With a score of 99 percent, Botswana’s businesses top the log of banked enterprises in Africa.
In its “Financial Inclusion in Africa” report, the African Development Bank (AfDB) defines “banked enterprises” as the percentage of SMEs with an account at a formal financial institution. South Africa scores 98 percent which ties it with Swaziland. Botswana has the third highest number of auto teller machines in Africa after Mauritius and South Africa. Per 100 000 adults, Mauritius has 1009.32 ATMs, South Africa has 59.58 and Botswana has 30.06. In terms of the number of commercial bank branches per 100 000 adults, Botswana – which has 9.15, is ranked fifth after Mauritius (590.21), Morocco (20.98), Tunisia (16.56) and South Africa (10.10).
However, that is about as far as the good news goes because at 48 percent, those same Botswana SMEs are also the worst indebted on the continent. Nigeria’s are the least indebted with only 4 percent of them having an outstanding loan or line of credit. About 70 percent of adults in Botswana don’t have an account at a formal financial institution.
Contrast that with Mauritius where only 20 percent of adults are unbanked – that is, do not have a bank account at a formal financial institution. The island nation is Africa’s best performer, outclassing even the continent’s largest economy, South Africa, where only 54 percent of adults have a bank account.
With only 2 percent of its adults with an account, Niger is the worst performer on the continent and is closely followed by the Central African Republic where only 3 percent of adults are formally banked. About 6 percent of Botswana adults have at least one loan outstanding from a regulated financial institution. Uncharacteristically for its pattern of performance, Mauritius gets the worst score with 14 percent of its banked adults having such loans.
Overall, 23 percent of adults in Africa have an account at a formal financial institution. Within Africa, there is a large variation in account ownership ranging from 42 percent in Southern Africa to 7 percent in Central Africa. In the Democratic Republic of Congo and Central African Republic, more than 95 percent of adults are unbanked. In North Africa, 23 percent of adults have an account at a formal financial institution ranging from 39 percent in Morocco to 10 percent in Egypt.
Throughout Africa, men are more likely than women to have an account at a financial institution. Although the gender gap is smaller compared to other regions, there is still a 7 percent difference. AfDB says that on average, adults in the highest within-economy income quintile are almost four times as likely to have a formal account as those in the lowest income quintile. Similarly, adults with a tertiary education and those aged 25-64 are particularly likely to report having an account at a formal financial institution.
“These gaps highlight the importance of financial literacy in expanding financial inclusion,” says the report.