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Commercial banks now behaving well BoB

Bank of Botswana governor, Linah Mohohlo

Commercial banks have not gone on a lending spree after getting P2,3 billion in liquidity relief, the central bank informed media last week during an engagement. Bank of Botswana governor, Linah Mohohlo, said that banks had responded well to the move, and instead opted to use the funds to shore up their liquidity.

Mohohlo maintained that there “is no liquidity crisis and there never was.” She said banks were using the excess money available to them, to fund their operations elsewhere in the world that were not performing as well.

Previously, excess public funds disbursed to municipalities and other public institutions were placed in call accounts with the commercial banks, something that Bob then advised the government against, saying funds should be available when needed.

“We were merely implementing the law,” said Mohohlo, it is a statutory requirement for public funds to be held by the central bank. She said the banks have even approached BoB to reverse the action and allow funds to come to them but that those calls have been rejected.

“The banks have tended primarily to shore up their liquid assets with the funds rather than increase lending,” BoB’s Andrew Motsumi said. He said that some banks had violated the loans to deposits ratio of 80 percent, though he would not reveal the culprits or the disciplinary measures taken against them.

BoB reduced the Primary Reserve Requirement from the previous 10 percent to 5 percent with effect from April 1, 2015, releasing P2.3 billion to augment the banks loanable funds. Mohohlo when announcing the central bank’s decision, had emphasised that the central banks action, was not a bailout to the banks rather “just a measure adopted in moments of reduced liquidity.”

She said more emphasis by the banks on deposit mobilization and improved financial inclusion would be steps in the right direction towards a more mature banking sector. She said the commercial banks are more proactive now and can even cold call clients to make deposits.

In the past five years, excess liquidity in the banking system, as represented by outstanding Bank of Botswana Certificates (BoBCs), which declined from P17.7 billion as at end-2010 to P4.6 billion in February 2015.

The main cause was the Bank of Botswana’s phased reduction of the excess money that is continuously mopped by way of auctioning of BoBCs. The cap for this excess money is currently P5 billion and it was put in place to encourage productive lending by banks as well as to moderate the cost of mopping up excess liquidity.

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China’s GDP expands 3% in 2022 despite various pressures

2nd February 2023
China’s Gross Domestic Product (GDP) expanded by 3% year-on-year to 121.02 trillion yuan ($17.93 trillion) in 2022 despite being mired in various growth pressures, according to data from the National Bureau Statistics.

The annual growth rate beat a median economist forecast of 2.8% as polled by Reuters. The country’s fourth-quarter GDP growth of 2.9% also surpassed expectations for a 1.8% increase.

In 2022, the Chinese economy encountered more difficulties and challenges than was expected amid a complex domestic and international situation. However, NBS said economic growth stabilized after various measures were taken to shore up growth.

Industrial output rose 3.6% in 2022 over the previous year, while retail sales slightly shrank by 0.2% data show that fixed-asset investment increased 5.1% over 2021, with a 9.1% hike in manufacturing investment but a 10% fall in property investment.

China created 12.06 million new jobs in urban regions throughout the year, surpassing its annual target of 11 million, and officials have stressed the importance of continuing an employment-first policy in 2023.

Meanwhile, China tourism market is a step closer to robust recovery. Tourism operators are in high spirits because the market saw a good chance of a robust recovery during the Spring Festival holiday amid relaxed COVID-19 travel policies.

On January 27, the last day of the seven-day break, the Ministry of Culture and Tourism published an encouraging performance report of the tourism market. It said that domestic destinations and attractions received 308 million visits, up 23.1% year-on-year. The number is roughly 88.6% of that in 2019, they year before the pandemic hit.

According to the report, tourism-related revenue generated during the seven-day period was about 375.8 billion yuan ($55.41 billion), a year-on-year rise of 30%. The revenue was about 73% of that in 2019, the Ministry said.

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Jewellery manufacturing plant to create over 100 jobs

30th January 2023

The state of the art jewellery manufacturing plant that has been set up by international diamond and cutting company, KGK Diamonds Botswana will create over 100 jobs, of which 89 percent will be localized.

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Investors inject capital into Tsodilo Resources Company

25th January 2023

Local diamond and metal exploration company Tsodilo Resources Limited has negotiated a non-brokered private placement of 2,200, 914 units of the company at a price per unit of 0.20 US Dollars, which will provide gross proceeds to the company in the amount of C$440, 188. 20.

According to a statement from the group, proceeds from the private placement will be used for the betterment of the Xaudum iron formation project in Botswana and general corporate purposes.

The statement says every unit of the company will consist of a common share in the capital of the company and one Common Share purchase warrant of the company.

Each warrant will enable a holder to make a single purchase for the period of 24 months at an amount of $0.20. As per regularity requirements, the group indicates that the common shares and warrants will be subject to a four month plus a day hold period from date of closure.

Tsodilo is exempt from the formal valuation and minority shareholder approval requirements. This is for the reason that the fair market value of the private placement, insofar as it involves the director, is not more than 25% of the company’s market capitalization.

Tsodilo Resources Limited is an international diamond and metals exploration company engaged in the search for economic diamond and metal deposits at its Bosoto Limited and Gcwihaba Resources projects in Botswana.  The company has a 100% stake in Bosoto which holds the BK16 kimberlite project in the Orapa Kimberlite Field (OKF) in Botswana.

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