The National Development Bank (NDB), originally known as farmers’ paradise, rose to the challenge this week as it indicated that it is introducing home-ownership product to improve its struggling image in the market.
The home-ownership product, dubbed “Bonno loan construction”, is to meet fierce competition from the tigers of the market, such as the Botswana Building Society on the home-ownership front and First National Bank of Botswana on the commercial side.
BBS already controls over 70 percent of the home-ownership market while FNBB is a renowned tiger on the commercial side.
The two are followed by Barclays, which is currently clinching big deals under the Public, Private Partnership, geared towards transferring risk from government to the private sector, and closely followed by Standard Chartered Bank of Botswana, along side Stanbic Bank of Botswana.
“The objective of this facility is to provide home ownership by individuals and companies. In 2007, the bank introduced Bonno home loans to cater for home improvement, buying plot and home purchase.
“As part of the bank’s re-engineering and enhancement of products to the construction phase, the facility is now being rolled out. This move will ensure that the bank provides a complete package or one-stop shop for property development in Botswana. This is one of the many initiatives that the bank has put in place to fulfil its mandate or working together for the betterment of the people and contribute to the economy,” it said in a statement Friday.
The bank, whose financial standing has been dwindling over the years until it was beaten by BBS on the strength of assets, is planning a mob exercise that will be financially inclusive.
According to the plan, the qualification for the loan’s floor will start with a take home pay of P 600 going up to P 1,500 per month.
The move defies the current logic in the market where a family is required to be left with something for bills, food purchase and clothing in an attempt to avoid possible default on the loan. This will also put it in a dangerous position against the Self Help Housing Agency (SHHA), which is interest free and whose minimum threshold has been upped from P 20, 000.
“NDB’s home-loan seeks to provide financing for various income groups, as indicated by its loan range which ranges from P 20,000 to P 1.5 million for individuals and companies,” the statement added.
In its bullish approach to the market, the bank said it does not demand deposits up-front in a bid to ensure that every Motswana benefits from its scheme. However, the strategy might backfire after doling out loans to people- similar to the mortgage crisis in the United States of America, where undeserving people would be given loans.
“The property constructed or purchased will secure loan to the equivalent to 100 percent of its open market value. In addition, the bank provides financing cover for transfer duties and bonds fees and value added tax,” it stated.