Thursday, July 18, 2024

Banking Act under reconstruction

The Central Bank says both the Bank of Botswana Act and the Banking Act are at advanced stages of review to modernise and align these laws to best international standards and practices.

Bank of Botswana Governor, Moses Pelaelo said that Botswana offers a well-developed public infrastructure, encompassing a liberal business operating environment, legal protection and respect for property rights, efficient and independent judiciary. He added that in general, macroeconomic stability, as the credit rating institutions (Moody’s and S&P Global Ratings) would say, anchored on strong institutions and predictable policies, including successful monetary policy and stable financial conditions. He said added to this is a strong, effective and responsive regulatory framework for the banking industry and financial sector, broadly.

He stated that commercial banks will continue to be well governed, operate in a sound manner and adhere to the prudential requirements and regulatory guidelines and therefore contribute to enduring strength and stability of the banking system and the broader financial sector. He said in addition to the prudential and conduct aspects, there are national requirements and preferences regarding localisation of resource procurement.

“We are well aware that public trust is the single most important asset of a bank,” said Pelaelo.

He further stated that the nexus of individual bank strength and compliance and a conducive operating environment makes for financial stability, which has several benefits. He said among these are, first, sustained capability of individual institutions to play their roles of financial intermediation, risk mitigation, continuity of efficient payments and beneficial innovation, profitably, to the greater benefit of society. Second, a stable financial system and prudently managed banks facilitate effective policy transmission and therefore good prospects for countercyclical or policy measures to have the desired impact on the economy. Pelaleo stated that third, stability engenders system integrity and, therefore, patronage of the sector with all the resultant and incidental developmental and welfare-enhancing benefits for society. He said the focus of the Bank of Botswana in ensuring viability and soundness of individual banks and integrity and stability of the financial system including the payments system.

“Botswana now has a majority of regional banks or panAfrican banks. This is fitting for regional integration aspirations,” said Pelaelo.

He stated that active participation of commercial banks competitors in the national development and economic transformation effort, intended to accelerate economic diversification and inclusive growth and help to transition the country to high-income status by 2036. He added that at a high level, the critical elements include promoting export-led growth involving integration of the domestic industry into the global value chains, harnessing of information and communications technology, digitalization, for the purposes of efficiently and competitively driving economic activity and for growth of new industries or businesses; promoting enhanced use and productivity of domestically mobilized financial resources and therefore generate higher levels of industrialization; fostering infrastructure development and efficiency of provision of government services for greater impact on private sector operations.

“The appreciation and knowledge of the African context and institutions by the panAfrican banks would enable easier and productive engagement of the banks with local businesses,” said Pelaelo.


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