Short and boring. Those are the words Member of Paliarment for Bonnington South Ndaba Gaolathe used to describe the Minister of Finance Kenneth Matambo’s Banking (Amendment) Bill, 2018.
“Thank you Madam Speaker for the opportunity to weigh into this very short if not boring, you would agree with me very technically boring, but necessary piece of legislation,” Gaolathe said before he made his recommendations to the Banking Bill and concluding, “I thought with these words Madam Speaker, given how boring the Minister of Finance’s Amendment Bill has been, I should put a bit of spice to make it a bit more interesting. I can see from his (Matambo) smiles that there is hope that we will get these amendments in due course.”
Gaolathe said recognizing that the amendments were necessary and done in line with the government’s efforts to align with the recommendations of the Eastern and Southern African Anti-Money Laundering Group (ESAAMLG), one would have hoped that the Finance Minister would have also taken the opportunity to make other amendments which, Gaolathe said, were overdue to the banking sector.
He said the Banking Act was very stringent and restrictive in terms of its requirements for setting up banking entities in Botswana, adding that it was the right time for the Botswana Government to consider relooking at the requirement of the 5 million Pula capital adequacy.
He said it was time for the Banking Act to categorize different tiers of banking and have different requirements for capital adequacy for the different categories. “This would be necessary to encourage in particular the establishment of the indigenous banking and bankers. Historically when you look at the evolution of banking or of the banking tradition, some of the banks that have turned out to be the major international banks that they have become, are actually entities that have evolved out of other unexpected entities,” Gaolathe sad. He made reference to investment societies (Metshelo) as some of the entities that have the potential to evolve into serious multinational banks.
“If some of those are considered under some category for banking you would be surprised at the type of banking entities that this country would be able to establish.” Gaolathe also raised concerns about the ‘subtle’ requirement within the Banking Act that requires aspiring banking entities in Botswana to submit a banking proposal which should include a proposal or strategy for the rollout of the branch network. He said that implies that every bank in Botswana can potentially establish multiple branch networks. “The argument here is that; perhaps the time has come to consider that there are banks which can potentially bring tremendous value to this country, even as they are single branch banks. That certainly is something that the Government should consider,” the AP leader recommended.
He also spoke about the implication that those aspiring to establish banking entities should have a shareholding structure that must be acceptable to the Bank of Botswana. “This is far too broad and vague. I think there is room there to be more specific around the type of shareholding structure that universally should be acceptable so that there is not too much guess work around that… You do not want to leave too much room so that you end up with the banking sector that is unduly and predominantly owned by foreigners,” Gaolathe recommended.