Saturday, June 15, 2024

Govt seeks to increase citizen’s participation in the banking sector

The Ministry of Finance is set to table a Bill aimed at enabling citizens to participate in the banking sector.

Minister of Finance Peggy Serame told Parliament that government is concerned by low participation in the banking sector. She said the Ministry of Finance is concerned that there is a small number of majority citizen-owned financial intermediaries in financial services; particularly lack of citizen-owned banks.

“During this sitting of Parliament, I shall be tabling a Bill to seek re-enactment of the Banking Act. The Bill, inter alia, provides for tiered-banking licence categories such as deposit-taking microfinance and universal commercial banks, with different minimum prudential requirements such as start-up capital, regulatory capital adequacy and liquid assets requirements,” said Serame.

She further stated that government policy encourages ownership of businesses, including banks and other financial services providers by Batswana, as espoused in the economic empowerment initiatives and the Economic Inclusion Act, 2021. She added that the Bank of Botswana has, over the years, received banking licence enquiries and applications from citizens and accordingly processed them. She said however, the applications were not successful as they did not meet the requirements for issuance of a banking licence, as set out under the Banking Act (Cap. 46:04), the licensing policy and related guidelines.

She also spoke of the  Bank of Botswana when it issued a commercial banking licence to BBS Bank Limited in October 2022 (formerly Botswana Building Society), a citizen-owned-and-controlled commercial bank.

“I hope Botswana citizens will be able to take advantage of the re-enacted banking law to venture into bank businesses,” she said.

Quizzed on how lack of foreign exchange controls and price transfer contribute to external spillage of funds that could have been used in the domestic economy for further investments, Serame stated that there has not been any observed external spillage and/or capital flight that could be directly attributed to lack of foreign exchange controls. She said to the contrary, major trading currencies continue to be readily available in the market to warrant any concern about the unintended consequences of not having in place exchange controls. She added that the relative stability of the Pula against other international currencies is indicative of the resilience of the real economy despite the intermittent external shocks.

“Exchange controls are porous and would constitute unnecessary, costly administrative or bureaucratic burden on businesses, households, and taxpayers without any meaningful benefit in the context of an open economy with total trade constituting over 80 percent of GDP, with high prevalence of card and other digital means of payments,” said Serame.

RELATED STORIES

Read this week's paper