Wednesday, January 19, 2022

Survey on local bank charges almost complete

Botswana’s bank charges are once more being spotlighted with the International Monetary Fund referencing a Bankers Association of Botswana (BAB) survey to compare such charges with those in other countries.

In the latest report on Botswana, the Fund says that the Association is “planning to conduct a survey”, which statement is to be expected from a document that takes months to put together. However, as BAB’s CEO Oabile Mabusa reveals, the fact of the matter is that the exercise started in February this year and is near completion. It would appear that the study was prompted by the Bank of Botswana’s decision to impose a two-year moratorium on any upward adjustment of bank charges and fees with effect from January 1 this year. The Association officialized its opposition to that decision and announced plans to undertake a regional survey on bank charges. The IMF would have learnt of such intent around this time.

The one other announcement that BAB made then was that it would compare Botswana’s charges with those of neighboring countries. Save to say that the countries they benchmarked against were “a handful”, Mabusa wouldn’t mention them by name, explaining that such information would be available when the report is complete.

From the highs echelons of power at the Bank of Botswana (BoB) to the Office of the President, there is a great deal of consternation about bank charges in the country. Speaking at the official opening of the State Bank of India last year, BoB’s Governor, Linah Mohohlo, lamented high charges against a not-too-impressive quality of service. Such charges, she said, discouraged savings and financial intermediation. Vice President Ponatshego Kedikilwe would repeat the same charge when he officiated at the official opening of the First National Bank head office in Gaborone. Around this time, the government seems to have made up its mind about how it wanted to deal with the problem and in January this year, BoB imposed its moratorium.

In response to the question of what BAB’s position is on the matter, Mabusa said that while the Association had a position on the matter, “we don’t think it would be helpful to project it now.” What the Association wants to do now is see through a process that will yield a report expressing such position.

The IMF says that in its meetings with Botswana authorities, the latter emphasised that in light of the perceived high level of commercial banks’ charges in Botswana, the aim of the floor on deposit rate and moratorium on increasing banks’ fees is to provide consumer protection. In addition, this would encourage banks to increase intermediation and move away from non-interest income towards interest income.

BoB, as the IMF report notes, has established a consumer protection unit in its banking supervision department that aims to enhance the bank’s efforts towards better consumer protection.

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