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Banking industry well capitalized to support economy – Pheko-Moshagane


Chairperson of Botswana Banking Association, Keabetswe Pheko –Moshagane, who is also Managing Director of Absa Bank Botswana has assured the country that Botswana’s banking industry is solid, well capitalized and ready to support the economy during these challenging times of the COVID-19 pandemic.

Moshagane was speaking at a Press briefing addressed by commercial banks this weekend to deliberate on the industry’s response strategies to COIVID-19. She said COVID-19 pandemic’s impact on the economy is severe and clearly the world has not experienced this before.

She however noted that it is not easy to make timeline predictions as it is not known how long the pandemic and adverse situation would last. “This is still a new wave and turn of events as far as impact on the economy is concerned, the situation is still at its infant state,” she said.

The Banking Association chairperson however cautioned that if the pandemic and its adverse impacts intensify and spillover to the rest of 2020 and beyond, the banking industry would be affected just like any other sector of the economy.

Pheko-Moshagane reiterated that as of the moment and at least till the end of the year the banking industry’s liquidity stance is well positioned to anchor the economy. She highlighted that commercial banks play a critical role in the economy of any developing country and therefore it is important for the industry to formulate a framework best suited to support the nation accordingly.

In general, as a way of cushioning their customers during COVID-19 crisis, the banking industry will offer three months repayment holidays to customers with mortgage, car and other loans. Moshagane explained that the loan repayment break would be reviewed after three months depending on the situation relating to the pandemic.

As of 2011 Botswana’s Financial System sat at an excess of nearly P300 billion, inclusive of the foreign reserves and funds held by Botswana Development Corporation and Motor Vehicle Accident Fund. Currently Botswana’s 10 commercial banks account for about 33 percent of the financial system, hosting in access of P100 billion in assets.

According to information from Bank of Botswana which is the industry’s regulatory and oversight body, commercial banks have been able to roar to profitability  year on year despite sluggish economy and unfavorable circumstances in the market.

In terms of banks’ Net Income/Profitability over the last 8 years, data from Bank of Botswana shows that the industry profitability picked up from P1.57 billion in 2011 to an average of P1.7 billion in 2013 before dropping to P1.4 billion in 2014 after Bank of Botswana banned increase of fees. In 2015 following reduction in interest banks income significantly declined to end the year at P 1 billion. Profitability picked up to 2 billion in 2018.

Loans and Advances account for roughly 60% of these Assets while deposits account for over 70% of liabilities. The banks ended 2019 with about P75.7 billion of deposits, and in the first month of 2020 this figure now stands at P76 billion, mirroring 0.4% increase.

Total credit given out by commercial banks stood at P62.8 billion in 2019 and by the end of January 2020 it was P63.5 billion, up by 1.1%, signaling that in January only, banks wrote out roughly P729 million in new loans, with P403 million going towards businesses and P347 million channeled to households

No new banks have entered the sector since 2012, and commentators have indicated that outdated regulation and the dominance of foreign-owned commercial banks are factors that potentially keep new entrants out.

The microlending sector, on the other hand, is growing and has the potential to increase financial inclusion. Large commercial banks continue to introduce more technologies and are moving towards branchless banking. Latest available industry statistics reflect a stable, adequately-capitalised banking sector which experienced growing customer deposits and improved profitability.


Masisi to dump Tsogwane?

28th November 2022

Botswana Democratic Party (BDP) and some senior government officials are abuzz with reports that President Mokgweetsi Masisi has requested his Vice President, Slumber Tsogwane not to contest the next general elections in 2024.

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African DFIs gear to combat climate change

25th November 2022

The impacts of climate change are increasing in frequency and intensity every year and this is forecast to continue for the foreseeable future. African CEOs in the Global South are finally coming to the party on how to tackle the crisis.

Following the completion of COP27 in Egypt recently, CEOs of Africa DFIs converged in Botswana for the CEO Forum of the Association of African Development Finance Institutions. One of the key themes was on green financing and building partnerships for resource mobilization in financing SDGs in Africa

A report; “Weathering the storm; African Development Banks response to Covid-19” presented shocking findings during the seminar. Among them; African DFI’s have proven to be financially resilient, and they are fast shifting to a green transition and it’s financing.

COO, CEDA, James Moribame highlighted that; “Everyone needs food, shelter and all basic needs in general, but climate change is putting the achievement of this at bay. “It is expensive for businesses to do business, for instance; it is much challenging for the agricultural sector due to climate change, and the risks have gone up. If a famer plants crops, they should be ready for any potential natural disaster which will cost them their hard work.”

