Wednesday, November 29, 2023

Well done BBS, you are almost there…

As shown in one of the stories we are carrying in this edition, the shareholders of the Botswana Building Society (BBS) this week made a decision to turn their society into a private company, paving way for application of a banking license by December 2017. Other things held constant, we have been told that the BBS will start operating as a commercial bank in the first quarter of 2019. Most importantly, the BBS shareholders decision to agree whole heartedly is historic in the sense that it also paves way for the country to get its first ever indigenous commercial bank. After over 50 years of Independence, Botswana will also now be counted amongst countries that have an indigenous commercial bank. This in way feels like gaining independence yet again, only that this time around its financial independence. Just as a recap, our country currently has ten commercial banks, all originally from outside and atleast two statutory banks being Botswana Savings Bank (BSB), National Development Bank (NDB). All of these foreign banks makes money (profits) here….a lot of it and send it back to their country of origin. There is nothing wrong with that ads we are an open market economy but imagine of all the money was retained here, for future investments and development. 

That is why perhaps the demutualisation process of BBS could be regarded as one of the best financial news received this year apart from the decision by the outgoing President to cut costs and occupy the state house that was built for retiring presidents and was occupied by Sir Ketumile Masire until the time of his passing. The expectation is that President Ian Khama will occupy both the house and office that were used by Sir Ketumile and thus save the country a lot of money as only a small portion would now be used to refurbish them as opposed to the P34 million that was to set up an “office” and the monthly housing allowances that were to be paid to him. 

Anyway, back to our good news of this week, we have to state that one of the key indicators of a booming economy is the presence of vibrant home-grown financial institutions and how they contribute to the economy. Outside banking, as a country we have been doing well as shown by the establishment of the Non Banking Financial Institutions Regulatory Authority a few years ago. However we have been overtaken by time when it comes to having a home grown bank. One that will be able to tailor make products and services for Batswana. 
The banking sector, unlike the non-banking sector, has a fully grown history of regulation as indicated by a 33 year difference. Non-bank regulation was introduced in 2008, nearly a decade in existence. It would appear, however, that the sector with the least history of regulation has behind it success stories of citizen empowerment. Critics have over the years stated that Central Bank licensing requirements are rigid which makes them less accommodative for Batswana wishing to set up own banks. Even well established financial companies like Letshego Holdings have been turned down and has since realised their dreams outside pour borders. 
Generally indigenous banks are expected to support trade and commerce as well as industrialisation by offering financial product and services that are competitive and relevant to needs of the public. This is what we expect from BBS or any other indigenous bank that will be ultimately set up. Competition in the banking sector over the next five years should be driven by existing and potential new-entrant indigenous banks such as the one that Letshego wanted to set up. 
To have strong home-grown banks in spite of challenges and expected competition from old guns, BBS bank as well other coming indigenous banks would need to innovate and introduce new products and services. 
As the time of fully being a commercial banking, BBS would need to remember that banking is no longer about providing a home for the public’s money and giving them access to it when the need be; nor is it just about being a conduit for financing. It is about being a value-adding partner. As a new bank, and if it wants to stay ahead of the game, BBS needs to tailor make its products and services to the needs of Batswana and that is how an indigenous bank should view itself. 
The #Bottomline is that strong, sounds banks can and should help families buy a home, save for the future whilst helping small businesses to grow and thrive. Our expectation is that BSS will, as it turns into a commercial bank become a go to bank for a lot of Batswana same way it has been whilst t was a society. 


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