TICGL

| Economic Consulting Group

TICGL | Economic Consulting Group
Menu
Close
Tanzania Interest Rate Developments March 2026 | TICGL Economic Analysis
15.07%
Overall Lending Rate
▼ from 15.24%
12.25%
Negotiated Lending
▼ from 12.38%
5.75%
Central Bank Rate
→ Unchanged Q1
8.33%
Time Deposit Rate
▼ from 8.36%
9.70%
12-Month Deposit
▲ from 9.58%
5.79%
Interest Rate Spread
▼ from 5.88%
3.2%
Inflation Rate (Feb)
✓ Well-anchored
Section 1

Overview of Interest Rate Developments

In January 2026, commercial bank interest rates in Tanzania showed slight but meaningful declines, particularly in lending rates — a sign of adequate banking sector liquidity and a stable monetary policy environment maintained by the Bank of Tanzania.

15.07%Overall lending rate — down from 15.24% in December 2025
8.33%Time deposit rate — a marginal decline from 8.36%
12.25%Negotiated lending rate — prime customers benefit from lower rates
11.74%Negotiated deposit rate — slight increase, favouring large depositors

In early 2026, Tanzania's interest rates remained stable, influenced by the Bank of Tanzania's (BoT) Central Bank Rate (CBR) held at 5.75% for Q1 (January–March), reflecting low inflation (3.2% in February) and adequate liquidity. Commercial bank lending rates averaged 15.07% in January (down from 15.24% in December 2025), with negotiated rates for prime customers at 12.25%. Interbank rates rose slightly, with the 7-day IBCM at 6.68% as of March 13, up from 6.40% in January.

Key Takeaway: Why Are Rates Declining?

The slight decline in lending rates indicates that banks were operating with adequate liquidity, reducing the need to offer higher deposit rates to attract funds. Treasury bill oversubscription in government securities auctions signals strong confidence in Tanzania's financial system and keeps benchmark yields relatively low.

Section 2

Lending Interest Rates in Tanzania

Lending rates represent the cost of borrowing money from commercial banks by businesses and households. These rates directly affect investment decisions, mortgage costs, business expansion, and SME credit access.

Lending rates in Tanzania declined marginally over the 2025–2026 period, reflecting improved liquidity from government securities auctions. Large or prime customers consistently obtain loans at significantly lower negotiated rates, highlighting a two-tier lending structure.

Lending Interest Rate Trend (Jan 2025 – Feb 2026)

PeriodOverall Lending Rate (%)Negotiated Lending Rate (%)Short-Term Lending Rate (%)Trend
Jan 202515.7312.8015.70Baseline
Mar 202515.5012.9415.83▼ Easing
Jun 202515.2312.6815.69▼ Easing
Sep 202515.1812.8415.52▼ Continued
Dec 202515.2412.3815.46▲ Minor uptick
Jan 202615.0712.2515.49▼ Latest
Feb 2026 (est.)~15.00~12.25~15.45▼ Projected
Tanzania Lending Interest Rate Trends
Jan 2025 – Feb 2026 · All three lending rate categories · Source: Bank of Tanzania
The Prime Customer Advantage

The persistent gap between overall lending rates (~15%) and negotiated rates (~12.25%) — roughly 2.8 percentage points — reflects the dual nature of Tanzania's credit market. Large corporations access significantly cheaper credit, while SMEs and individuals bear the full borrowing cost. SME-led growth contributes approximately 40% of Tanzania's GDP.

Section 3

Lending Rates by Loan Maturity

Interest rates in Tanzania vary significantly depending on the loan repayment period (tenor). The maturity structure reveals how banks price credit risk across different time horizons.

Lending Rates by Loan Tenor — January 2026

Loan CategoryTenorInterest Rate (%)Risk Profile
Short-term loansUp to 1 year15.49Working Capital
Medium-term loans1–2 years16.58Highest Rate
Medium-term loans2–3 years14.96Moderate Risk
Long-term loans3–5 years14.05Investment Grade
Extended long-termAbove 5 years14.24Secured/Structured
Rate by Tenor — Visual Comparison
January 2026 · Horizontal bar view
Short-term (<1yr)
15.49%
Medium 1–2 yrs
16.58%
Medium 2–3 yrs
14.96%
Long-term 3–5 yrs
14.05%
Above 5 years
14.24%
Maturity Rate Structure
Radar view of rate distribution by tenor
Why Do 1–2 Year Loans Cost the Most?

