Monday, July 22, 2024

Botswana lenders see credit appetite as moderate in 2022

A survey carried by Bank of Botswana on household debt has found out that commercial banks, statutory banks, microlenders and hire purchase stores view the outlook for demand for credit by households in the country for 2022 as moderate.

The BoB survey also indicates that the rising cost of living and the lingering effects of COVID-19 on households’ loan affordability informed the outlook for demand of credit.

Botswana’s annual inflation quickened this year to its highest level, driven by price rises for fuel, food and miscellaneous services, official data released by Statistics Botswana over the past several months shows.

Kwabena Antwi (CFA), Portfolio Manager at Kgori Capital says the local assets management firm expects inflation to remain elevated but gradually reduce and sustainably trend within the BoB’s objective range from the second quarter of 2024.

Sharing the sentiments, is the banker – Absa Botswana which says in line with global developments of rising oil and food prices, inflation is posing a serious challenge for Botswana’s outlook. Another banker, First National Bank Botswana says domestic inflation should average 12.4 percent in 2022 fueled by the war in Ukraine which has led to significant increases in the major contributors to the headline inflation since the start of the conflict.

The central bank says most commercial banks indicated that they were reluctant to supply credit in 2021. The survey outcome shows that as at December 31, 2021, total household debt amounted to P58.5 billion, comprising bank loans (88.5 percent), micro-lender loans (11 percent) and hire purchase credit (0.5 percent). As a percent of Gross Domestic Product (GDP), total household debt was 29.9 percent in the same period, slightly below 31.7 percent in 2020. Combined with arrears, household debt was P59.2 billion, translating into 30.3 percent of GDP. As with the previous surveys, the current survey indicates that men incur more debt than women and that the population group aged 30 to 49 years old has proportionately more debt than other age segments of the population.

“Households earning between P3 001 and P19 999 per month actively participate in credit markets compared to those outside this income range”, says the BoB.


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