The latest report by Bank of Botswana states that 33 percent of Botswana’s population remains unbanked.
This is a piece of statistics from which a lot can be extrapolated.
The most obvious is that commercial banks in Botswana have lagged behind in taking advantage of government financed infrastructure, especially in telecommunications to reach out to more potential clients.
That is very unfortunate.
Another extrapolation to be made is that the 33 percent segment that remains unbanked is in a way related to the amount of people that are unemployed in Botswana.
Indeed this is what Bank of Botswana makes reference to in their report.
“A major determinant of access to financial services includes educational level, employment status, age and location. Being unemployed was the main reason for not having a bank account, with the other significant reasons being lack of regular income and no money to save.”
If that is true then it is a scary prospect.
Many Batswana are known to use banking services to access their wages and salaries.
It is, therefore, possible that the 33 percent mentioned above is by and large related to those people who have no source of income for which they could go to the bank.
Whatever the reasons, we believe that 33 percent is a very high figure.
While admittedly the figure has over time been coming down, we should look at it in the context of the resources that Botswana Government has over the years invested as a way of facilitating outreach for such institutions like commercial banks.
Botswana Government is easily one of the foremost in Africa when it comes to expenditure on infrastructure development.
The belief was that such infrastructure development would translate to human development.
But from the look of things our levels investments is not so much correlated to outcome.
The Bank of Botswana says in its report that banking access remains concentrated in urban areas.
We note that there are still many places in our rural areas where there is a concentration of such cadres like civil servants where there is a high demand for banking services, yet not a single of commercial banks finds a reason good enough to meet government half way by way of opening a presence in those places.
Where there are automatic teller machines, they are not efficiently operated, leading to instances where for a greater time they are either out of cash or simply out of order.
As Bank of Botswana rightly points out, rural communities therefore incur high costs to access financial services, including transportation and time.
There many benefits to be accrued from access to financial services.
“Financial Survives in the form of credit, payments, and remittance facilities allow households and enterprises to make financial investments, acquire assets, smooth consumption, manage liquidity and, through use of insurance services, respond to emergencies,” says the Bank of Botswana Report.
It thus goes without saying that many of the unbanked 33% of the population is losing out.
We also note that on behalf of Government, the Minister of Finance is worried that despite continuing to record healthy returns, banks are not doing enough to reinvest in broadening access.
In a speech to open a branch for the Standard Chartered Bank, this is part of what Minister Ken Matambo said”
“It is worth noting that according to published annual statistics, the banking sector continues to perform relatively well even though this positive performance does not translate into lower costs of banking for their clients. The 2011 Bank of Botswana Annual report shows that total commercial bank assets grew by 4.9 percent from P49.4 billion in December 2010 to P51.8 billion in December 2011 where loans and advances and other assets grew by 27.2 percent and 59.2 percent respectively. These figures translate into positive profitability ratios which are high by international benchmarks. It should therefore follow that profitability should be matched by lower transaction costs, with high quality of services and improved access to financial services for the majority of the population.
“The Bank of Botswana 2011 Annual Report also reveals that even though Botswana performs better in the region, in terms of access to finance, such access still varies widely across segments of the population. The reality is that those without employment and regular income, the poorer sections of the community and people in the rural areas are still lagging behind in enjoying banking services.
“Director of Ceremonies, this apparent lack of access to financial services continues to worry Government and I would like to urge Standard Chartered Bank and other banks, to consider introducing products that can be accessed by the unbanked population, by taking advantage of the infrastructure that Government has invested in, for example, good telecommunication systems. I believe this is what is called branchless banking. I am informed that branchless banking is done through cellphones, smartcard and point-of-sale technologies, which can provide convenient systems for account opening, deposit taking and loans, etc. I wish to use this opportunity to assure this gathering that Government will continue to enhance the legislative environment and infrastructure, which promote further improvements to access financial services.”
We hope with these remarks, banks across the board will take stock of what investments they have so far put in place to meet government half way.