Medium-term loans in the 1–2 year range carry the highest rate (16.58%) due to peak credit risk. Long-term loans (3–5 years and above) are often tied to investment financing or secured borrowing backed by assets, hence the slightly lower rates of 14.05–14.24%.

Section 4

Deposit Interest Rates in Tanzania

Deposit rates represent the returns paid by banks to customers who save money. They reflect banks' need to attract funds, their current liquidity levels, and the competitive landscape for savings mobilisation.

Tanzania's deposit rate structure reveals significant tiering: savings accounts earn 2.94%, 12-month fixed deposits earn 9.70%, and large institutional investors can negotiate rates as high as 11.74%.

Deposit Interest Rate Trend (Jan 2025 – Feb 2026)

PeriodSavings Deposit (%)Overall Time Deposit (%)12-Month Deposit (%)Negotiated Deposit (%)
Jan 20252.978.3110.0811.80
Mar 20252.868.008.1410.35
Jun 20252.908.749.7911.21
Sep 20252.928.509.8411.05
Dec 20253.028.369.5811.66
Jan 20262.948.339.7011.74
Feb 2026 (est.)~2.95~8.30~9.65~11.70
Tanzania Deposit Interest Rate Trends
All deposit categories · Jan 2025 – Feb 2026 · Source: Bank of Tanzania

Deposit Rate Tier Structure — January 2026

Savings Account
2.94%
Time Deposit
8.33%
12-Month Deposit
9.70%
Negotiated Rate
11.74%
What This Means for Savers and Businesses

Savings deposit rates remaining low at around 3% indicate that banks have ample short-term liquidity. Negotiated deposit rates — offered mainly to large institutional investors such as pension funds and insurance companies — are substantially higher, reflecting the large volumes and long-term nature of these deposits.

Section 5

Interest Rate Spread in Tanzania

The interest rate spread — the difference between lending rates and deposit rates — is one of the most important indicators of banking sector efficiency and financial intermediation quality.

Interest Rate Spread Trend (Jan 2025 – Feb 2026)

PeriodShort-Term Lending Rate (%)12-Month Deposit Rate (%)Interest Rate Spread (%)Change
Jan 202515.7010.085.63Baseline
Mar 202515.838.147.69▲ Widened
Jun 202515.699.795.90▼ Narrowed
Sep 202515.529.845.69▼ Narrowed
Dec 202515.469.585.88▲ Minor rise
Jan 202615.499.705.79▼ Improved
Feb 2026 (est.)~15.45~9.65~5.80Stable
Lending Rate vs. Deposit Rate vs. Spread
Composite view showing the interest rate spread dynamics · Jan 2025 – Feb 2026
Spread Narrowed to 5.79% — A Marginal Improvement

The spread narrowed from 5.88% in December 2025 to 5.79% in January 2026. Tanzania's spread remains above the Sub-Saharan Africa average of ~5%, partly reflecting higher credit risk, operational costs, and limited financial market competition. Reforms to narrow spreads to 4–4.5% could free up an estimated additional 1.2–1.5% of GDP in private sector credit annually.

Rate Components in January 2026

Short-Term Lending
15.49%
12-Month Deposit
9.70%
Interest Spread
5.79%
Central Bank Rate
5.75%
Section 6

Factors Influencing Interest Rates in Tanzania

Interest rates in Tanzania are shaped by a set of interconnected macroeconomic forces — from the Bank of Tanzania's monetary policy stance to global commodity price pressures and the depth of domestic financial markets.

The Central Bank Rate (CBR) — held at 5.75% throughout Q1 2026 — serves as the anchor around which all commercial bank rates orbit.

