Households are slowing down on credit and channeling funds towards deposits, while upbeat businesses are willing to increase their exposure to credit in efforts to expand. This trend has been observed over the past four months of the year, financial data from Bank of Botswana reveals.
Total deposits held by commercial banks increased from P62.5 billion in March to P64.1 billion in April. This is after deposits of central government edged 58.7 percent, local government up 34.2 percent, resident businesses slightly up 3.1 percent non-resident busineses increased 47 percent.
However household deposits held by commercial banks went down 6.4 percent in April. While household deposits are down in April, it does not reflect the broader trend that has been observed which shows household’s total share of deposits going up. The latest data shows that businesses continue to hold the most deposits as they account for 74.6 percent of total deposits compared to 20.2 percent held by households.
The May financial data which show that credit growth was largely driven by businesses. Total credit extended by commercial banks is reported at 54.9 billion in April, up by 0.4 percent from the previous month. There was an uptake of credit in the resident businesses, advancing by 1.7 percent. The most recent business confidence survey, still from the central bank, points to renewed optimism from resident businesses fuelled by anticipated government expenditure. Loans to non-resident businesses and households both decreased 0.4 percent, a trend also observed in the business survey as foreign businesses prefer borrowing from their parent companies based outside the country.
Commercial banks credit growth for 12 months ending April was up 6.2 percent from March. The share of credit to the household sector was 60.4 percent, down 0.5 percent in the previous month. On average, household borrowing has been on decline, reflecting the stagnated wages, retrenchments and slow employment rate growth.
Outstanding bank of Botswana certificates (BoBCs) at market value increased 4.3 percent to P5.7 billion in April. The financial statistics for May shows that in April, the foreign exchange reserves increased by 5.4 percent to P74.4 billion. In US dollar returns, the reserves were up 2.4 percent.
At the end of May 2018, the pula appreciated against the pound sterling by 1.7 percent, while firming against the euro by 2.3 percent. The pula weakened against the US dollar by 1.6 percent, also losing ground against the Japanese yen by 2.1 percent and depreciated against Chinese renminbi and the rand by 0.3 percent and 0.1 percent, respectively. In the twelve months to May, the pula continued to weaken against the greenback, delivering 3.7 percent appreciation from the highs of 10.4 percent in March. The pula in year to date returns is losing against the rand, down 1.2 percent in May, however much better than the steep drop in March.
