Dear Editor
Allow me space in your newspaper to air my concern about the going ons in our banking industry. I was inclined to put up this article after reading an article on the Telegraph of April 7, 2010. In this article, Prof Malema quotes Mr. Thuli Johnson, MD for Barclays Bank of Botswana as having said, “as you all know, we went aggressively on the lower end of the market in the past years in an attempt to get them financially included”. One can ordinarily ask themselves as to what the statement means and when you read the statement blindly you will think that the drive is all for the good of “the low end” as Mr Johnson has put it while it is to the detriment of the aforesaid.
The article goes on to say that Barclays “brought down the floor of people who qualify to open an account to a minimum level salary of P800.00 per month” and additionally such people have been connected to the modern day financial flexibility of issuing them with credit cards. My strongest conviction is that Barclays in the drive to carry “the low end” in the mainstream of banking end up defying the millennium development goal 2 of eradicating poverty and hunger. A question worth asking is whether issuing a credit card to someone earning P800.00 is indeed a way of trying to achieve the Millennium Development Goals. I am sure to a lot of people the answer will be a big NO. It is a simple fact that a credit card is a very useful and convenient gadget to a lot of people but at the same time it can seriously lead one to the doldrums of poverty. I have seen a lot of people, mostly in the middle class fall right in the pit of illiquidity just because of lack of education on proper usage of a credit card, now what more about the low income earning. Sadly so, it is that lack of knowledge that results in banks making a killing in the process.
Realistically speaking I do not see how somebody earning P800 can be expected to use a credit card responsibly, to him a credit card is one easy way of using money and how they pay for it and when and how much they pay back doesn’t really matter. My biggest gripe with this is that these people pay rent, have children to look after or at least food has to be on the table for them to survive. It is a simple fact that banks make more money from borrowings than it does from savings, but I feel the Banking Adjudicator and Bank of Botswana need to come into the picture and closely monitor where banks are leading our society. By the aforesaid bodies monitoring the banking industries they should be in a better position to advice banks to divert their attention to saving than borrowing mostly for the low income earning bracket as the latter turns our society into a spending nation which in the process means that more and more of GDP goes into consumption at the expense of investment and at the expense of the trade balance.
I am sure some progressive economists will agree with kurt Richebacher who once said “to have too much credit is never good, not for a country and not for an individual and not for a company”. While we witness the exceptional performance of the banks in this country, at the same time, for all that matters, I implore them to embrace financial inclusion of the low income group on saving than borrowing for the betterment of our people’s livelihood. In conclusion, it is up to the readers to conclude for themselves as to whether banks are on a wealth creation drive or impoverishment mode.