Key Determinants of Interest Rates

🏦
Monetary Policy Rate (CBR)
The Bank of Tanzania's Central Bank Rate directly guides commercial bank lending and deposit rates. Held at 5.75% in Q1 2026, it signals a stable, accommodative stance supporting credit growth while keeping inflation anchored at 3.2%.
💧
Banking Sector Liquidity
Higher liquidity reduces the need for banks to offer elevated deposit rates to attract funds, suppressing lending rates. Oversubscribed Treasury bill auctions (e.g., TZS 840 billion in January 2026) signal ample system liquidity.
📉
Inflation Expectations
Higher expected inflation erodes real returns. Banks respond by raising nominal rates. Tanzania's inflation at 3.2% in February 2026 — within BoT's 3–5% target band — has kept upward rate pressure minimal.
🏛️
Government Borrowing
Increased domestic government borrowing competes with private sector credit, potentially pushing rates upward. Tanzania's domestic debt of ~TZS 38.6 trillion requires careful management to avoid crowding out private investment.
🏭
Private Sector Credit Demand
Higher demand for business and consumer loans places upward pressure on lending rates. Credit growth of 16–20% in Tanzania reflects strong demand in agriculture, manufacturing, and infrastructure sectors.
🌍
Global & External Factors
Exchange rate movements, global commodity prices, and international interest rate trends (particularly US Federal Reserve policy) can transmit financial conditions into Tanzania's banking system through import inflation and capital flows.
CBR vs. Commercial Bank Rates — Policy Transmission
How the Central Bank Rate anchors market rates · Q1 2025 – Q1 2026

Factor-by-Factor Impact Summary

DeterminantCurrent Status (Q1 2026)Direction of Effect on RatesMagnitude
Central Bank Rate (CBR)5.75% — Unchanged→ StabilisingHigh
Banking LiquidityAdequate — Auctions oversubscribed▼ Downward pressureModerate–High
Inflation3.2% — Within BoT target→ ContainedLow
Government BorrowingTZS 38.6 trillion domestic debt▲ Upward riskModerate
Private Credit DemandCredit growth 16–20%▲ Upward pressureModerate
External ShocksStable global outlook Q1 2026→ WatchLatent
The CBR Anchor Effect

The Bank of Tanzania's decision to maintain the CBR at 5.75% for Q1 2026 reflects confidence in the macroeconomic environment. Any upward revision to the CBR would likely add 0.3–0.5 percentage points to commercial lending rates within one to two quarters, supporting Tanzania's projected 6.0–6.3% GDP growth in 2026.

Section 7

Relationship Between Lending and Deposit Rates

The structure of interest rates in Tanzania directly reflects how commercial banks generate profit. The gap between what banks charge borrowers and what they pay depositors is the banking sector's gross operating margin on financial intermediation.

With lending rates at approximately 15% and deposit rates at approximately 8%, Tanzania's commercial banks maintain a spread of around 5–6 percentage points. This spread funds bank operations, provisions for non-performing loans, risk premiums, and profit.

The Bank Intermediation Model

IndicatorRole in BankingJanuary 2026 RateWho It Affects Most
Deposit RatesCost of funds for banks — paid to savers2.94% – 11.74%Savers, Pension Funds, Corporates
Lending RatesRevenue from loans — charged to borrowers12.25% – 16.58%SMEs, Households, Businesses
Interest SpreadBank profit margin on intermediation5.79%Banking Sector Profitability
Central Bank RatePolicy anchor for all market rates5.75%Entire Financial System

How Banks Intermediate Between Savers and Borrowers

Rate Composition — Lending Side
What makes up the 15.07% overall lending rate
Spread vs. Deposit vs. Policy Rate
Rate stack view — January 2026
Why Does the Spread Matter for Tanzania's Economy?

A spread of 5.79% is the cost of financial intermediation — ultimately borne by borrowers. For Tanzania's SMEs, which contribute ~40% of GDP, every percentage point in the spread translates directly to higher debt servicing costs. Narrowing the spread to 4% could unlock an estimated additional 1.2–1.5% of GDP in private sector credit annually.

Section 8

Key Interest Rate Indicators — January 2026

The following table and charts provide a consolidated snapshot of all key interest rate indicators for Tanzania as of January 2026, drawn from Bank of Tanzania data.

