Thursday, December 3, 2020

Financing gap remains a challenge in Botswana – BoB

BY KABELO SEITSHIRO

The scale and depth of the challenges facing business, more especially small ones in Botswana vary but the root cause of the problem is the same: the funding simply does not go the same direction as business needs.

This is the short message from the address made by the central bank governor ÔÇô Moses Pelaelo when addressing the press this past week. Pelaelo met financial journalists at the annual economic briefing held at the bank’s head office in the capital Gaborone this past Tuesday.

He said that businesses in Botswana continue to face serious challenges with the regard to access to finance.

As a result, the governor says the limited access to finance remains one of the key constraints to business growth in the domestic economy.

He also pointed out that the country’s Development Financial Institutions otherwise known as DFIs are of small size of their portfolios and they also face challenges in raising funding.

“Successful and productive financial resource mobilisation depends on conducive business environment, openness to FDI and sound governance and accountability for the DFIs,” said Pelaelo.

Still at the economic briefing, BOB Director of the Department of Research and Financial Stability at – Dr Tshokologo Kganetsano called on government to “let go” of the governance at the FDIs.

He stated that in general autonomous institutions are more successful compared to those that are run with active government involvement in governance.

Kganetsano said that to be effective and have the desired impact, the scale of operations and resources availed to FDIs should be much larger than current levels.

“A higher level of funding is needed to support large scale industrial projects and businesses, which might also involve infrastructure development”, Kganetsano says.

In Botswana DFIs include the Citizen Entrepreneurial Development Agency – CEDA, Botswana Development Corporation ÔÇô BDC and the National Development Bank ÔÇô NDB. The central bank has since recommended that the government should outsource development and industrialisation funds to commercial banks, where there is better project evaluation, monitoring and loan recovery.

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The Telegraph December 2

Digital edition of The Telegraph, December 2, 2020.