The statistics are out. And they make for a dizzy reading. Botswana’s household debt continues to grow at a much faster pace than any borrowing that is needed for production. And there is almost no saving happening worth talking about. For now the Central Bank says there is no reason to sound alarm bells. They may well be right.
The question though is for how long. In the meantime commercial banks are only too happy to continue making millions from this obscene culture that is not taking this country anywhere. One thing that is certain though is that it will certainly come to an end. And when that happens, there will be tears. The unfortunate thing though is that for now there is no evidence to suggest that our banks are preparing for a day when the long running gravy train will have to come to a halt. Experience from other countries teaches us that consumerism is not a culture that is sustainable, never. And we should be worried, that by the time the bubble bursts our banks who are the cornerstone of our financial services sector that supports the economic edifice will be terribly exposed.
Repairing the damage might prove much more costly and painstaking. As is the case with recession from which we are yet to fully recover, when this inevitable collapse happens, it may kill confidence in our economy to an extent that getting it back might prove as elusive as to be impossible. Our banks have to show that they can continue to survive without depending on excessively high personal debts on which they have up to now relied almost the same way a drug addict relies on prohibited substance to even stand up. But that is only half the story. The Central Bank and the Government have to play their role. There is need for a tougher law regulating debt. What we have now is simply not working. Many families are living from hand to mouth because they continue to service unproductive loans that are not improving their worth. Looking at the financial statements of several banks, it is clear that a growing number of debtors are already defaulting.
That is instructive. Naturally this leads to write-offs. And that should get us worried, especially if the number of defaulters is growing not declining. If we cannot see this for a time bomb, then we do not know what is. We have in the past suggested a law spelling out the terms under which both lenders and borrowers can operate. The current framework is taking us into an abyss from which we may never get out after the slide. The other point worth mentioning here is the extent to which the culture of consumerism is eroding our moral fabric. People are literally stealing in order to finance lifestyles that are not sustainable. There is no culture of saving to talk about. Which is why many Batswana are only one pay cheque away from poverty.