Complete Rate Dashboard — January 2026

IndicatorRate (Jan 2026)vs. Dec 2025vs. Jan 2025Category
Overall Lending Rate15.07%▼ −0.17pp▼ −0.66ppLending
Negotiated Lending Rate12.25%▼ −0.13pp▼ −0.55ppLending (Prime)
Short-Term Lending Rate15.49%▲ +0.03pp▼ −0.21ppLending (<1yr)
Medium-Term Rate (1–2yr)16.58%——Lending (Peak)
Long-Term Rate (3–5yr)14.05%——Lending (Long)
Savings Deposit Rate2.94%▼ −0.08pp▼ −0.03ppDeposit
Overall Time Deposit Rate8.33%▼ −0.03pp▲ +0.02ppDeposit
12-Month Deposit Rate9.70%▲ +0.12pp▼ −0.38ppDeposit
Negotiated Deposit Rate11.74%▲ +0.08pp▼ −0.06ppDeposit (Prime)
Interest Rate Spread5.79%▼ −0.09pp▲ +0.16ppSpread
Central Bank Rate (CBR)5.75%→ Unchanged→ UnchangedPolicy Rate
7-Day IBCM (Mar 13)6.68%▲ +0.28pp—Interbank

pp = percentage points · Source: Bank of Tanzania (BoT) · IBCM = Interbank Call Money Market

All Key Interest Rate Indicators at a Glance
Horizontal comparison of all rate categories · January 2026 · Source: Bank of Tanzania

Snapshot Rate Cards — January 2026

Overall Lending
15.07%
↓ Declining trend
Negotiated Lending
12.25%
↓ Prime customers only
Peak Rate (1–2yr)
16.58%
↑ Highest maturity rate
Savings Deposit
2.94%
→ Low, stable
12-Month Deposit
9.70%
↑ Slightly up from Dec
Interest Spread
5.79%
↓ Narrowing gradually
Central Bank Rate
5.75%
→ Unchanged Q1 2026
7-Day IBCM (Mar)
6.68%
↑ Up from 6.40% Jan
Extended Analysis

Economic Implications for Tanzania's Growth and Development

Stable interest rates, tied to the performance of Tanzania's government securities market, create both significant growth opportunities and structural risks.

Oversubscribed securities auctions — TZS 840 billion in bids in January 2026 — signal strong market confidence and generate downward pressure on yields. This enables government funding for critical infrastructure (TZS 15.24 trillion planned for FY2026/27). However, the persistent 15% lending rate remains a constraint for Tanzania's SME sector, contributing approximately 40% of GDP.

Interest Rates & GDP Growth Trajectory
Relationship between lending rates, spread, and Tanzania's economic growth outlook · 2025–2026

Economic Implications Matrix — Opportunities, Risks & Securities Market Linkages

Implication CategoryPositive Impact on Growth & DevelopmentPotential RisksLink to Securities Market
💰 Borrowing CostsDeclining rates (15.07%) boost private investment, supporting the 6.3% GDP forecast; underpins agriculture and mining export competitiveness.High spreads (5.79%) raise the cost of credit for SMEs, hindering job creation. Unemployment remains ~13.4%, concentrated in youth and rural areas.Low bond yields (11.3% on 10-yr bonds) benchmark commercial rates downward, enhancing credit growth of 16–20% annually.
🌊 Liquidity & StabilityCBR at 5.75% maintains inflation at 3.2%, preserving household purchasing power and real wage stability — critical for domestic consumption-led growth.Sticky lending rates (~15%) could slow recovery if global shocks — commodity price surges, US Fed rate hikes, or regional instability — force BoT to raise the CBR.Oversubscribed auctions provide system liquidity, stabilising IBCM rates at 6.68% and reducing market interest rate volatility.
🌐 Investment AttractionStable monetary environment attracts FDI toward Tanzania's USD 15 billion target for 2026, funding industrialisation under Vision 2050 across energy, transport, and mining.Crowding out risk: if government borrowing accelerates, domestic credit available to the private sector shrinks, limiting the diversification needed beyond resource extraction.Domestic bond focus (80% of securities holdings) recycles domestic savings productively, deepening Tanzania's financial markets toward a target of ~15% of GDP.
🤝 Inclusive DevelopmentAffordable long-term loans (14.24% for 5yr+) fund poverty reduction programs, supporting Tanzania's target of reducing poverty to below 20% by 2030.Inequality risk: persistently high rates exclude rural borrowers and smallholder farmers from formal credit, deepening the urban-rural financial inclusion gap.Institutional holders (banks and pension funds = 55% of bonds) support pension asset growth, strengthening the social security system and retirement income.

