Botswana’s level of indebtedness remains difficult to quantify, but the country’s household borrowing has been growing in the past three years while savings culture faces a number of challenges.
In the absence of a proper survey, the debt levels normally represents net debt on loans and staff advances from commercial banks, which excludes mircrolenders.
A Senior Research Fellow at the HYPERLINK “http://www.silobreaker.com/botswana-11_80891” Botswana Institute of Development and Policy Analysis (BIDPA), Professor Haile Taye, said household debt has been going up, but savings are not catching up.
“Household saving rates in Botswana are generally low, but they have declined in recent years,” Taye said at a savings seminar organised by Botswana Guardian.
The largest component of saving in both SA and Botswana is corporate saving followed by household saving while the least contribution comes from government.
On the other hand, corporate saving has been declining following a peak in 2009, while both household and government saving have remained almost stagnant since 2006, except the unusual jump in HH saving in 2009.
Bank of Botswana data has shown that outstanding loans and advances in Botswana have been increasing overtime both in total and in the relevant categories.
The household net debt stood at P6.3 billion in 2011, which is worrisome even for bankers. Barclays Bank of Botswana Head of Affluent Segment, Andrew Madeswi, said the challenge is to reverse the figure and take it to acceptable levels.
Madeswi said the challenge facing the-would be depositors is that they have not set themselves financial goals and saving, therefore, it does not become a commitment.
This is made worse by the fact that composition of household assets in Botswana and Africa is influenced by the cultural, demographic and other socio-economic characteristics of their communities.
Savings may be affected by unforeseeable situations like burials and weddings, where traditionally members of the extended family are obliged to make contributions.
“The interest (to save) is there, but it practically does not happen,” Madeswi said.
Banks like Barclays have products to support depositors with savings account that accrues lower returns. These accounts could have one withdrawal per month or per quarterly in a bid to instil discipline.
The challenges facing banks is that the society is pressurised by lifestyles with people opting to invest money on material assets, including luxury sedans or expensive suits. Traditionally, owning cattle was considered more important than owning material assets.
According to Madeswi, Batswana are sensitive as a society and they will not want someone to know their worth as is the case with rich people abroad. This is worsened by lack of adequate personal financial advisors coupled with low literacy rate, which results in people using ‘funds haphazardly’.
The other prohibiting factor according to Madeswi is that people like saying they are not ‘earning enough’. “But anyone can save with the little they have,” he stated.
He advised government and private sector to pull resources together to incentivise people to save, which will come at a cost in the short term, but “in the future, will reduce reliance on government”.
Taye said although, Botswana and South Africa are not good examples because of the sizes of the economies, comparing them in relation to the GDP, saving in Botswana is much better than its neighbour.
