023, which raised the minimum capital adequacy ratio for banks from 10 % to 12 % and implemented stricter loan‑to‑value (LTV) caps for property mortgages. The policy, designed to bolster financial stability in the wake of rising NPLs, has inadvertently dampened banks’ willingness to extend credit, particularly for projects perceived as high‑risk.

In an interview with the Business Daily (see link below), the CBT Governor, Ms. Lillian N. Mkeka, stated: “We are committed to a sound banking system. The recent measures are necessary to protect depositors and ensure that banks do not take on excessive risk.”

Source: [ CBT – Credit and Liquidity Policy ]

Who’s Winning?

1. Digital Banks and FinTech Platforms
The regulatory tightening has accelerated the shift toward digital lending platforms, which can operate with lower overhead and more agile risk‑assessment algorithms. Digital banks such as M-Kuanta and JamboPay have reported a 12 % increase in loan disbursements in Q1 2024, as they tap into under‑banked rural communities and the gig economy. According to their quarterly report (link below), the median loan amount remains modest, but the volume growth has outpaced traditional banks.

Source: [ M-Kuanta Quarterly Report ]

2. Agricultural Sectors with Structured Financing
Despite a slowdown in overall agriculture lending, the portion of loans directed toward structured, collateral‑backed agricultural projects has seen a modest uptick. Banks such as National Bank of Tanzania and East African Bank have increased their exposure to long‑term loan programmes for commercial farms, citing improved risk assessment protocols. These firms report that their portfolio of structured agricultural credit has grown by 4.3 % over the year.

Source: [ National Bank of Tanzania – Annual Report 2023 ]

3. Export‑Focused Commercial Banks
Banks with a strong export‑finance focus, notably East African Bank and Standard Chartered Tanzania, have benefited from steady demand for working‑capital facilities linked to regional trade. These institutions maintain lower NPL ratios, enabling them to continue extending credit to multinational enterprises (MNEs) operating in the country.

Source: [ East African Bank – Export Finance ]

Who’s Losing

1. Construction and Real‑Estate Firms
The most visible impact of the slowdown has been on the construction and real‑estate sectors. The CBT reports a 1.1 % contraction in construction loans, with large‑scale developers such as Tanzania Housing Development Ltd citing a sharp decline in available financing. The real‑estate market, already burdened by an oversupply of housing units and slowing population growth, is now facing further funding constraints.

Source: [ Tanzania Housing Development Ltd – Investor Update ]

2. SMEs in the Manufacturing Segment
Small and medium‑enterprise (SME) credit has decelerated to a 2.4 % growth rate. This slowdown disproportionately affects manufacturing SMEs that rely on working‑capital loans for raw‑material procurement and production scaling. Several SMEs have reported delays in project timelines due to financing bottlenecks.

Source: [ Tanzania Bankers Association – SME Outlook 2024 ]

3. Consumer Credit Markets
Consumer credit, which had been a key growth engine for the banking sector, has seen a near‑zero increase. The reduction in consumer lending is a direct result of the higher LTV ratios and stricter collateral requirements. As a consequence, consumer spending has dipped marginally, which could dampen retail growth in the short term.

Broader Economic Implications

Analysts warn that the slowdown in bank lending could have a cascading effect on the broader economy. “Credit is a lifeline for growth,” notes Professor Joseph M. N. Kihoro of the University of Dar es Salaam. “When banks pull back, businesses face higher cost of capital, which can translate into higher prices, reduced hiring, and ultimately slower GDP growth.”

The International Monetary Fund (IMF) has already highlighted Tanzania’s reliance on external financing, and the slowdown could exacerbate the country’s debt‑service burden. The CBT, however, maintains that the measures are necessary to prevent a systemic banking crisis, citing a 9.3 % NPL ratio in 2023 compared to a 7.1 % ratio in 2022.

Looking Ahead

The CBT plans to monitor the impact of the new prudential framework closely, with a view to adjusting capital requirements if the slowdown in credit growth threatens to undermine the economy’s recovery. In the meantime, banks are exploring alternative financing mechanisms, such as syndicated loans and bonds, to diversify their funding sources and mitigate the impact on the sectors most vulnerable to tightening.

For businesses navigating this new lending environment, the message is clear: adapt to stricter credit standards, consider digital platforms for smaller loans, and maintain robust collateral and risk‑management frameworks. The sectors that can align with the evolving regulatory landscape stand to reap benefits, while those that remain heavily dependent on conventional bank credit risk being left behind.

For further reading, the reader may consult the CBT’s full statistical bulletin on its official website, the Tanzania Bankers Association’s quarterly outlook, and the IMF’s latest report on Tanzania’s economic outlook.