Development Impact at a Glance

✅ Opportunities
  • Lending rates declining year-on-year (15.73% → 15.07%)
  • CBR stable at 5.75% — no tightening expected Q1 2026
  • Treasury oversubscription signals strong investor confidence
  • Infrastructure spend of TZS 15.24 trillion boosts GDP 1–1.5%
  • FDI target of USD 15 billion supported by stable monetary conditions
  • Domestic debt market depth (~TZS 38.6 trillion) reduces external financing risk
⚠️ Risks to Watch
  • High lending spread (5.79%) limits SME credit affordability
  • Youth unemployment at ~13.4% — needs SME-driven job creation
  • Rural financial exclusion persists despite declining aggregate rates
  • Crowding out risk if government borrowing grows faster than private credit
  • Global shock exposure: US Fed policy, commodity prices, exchange rate
  • Sticky rates — banks slow to pass on monetary policy easing to borrowers
Tanzania Growth Outlook vs. Interest Rate Environment
GDP growth scenarios linked to interest rate trajectory · 2024–2028 projection
Conclusion

Summary & Outlook

Data from the Bank of Tanzania confirms that Tanzania's interest rate environment in early 2026 is characterised by gradual easing, stable monetary policy, and adequate banking sector liquidity — a supportive backdrop for investment and growth, with important structural challenges remaining.

📊
Lending Rates Remain Relatively High

At around 15%, Tanzania's lending rates reflect genuine credit risk, operational costs, and the limited depth of the credit information ecosystem. While declining, these rates remain above regional peers and continue to constrain private sector borrowing — particularly for SMEs and rural entrepreneurs.

🏦
Deposit Rates Signal Adequate Liquidity

Moderate deposit rates (8–10% on time deposits) indicate that banks currently have sufficient funding and are not competing aggressively for deposits. This liquidity adequacy is reinforced by the oversubscription of government securities auctions.

⚖️
Spread Reflects Bank Intermediation Cost

The interest rate spread of about 5–6% captures the gross margin that banks earn on financial intermediation. While this spread has narrowed slightly (from 5.88% to 5.79%), structural reforms targeting credit risk infrastructure and financial market competition could accelerate the narrowing process.

🚀
Outlook: Resilient but Reform-Dependent

Tanzania's interest rate stability in 2026 positions the country for resilient 6.5–6.9% medium-term growth. However, the full benefits of monetary stability will only be realised if structural reforms — particularly those targeting SME credit access, financial inclusion, and spread reduction — are implemented under Vision 2050.

Tanzania Interest Rate Summary — Full Picture
Composite of all key rate indicators across lending, deposit, policy, and spread categories · Jan 2026 vs Jan 2025
🔔
Monitor BoT Updates

The Bank of Tanzania is expected to release updated interest rate data for February and March 2026 in its quarterly monetary policy report. Key indicators to watch include: any CBR revision, interbank rate movements, and credit growth velocity in agriculture and manufacturing sectors. TICGL will update this analysis upon release of new BoT data.

Data Sources & Attribution
Primary data: Bank of Tanzania (BoT) — Monthly Economic Review, January 2026 & Monetary Policy Report Q1 2026.
Analysis and synthesis: TICGL Research Division — Tanzania Investment and Consultant Group Ltd.
All figures are in Tanzanian Shillings (TZS) or percentages (%) unless stated otherwise.
Last updated: March 2026 | Next update: Upon release of BoT April 2026 data

Explore More from TICGL Economic Intelligence

Deepen your understanding of Tanzania's economy with our data-driven research and analytics tools.

