When it comes to citizen economic empowerment, commercial banks in Botswana have been a weak link.
They have actually undermined several key government policies, while continuing to benefit big time from government business and patronage.
The reason why Government came up with such schemes like CEDA (Citizen Entrepreneurial Developmental Agency) was exactly because commercial banks were refusing to come to the party.
Yet after the establishment of CEDA, these same banks have been the biggest beneficiaries of CEDA through the government underwritten sovereign guarantees.
There continues to be a huge variance between government vision and what one of the industry’s titans has characterized as Botswana banks’ excessive and “narrow profit-centric business paradigm that is characterised by a static short-run perspective.”
To close that gap, a serious consideration has to be made towards establishing a truly indigenous commercial bank.
We need an indigenous bank that will help rather than undermine Government policy.
Today’s overarching government policy has everything to do with financial inclusion.
In his State of the Nation Address, President Mokgweetsi Masisi had this to say; “Financial Inclusion is achieved when consumers across the spectrum in a country can access and sustainably use financial services that are affordable and appropriate to their needs. To achieve this, Government has developed a National Financial Inclusion Roadmap and Strategy that runs from 2015 to 20201. The strategy provides a holistic outlook of the financial needs of the society, and indicates how the financial sector should be improved to provide better services and financial products that promote financial inclusion….”
This is not only a national policy; it is an international one, spearheaded at multilateral level by the United Nations.
Yet Botswana’s commercial banks are doing everything to frustrate it.
For example Standard Chartered Bank Botswana has over the last few months been actively shutting down bank accounts owned by several SMMEs simply because these informal businesses are not meeting an artificial threshold of P500 000 a month turnover.
This is a huge indictment on both the Government and standard Chartered Bank of Botswana.
There is no one more glaring, more brazen and more flagrant example of frustrating economic diversification by a bank than this one.
Given the importance of SMMEs to any economy, what Standard Chartered is doing borders on criminality.
This is this same bank that has over the years benefitted from Government patronage through several facilities that it was engaged to do by both the Central Government and other government agencies, yet when it is called in to assist a public policy, the bank’s first response is not only to look the other way, but actually to thwart such a public policy.
Even with regards to listing on the local bourse, the Botswana stock Exchange, many of the commercial banks have only done so either halfheartedly or only as an apology.
Very little of their stocks are floating for them to be available to the public and other investors.
In short they place very little when it comes to growing and engendering the country’s capital markets.
Others, like Stanbic, owned by the giant South African Standard Bank have not even bothered to list on the local bourse.
This has had immense consequences on the liquidity situation, including on the availability of assets and vehicles on which to invest.
It is an established truth many of the banks doing business in Botswana invest very little in the country by way of Corporate Social responsibility.
This is notwithstanding the fact that Botswana is for many of them such a premier market across their various portfolios.
For the country’s banking industry, growth by assets since 1998 has exceeded 200 percent. The same applies to growth in loans as well deposits.
Given the high number of banks operating in Botswana, and also looking at the size of some them as measured other by assets or market capitalization, one can easily conclude at the relative importance of the sub-sector to the economy, and also at its implied dynamism, not least as measured by profitability that runs across.
But the industry has some gross shortcomings, chief of which is underinvestment in infrastructure.
This is easily typified by long queues inside the halls but also at the ATMs.
Speaking at the Botswana institute of Bankers annual Gala Dinner in August 2013, the then Governor of the Bank of Botswana, Linah Mohohlo had this to say in reference to locally based commercial banks; “ Similarly, the continuing insufficient investment by banks in human capital development is so glaring; improving financial literacy of bank customers is also 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 characterised by a static short-run perspective needs to change.”
That was over five years ago. If there has been any change since, it has been a change for the worse.
Early this year the Bankers Association hosted a major conference whose theme was Financial Inclusion, as defined by the president above.
At that conference it was made clear that Botswana was lagging behind on key areas of financial literacy as well as financial inclusion.
Because commercial banks were the hosts, one thing did not come out clearly enough; that the same banks are the biggest culprit when it comes to undermining growth in financial inclusion.