Thursday, August 18, 2022

Banks should take note of the Governor’s remarks

Last week, the Governor of Bank of Botswana delivered a keynote speech at the event for Botswana Institute of Bankers.

It was a well thought-out speech that reflected key aspects of statesmanship that our political leaders would do well to adopt.

While thorough in her recognition of how far the banking industry has come especially since she was first appointed Governor in 1998, Ms Mohohlo was equally ruthless in her introspection and outline of the shortcomings during the same time.

She first started by highlighting the clear statistics especially on the growth of number of banks and also the sheer scale of transactions that those banks have handled over that same time.

She said it would be meaningless to just bask on the successes, especially as going forward there were a lot of challenges with much more things that had to change if momentum of past success was to be maintained.

She singled out low staff training among Botswana’s banks as one big challenge that keeps her awake at night.

Given her position, background and the length of time she has spent as a banker, it is our view that she knows what she is talking about.

Ms Mohohlo knows the importance of training.

For a person who started as a secretary and on the back of training and personal development rose through the ranks to become a Central Bank Governor, there cannot be a more appropriate person than her to talk about the importance of staff training within the banking industry.

We quote Ms Mohohlo in detail so as to better capture the essence and gravity of her concerns.

“…Competition among banks has become more intense in a number of respects, and with demonstrable benefits for customers. Yet the complaint that banks charge rather highly for poorly developed services continue to resonate, seemingly undimmed from fifteen years ago. In part, this may reflect higher standards required by modern-day customers. But failure to make progress on reducing the period for cheque clearance, or reducing the long queues in banking halls and at ATMs are symptomatic of underinvestments in banking infrastructure. Similarly, the continuing insufficient investment by banks in human capital development is so glaring; improving financial literacy of bank customers is almost non-existent. This is as if banks in Botswana are oblivious to the fact that return from investing in staff training and development, and empowering the consumer with financial knowledge and business guidance, will ensure dynamic profitability and sustained business growth.

The almost zero to minimal corporate social responsibility, including endowments for major social projects that benefit society, is also disheartening, particularly given that banks deliver so generously in this respect where their headquarters are domiciled. Surely, Botswana banks’ narrow profit-centric business paradigm that is characterized by a static short-run perspective needs to change.

“A further challenge is that of financial inclusion. Independent surveys have shown that Botswana ranks relatively well in Africa in terms of financial access, especially in terms of access to banking products. This is a notable achievement of which we should be proud. But, as banking increasingly becomes regarded as a mainstream service, rather than one reserved for a privileged minority, the questions as to why a substantial proportion of our people do not yet have access become more pointed. It is incumbent for all the players in the banking community (whether large or small), as well as the regulator, to work constructively to advance this important agenda.

“We would do well to continue to look for ways to make effective use of new technologies to reach out to all communities, without undermining prudential standards. Recent initiatives to improve to improve the platform for the effective sharing of credit information are certainly welcome. In this way, greater inclusivity in banking services will be supported, particularly if it can be properly implemented such that it is able to provide a balanced picture of borrower profiles…”

Ms Mohohlo’s sentiments echo what John Middleton called “the head office syndrome” in a speech he delivered almost 15 years ago when he stepped down from the position of Barclays Bank Botswana Managing Director.

Botswana banks continue to make a lot of money for their head offices.

But there is little to prove that the local banks are appreciated, much less respected by their head offices.

Thresholds for loan amounts that citizen Managing Directors can issue out continue to be embarrassingly too low.

While the appointment of citizen Managing Directors has been a welcome development, it has not escaped our attention that many of these banks did it grudgingly and for most of them literally screaming as the regulators insisted it was overdue.

It has also not escaped our attention that some citizen Managing Directors are nothing more than glorified public relations officers as they often are assigned officers from the head offices to look over their shoulders.

Often more powerful than MDs these officers from head office often are the real reservoirs of bother power and authority.

This is humiliating because it reduces citizen MDs in our banks to a level of tokenism that cannot be accepted anywhere in the world.

RELATED STORIES

Read this week's paper