📊
TICGL Economic
Full suite of Tanzania macroeconomic analysis and commentary
📈
Is Tanzania's Economy Growing?
GDP, sectoral performance, and growth trajectory analysis
⚖️
Opportunities & Risks in 2026
What defines doing business in Tanzania in 2026?
🔍
Why Growth Has Not Been Inclusive
Examining inequality, SMEs, and structural gaps in Tanzania's economy
💼
Invest in Tanzania
Sector opportunities, incentives, and the investment landscape
🗃️
Tanzania Business Intelligence Dashboard
Live data analytics for Tanzania's economy and markets
🖥️
TICGL Dashboard
Your personalised economic intelligence hub
🎓
Join TICGL as a Researcher
Contribute to Tanzania's economic knowledge base

Bank interest rates in Tanzania remained broadly stable during October 2025, consistent with the Bank of Tanzania's (BoT) steady monetary policy stance. The Central Bank Rate (CBR) was maintained at 5.75% for the second consecutive meeting, following a 25-basis-point cut in July 2025, to anchor inflation expectations within the 3-5% target amid robust economic growth projections exceeding 6% for the year. Lending rates showed minimal fluctuation, with the overall average edging up slightly to 15.19% from 15.18% in September, while negotiated rates for prime borrowers eased to 12.40%. Deposit rates trended marginally lower, with the overall time deposit rate declining to 8.36% from 8.50%, reflecting ample liquidity in the banking system (M3 growth at 21.5% YoY). This stability is underpinned by low inflation pressures (headline at 3.5%), a firm shilling (appreciating 9.5% YoY against USD), and strong external buffers (reserves covering 4.7 months of imports).

Economic Implications: Rate stability fosters predictability, encouraging private investment and consumption, which drove 5.6% GDP growth in FY2024/25 and supports 6%+ momentum in Q4 2025 via sectors like tourism (up 28% arrivals) and mining (credit growth 29.7%). However, the wide lending-deposit spread (6.28 percentage points) highlights inefficiencies in financial intermediation, typical of emerging markets with high credit risk and operational costs, potentially crowding out SME lending and limiting inclusive growth (youth unemployment at 13.4%). Per Deloitte's 2025 Outlook, sustained low rates could boost FDI by 10-15% in services, adding 0.5-1% to GDP, but persistent high borrowing costs (above Kenya's 13-14%) risk a 0.5% growth drag if not addressed through digital lending reforms. Read More: Tanzania Interest Rates Stabilize in September 2025

1. Deposit Interest Rates

Deposit rates encompass savings and fixed-term deposits (1-12 months), averaging 8.36% overall in October 2025, down slightly from prior months due to excess liquidity from robust remittances (USD 579M YoY) and export earnings. Banks faced no pressure to hike rates, as interbank rates fell to 6.38% (from 6.45%).

1.1 Deposit Rates Table (October 2025)

The table below details key categories, drawn from BoT's aggregated data; short-term rates remain subdued, incentivizing longer holds.

Deposit CategoryInterest Rate (%)Interpretation
Savings Deposits2.93Stable; low real yield (0.43% after 3.5% inflation) may channel savings to informal channels, but supports inclusion via mobile banking.
1-month Deposits2.75Minimal change; reflects ample short-term liquidity, easing rollover costs for households.
3-month Deposits4.77Moderate; suitable for conservative savers, up slightly YoY amid stable policy.
6-month Deposits4.91Slightly higher than 3-month; unchanged, signaling confidence in near-term stability.
12-month Deposits5.84Highest; stable, but below inflation-adjusted needs, potentially curbing long-term savings mobilization (household rate at 12%).

Source: BoT computations (Table 2.3.1 and A4); rates are weighted averages across commercial banks.

Key Insights – Deposit Rates:

Economic Implications: Low deposit rates (real yield ~ -0.5% to 2.3%) discourage formal savings, pushing ~50% of households toward informal options and hindering capital deepening (financial inclusion at 75%). This supports consumption-led growth (3.5% private demand contribution), but limits funding for banks' private credit expansion (16.1% YoY), per IMF 2025 Article IV. Positively, stability aids monetary transmission, keeping M2 growth at 25.8% and bolstering reserves (USD 6.2B), while encouraging shifts to higher-yield government securities (T-bill yields at 6.27%).

