Tuesday, May 17, 2022

Who borrows? An analysis of gender and debt in Covid-struck Botswana

A substantial literature exists on household finance in Botswana, but less is known about the borrowing behaviour of men and women within the country’s households. While to date there is little information about borrowing behavior of either men or women in the country, a household indebtedness survey carried by the Bank of Botswana has given hints in terms of who knocked frequently at the banking halls between men and women.

As with the previous surveys, the latest survey shows that Botswana men incur more debt than women and that the population group aged 30 to 49 years old have proportionately more debt than other age segments of the population.

The central bank says the survey measured 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 data was collected by means of an online questionnaire, which supplemented the regular statutory returns of commercial and statutory banks for the month of December 2020.

According to the bank, as at the end of December 2020, total household debt in Botswana amounted to P54.8 billion, comprising bank loans (88.9 percent), micro-lenders loans (9.1 percent), hire purchase credit (1 percent) and SACCOS loans (1 percent). A further breakdown of the data shows that during the period, there were 583 286 household borrowers, comprising 370 122 (63.5 percent) males and 213 164 (36.5 percent) females. This means that men were face of debt during 2020.

“According to Morsy (2020), credit bias towards males primarily reflects females’ own evaluation of low creditworthiness because of relatively low financial literacy (particularly among low-income groups)3 and high-risk aversion. Indeed, banks have indicated that they did not have lending products designed to enhance financial inclusion for women.” reads part of the Bank of Botswana Household indebtedness survey report.

The summary of BoB findings also shows that most of the household borrowers were Government employees (59.8 percent), followed by private sector employees (36.9 percent). The bank researchers found out that those that are self-employed accounted for 2.7 percent while the unemployed individuals accounted for 0.6 percent of total household borrowers. Relating to credit provision based on monthly income levels, most borrowers earned monthly income ranging from P3 000 to P19 9994 (53.4 percent), followed by those who earned less than P3 000 per month (33.5 percent), while those earning P20 000 and above per month constituted 13.1 percent of borrowers.

The BoB survey also indicate that COVID-19 related factors affected the supply and demand for credit in 2020 with commercial banks ,micro lenders and hire purchase stores projecting the outlook for demand for credit as moderate in 2021.

As a percent of Gross Domestic Product (GDP), total household debt was 31.7 percent in the same period, this compares to 28.4 percent in 2019.

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