Thursday, December 8, 2022

What is the ‘gender’ of debt in Botswana? 

While to date there is little information about the borrowing behavior of either men or women in Botswana, a household indebtedness survey carried out by the Bank of Botswana usually gives hints in terms of who frequently knocked at the banking halls between men and women in any given year. 

As with the previous surveys, the 2021 survey shows that Botswana men incur more debt compared to women. In value terms, 56.1 percent (of the loans) went to males compared to 43.9 percent for females. This represents a slight decline from 2020 for males (56.3 percent) and a slight improvement for females (43.7 percent).

The population group aged 30 to 49 years old has also held to the tittle of having more debt than other age segments of the population. The data shows that household borrowers aged 30 to 49 years actively participated in the credit market, at 65.5 percent (70.6 percent in 2020), followed by those aged 50 years and above (24.6 percent) and those less than 30 years (9.8 percent).

The Bank of Botswana survey however could not be painting a true picture of what is happening on the ground as the data collected does not include informal credit arrangements such as Metshelo and family loan arrangements. In addition, the survey does not collect information on household assets and income flows. 

The annual survey measures the level of household indebtedness in the country using data collected from commercial banks, statutory banks, micro-lenders, hire purchase stores, and Savings and Credit Cooperative Societies (SACCOs). The latest data collected shows that as of the end of 2021, there were 545 316 household borrowers, comprising 312 927 (57.4 percent) males and 232 389 (42.6 percent) females, at banks, micro-lenders, and hire purchase stores. 

Credit Bias…

As part of the 2021 survey, the central bankers also discovered that a large percentage of local banks indicated during the survey that they did not have lending products designed to enhance financial inclusion for women.  The Bank of Botswana says only one commercial bank highlighted that it has an inclusive strategy, while one bank said it is at an advanced stage of developing such as strategy. Could this explain why few women in Botswana are getting access to credit? Director of Macroeconomic Policy and Research, African Development Bank, Hanan Morsy says credit bias towards males primarily reflects females’ evaluation of low creditworthiness because of relatively low financial literacy (particularly among low-income groups) and high-risk aversion. 

Financial literacy is generally described as the ability to process economic information and make informed decisions about financial planning, wealth accumulation, debt, and pensions. Over the years, it has become increasingly important to enable individuals and households to cope with the ever growing complexity of products and services in the financial markets.

Despite more money going towards males, the Organisation for Economic Co‑operation and Development (OECD) said in 2013 that women appear to be better than men at short-term money management behaviour. 

OECD and other studies also showed that women have lower financial knowledge than men in a large number of countries, in both developed and developing ones.

“Gender differences extend to financial behaviour. Women appear to be better than men at keeping track of their finances. However, women are likely to be more vulnerable than men in some aspects of financial behaviour, including making ends meet, saving, and choosing financial products”, says OECD.

OECD says there is evidence that suggests that gender differences in financial knowledge and financial behaviour, especially in terms of making ends meet and saving, are partly related to socio-economic differences between men and women, and in particular to their lower incomes.

“This suggests that women’s financial weaknesses are due to higher constraints that women face with respect to men in accessing economic and financial opportunities, as well as to lower financial literacy. This calls for policies addressing gender inequalities both in economic opportunities and in financial literacy as a means to improve women’s financial well-being”, says OECD. With survey outcome such as the Bank of Botswana one, gender equality in terms of economic and financial opportunities is becoming increasingly relevant at both national and international level.

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