2. Lending Interest Rates

Lending rates cover overall averages, short-term (up to 1 year), and long-term (3-5 years), remaining anchored by the CBR and low inflation risks. The overall rate held at 15.19%, with easing in negotiated and long-term segments signaling banks' support for investment amid business optimism.

2.1 Lending Rates Table (October 2025)

Lending CategoryInterest Rate (%)Notes
Overall Average Lending Rate15.19Unchanged from September; broad stability aids credit access.
Short-term Lending Rate13.19Slight increase; for working capital, remains affordable vs. historical peaks (16% in 2024).
Long-term Lending Rate17.08Marginal decline; encourages capex in infra/agri, down from 17.3% YoY.

Source: BoT; short/long-term align with up to 1-year (15.50% overall) and 3-5 years (15.13%), with user's figures reflecting sub-averages for prime borrowers.

Key Insights – Lending Rates:

Economic Implications: Stable/easing rates sustain 16.1% private credit growth, fueling sectors like agriculture (25.6%) and MSMEs (36.4% of loans), potentially adding 1.2% to GDP via multipliers, as per World Bank 2025 CPF. This aligns with 6% growth forecast, enhancing job creation (200K in ports/tourism). However, elevated levels (vs. regional 13%) exacerbate affordability for SMEs, linked to a 0.5% GDP drag in manufacturing (5.2% credit growth), per ResearchGate 2025 study. BoT's stance mitigates risks from post-election inflation spikes (food up 7.4%), preserving FX stability.

3. Combined Summary Table – Lending vs Deposit Rates

CategorySubcategoryInterest Rate (%)Trend
DepositsSavings2.93Stable
1-month2.75Unchanged
3-month4.77Stable
6-month4.91Stable
12-month5.84Stable
LendingAverage Lending Rate15.19Stable
Short-term Lending13.19Slight rise
Long-term Lending17.08Slight fall

Economic Implications: The 9-14% lending-deposit differential underscores high intermediation margins (operational costs ~4%, risk premiums 5-7%), enabling bank profitability (ROA 2.5%) but crowding out private lending during liquidity squeezes. This supports fiscal financing (domestic debt at TZS 38T), but IMF recommends narrowing to 5% via competition to unlock TZS 2T for SMEs, boosting 7% medium-term growth.

4. Interpretation of Interest Rate Conditions

(1) Narrow Movement Signals Stability: Minimal shifts indicate effective BoT liquidity management (reverse repos at TZS 1.2T), aligning with global easing (Fed cuts) and domestic buffers.

Implication: Enhances business confidence, per Reuters Oct 2025 report, sustaining 21.5% M3 expansion and 6% GDP via investment (infra 2% contribution).

(2) Spread Between Deposit and Lending Rates: 6.28 pp (deposits 2.75-5.84% vs. lending 13.19-17.08%), widened from 5.65 pp YoY, due to risk aversion and sovereign yields (T-bonds 10-12%).

Implication: Typical for high-NPL markets (3.2%), but erodes efficiency; SECO 2025 Report links it to low financial deepening (credit/GDP 17.4%), risking 1% growth loss without fintech reforms.

(3) Impact of Monetary Policy: CBR at 5.75% ensures controlled liquidity, shilling appreciation (9.5%), and inflation anchoring.

Implication: Bolsters reserves (USD 6.2B), offsetting election unrest risks (inflation up to 3.5%), and supports 4.7-month import cover for AfCFTA integration (USD 1B trade potential).

5. Summary Narrative

Interest rates in Tanzania during October 2025 remained broadly stable, supported by adequate liquidity, moderate inflation (3.5%), and a firm shilling (9.5% YoY appreciation). Deposit rates ranged 2.75-5.84%, while lending rates spanned 13.19-17.08%, with the overall average unchanged at 15.19%, indicating a balanced credit environment where banks lend without stress and borrowers enjoy predictable costs. This setup, per BoT's October report, underpins robust growth (>6%) by facilitating credit to key sectors, though wide spreads highlight needs for deeper markets to maximize inclusive benefits.

crossmenu linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram