Even in its latest iteration, the push for citizen-owned banks has failed to raise a corollary issue that has yet to be mainstreamed into public discourse.
Specially-elected MP, Bogolo Kenewendo, has asked the Minister of Finance and Economic Development, Kenneth Matambo, what his Ministry is doing to encourage the development of domestically owned banks. According to the minister, over the years, the Bank of Botswana has received and processed a number of applications from citizen-owned companies.
“These applications were not successful as they did not meet the licencing requirements set out in the Banking Act and also in the Licensing Policy and related guidelines. The constraints, I wish to clarify, have not been the required statutory minimum start-up capital but rather issues relating to governance, management and realistic business strategies,” he said.
The second part of the issue is that failure by citizens to own a bank creates an odd dynamic, one in which new shopping malls continue to be dominated by the same South African brand shops. A source with an understanding of this issue says that banks insist on a certain percentage of tenants at malls being well-known foreign brands before they can approve funding for a mall development. As a rule, banks will not provide funding unless a marquee supermarket is secured as the anchor tenant and (rough example) some 35 percent of the remaining tenants are also foreign big names. The source adds that in some instances, there will a long-standing business, professional and personal relationship between the parties involved. Such relationships would have been developed in South Africa.
The result has been that the biggest South African retailers dominate new malls in Botswana. What consumers don’t often realise is that a single retailer, who would occupy a large space at a mall courtesy of the bank-facilitated favouritism, would have a wide variety of shops with no obvious link. Often such link becomes apparent when Shop A asks a customer for a discount membership card when s/he buys from Shop C. This arrangement also makes it very easy for the anchor tenants ÔÇô the supermarkets ÔÇô to suck up all trades reserved for citizens through the practice of fronting. In terms of the latter, a citizen secures a trading licence and essentially rents it out to a foreign-owned supermarket.
On the downside, there is no guarantee that citizen-owned banks will change this arrangement because they may also decide that South African brand shops draw customers better than local, relatively unknown ones. On the evidence thus far, citizen economic empowerment has proved to be very discriminatory in terms of which citizens are economically empowered.