Total deposits held by banks might be growing but most of those deposits are kept in liquid accounts, meaning that not much is channelled towards savings.
According to the available financial statistics data from Bank of Botswana, total deposits have grown to P64.7 billion in May, continuing with the upward trend that has been observed. The first five months of the year have accumulated more deposits compared to the corresponding period last year. In the last decade, total deposits have grown by 73 percent, largely fuelled by growth in deposits held by private busineses and households.
Currently, the private business sector accounts for P42.9 billion in deposits, representing 66.4 percent, while the household sector comes second at P13.4 billion or 20.7 percent of all deposits.
From 2008 to now, the deposits held by private businesses have grown over by 72 percent, enjoying good growth rate between 2011 and 2015 before easing on the pace. In the 10 years period under review, private businesses deposits hit its highest level at P45.2 billion in August last year before retreating.
Similarly, households’ deposits advanced 76 percent in the past decade, with good trajectory from 2010 to 2014, and the latter having been a good year as the growth pace accelerated, hitting an all time high at P15.2 billion in November of the same year.
The breakdown of deposits by type reveal that holders prefer 24/7 access to their monies instead of savings or fixed term deposits. The call deposit account is the most preferred as it holds P22.1 billion or 34.1 percent of all deposits. It popularity stems from its convenience, with its no fixed deposit period yet earning daily interest, while also providing instant access to funds and allows unlimited withdrawals and deposits. This is the number one go to account for businesses as it allows them to earn interest on surplus cash while enjoying immediate access to meet their financial obligations.
The current account is on the second rung, taking in P13.2 billion or 20.4 percent of total deposits. These accounts are mostly used by households for day to day transactions, allowing its owners to access their funds through numerous transactions carried over various distribution channels such as ATMs, electronic debits, and mobile banking.
When holders decide to exercise financial discipline, the prefer keeping their deposits locked in a 6-months fixed deposit account, which accounts for P13.5 or 20.9 percent of total deposits. The 12 month fixed deposits by May was fourth in line of popularity, holding about P5.6 billion or 8.7 percent of deposits.
Not surprisingly, as local financial experts have always warned, there is a poor saving culture. Savings accounts represented P4.6 billion or 7.1 percent of total deposits, while fixed term deposits accounts for periods greater than a year held a paltry P1.8 billion 2.9 percent.