Bank Deposits:

Total Deposits Growth: Deposits in Tanzania banks increased by 23.2% from TZS 26,487.5 billion at the end of December 2022 to TZS 32,619.5 billion at the end of December 2023.

Factors Contributing to Growth:

• Improved economic activities.
• Bank deposit mobilization measures.
• Increased usage of agent banking and digital banking platforms.

Regional Distribution:

• Dar es Salaam zone contributed the largest share, accounting for 63.3% of the total deposits.

Bank Loans:

Total Loans Growth: Bank loans to various economic activities increased by 21.2% from TZS 23,932.0 billion at the end of December 2022 to TZS 28,999.6 billion at the end of December 2023.

Factors Contributing to Growth:

• Improved economic activities.
• Increased initiative by commercial banks to extend credit to the private sector.

Sectoral Distribution:

• Around 66.5% of bank loans were extended to personal, trade, agriculture, and manufacturing activities.

Regional Distribution of Bank Loans:

• Dar es Salaam Zone: This zone had the highest amount of loans, with a total of TZS 16,203.4 billion at the end of December 2023, accounting for 55.9% of the total bank loans.
• Central Zone: This zone showed significant growth, with bank loans increasing by 50.2% from TZS 2,536.7 billion to TZS 3,809.1 billion.
• South Eastern, Lake, Northern, and Southern Highlands Zones: These zones also experienced growth in bank loans, contributing to the overall increase.

Relationship between Bank Deposits and Bank Loans:

Dar es Salaam Zone:

• Bank Deposits: Dar es Salaam zone accounted for the largest share of total deposits, indicating significant financial activity in the region. This could be due to its status as the economic hub of Tanzania.
• Bank Loans: Similarly, Dar es Salaam had the highest amount of bank loans, representing 55.9% of the total bank loans. This shows a strong demand for credit in the zone, likely driven by various economic activities such as trade, commerce, and manufacturing.

Central Zone:

• Bank Deposits: Although not specified as having a significant share of deposits, the Central zone showed substantial growth in bank loans.
• Bank Loans: Central zone exhibited the highest percentage increase in bank loans, indicating increasing economic activity and demand for credit. This could signify growing investments or business expansion in the region.

Other Zones:

• South Eastern, Lake, Northern, and Southern Highlands Zones: These zones also experienced growth in both deposits and loans, albeit to varying degrees. For example, the Northern zone showed a notable increase in bank loans, indicating economic development and increased investment activities in that area.

Examples of Zonal Performance:

• Dar es Salaam: The region's strong performance in both deposits and loans reflects its role as the financial and economic center of Tanzania. Its robust banking sector and diverse economic activities drive the demand for both deposit and credit services.
• Central Zone: The significant increase in bank loans shows growing economic activity and investment in this region. For example, if there are infrastructure projects or industrial developments happening in the Central zone, businesses may be seeking loans for expansion.
• Other Zones: In zones like Northern Tanzania, where there's growth in both deposits and loans, it might indicate the development of industries such as agriculture, tourism, or mining, leading to increased banking activity.

Tanzania bank deposits, bank loans, and zonal economic development:

1. Positive Correlation between Deposits and Loans:

The increase in bank deposits indicates that individuals and businesses are saving more money in banks. This can be attributed to improved economic activities and various banking initiatives.

The increase in bank loans reflects a corresponding increase in lending by banks. This shows that banks have more capital available to lend out, which can be used by businesses and individuals for various purposes, including investments and consumption.

2. Regional Distribution:

Dar es Salaam, being the economic hub, not only contributed the largest share of deposits but also had the highest amount of loans. This shows that economic activities in Dar es Salaam are robust, and businesses and individuals in this zone are actively engaged in banking transactions, including borrowing and saving.

Other zones also show growth in both deposits and loans, indicating positive economic development across different regions.

3. Sectoral Distribution of Loans:

The majority of loans were extended to personal, trade, agriculture, and manufacturing activities. This indicates that banks are actively supporting these sectors, which are crucial for economic development and job creation.

4. Zonal Economic Development:

The increase in both deposits and loans across different zones reflects positive economic development. As deposits and loans grow, it shows that businesses and individuals are investing in economic activities, which can lead to job creation, increased productivity, and overall economic growth.

The significant growth in bank loans in the Central zone may indicate increasing economic activities and investment opportunities in that region.

Overall, the relationship between bank deposits and loans indicates a healthy financial ecosystem supporting economic development across different zones.