According to Moribame, Start-up businesses will forever require help if there is no change.

“There is no doubt that the Russia- Ukraine war disrupted supply chains. SMMEs have felt the most impact as some start-up businesses acquire their materials internationally, therefore as inflation peaks, this means the exchange rate rises which makes commodities expensive and challenging for SMMEs to progress. Basically, the cost of doing business has gone up. Governments are no longer able to support DFI’s.”

Moribame shared remedies to the situation, noting that; “What we need is leadership that will be able to address this. CEOs should ensure companies operate within a framework of responsible lending. They also ought to scout for opportunities that would be attractive to investors, this include investors who are willing to put money into green financing. Botswana is a prime spot for green financing due to the great opportunity that lies in solar projects. ”

Technology has been hailed as the economy of the future and thus needs to be embraced to drive operational efficiency both internally and externally.

Executive Director, bank of Industry Nigeria, Simon Aranou mentioned that for investors to pump money to climate financing in Africa, African states need to be in alignment with global standards.

“Do what meets world standards if you want money from international investors. Have a strong risk management system. Also be a good borrower, if you have a loan, honour the obligation of paying it back because this will ensure countries have a clean financial record which will then pave way for easier lending of money in the future. African states cannot just be demanding for mitigation from rich countries. Financing needs infrastructure to complement it, you cannot be seating on billions of dollars without the necessary support systems to make it work for you. Domestic resource mobilisation is key. Use public money to mobilise private money.” He said.

For his part, the Minster of Minister of Entrepreneurship, Karabo Gare enunciated that, over the past three years, governments across the world have had to readjust their priorities as the world dealt with the effects and impact of the COVID 19 pandemic both to human life and economic prosperity.

“The role of DFIs, during this tough period, which is to support governments through countercyclical measures, including funding of COVID-19 related development projects, has become more important than ever before. However, with the increasingly limited resources from governments, DFIs are now expected to mobilise resources to meet the fiscal gaps and continue to meet their developmental mandates across the various affected sectors of their economies.” Said Gare.

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TotalEnergies Botswana launches Road safety campaign in Letlhakeng

22nd November 2022

Letlhakeng:TotalEnergies Botswana today launched a Road Safety Campaign as part of their annual Stakeholder Relationship Management (SRM), in partnership with Unitrans, MVA Fund, TotalEnergies Letlhakeng Filling Station and the Letlhakeng Sub District Road Safety Committee during an event held in Letlhakeng under the theme, #IamTrafficToo.

The Supplier Relationship Management initiative is an undertaking by TotalEnergies through which TotalEnergie annually explores and implements social responsibility activities in communities within which we operate, by engaging key stakeholders who are aligned with the organization’s objectives. Speaking during the launch event, TotalEnergies’ Operations and HSSEQ,   Patrick Thedi said,  “We at TotalEnergies pride ourselves in being an industrial operator with a strategy centered on respect, listening, dialogue and stakeholder involvement, and a partner in the sustainable social and economic development of its host communities and countries. We are also very fortunate to have stakeholders who are in alignment with our organizational objectives. We assess relationships with our key stakeholders to understand their concerns and expectations as well as identify priority areas for improvement to strengthen the integration of Total Energies in the community. As our organization transitions from Total to Total Energies, we are committed to exploring sustainable initiatives that will be equally indicative of our growth and this Campaign is a step in the right direction. ”

As part of this campaign roll out, stakeholders  will be refurbishing and upgrading and installing road signs around schools in the area, and generally where required. One of the objectives of the Campaign is to bring awareness and training on how to manage and share the road/parking with bulk vehicles, as the number of bulk vehicles using the Letlhakeng road to bypass Trans Kalahari increases. When welcoming guests to Letlhakeng, Kgosi Balepi said he welcomed the initiative as it will reduce the number of road incidents in the area.

Also present was District Traffic Officer ASP, Reuben Moleele,  who gave a statistical overview of accidents in the region, as well as the rest of the country. Moleele applauded TotalEnergies and partners on the Campaign, especially ahead of the festive season, a time he pointed out is always one with high road statistics. The campaign name #IamTrafficToo, is a reminder to all road users, including pedestrians that they too need to be vigilant and play their part in ensuring a reduction in road incidents.

The official proceedings of the day included a handover of reflectors and stop/Go signs to the Letlhakeng Cluster from TotalEnerigies, injury prevention from tips from MVA’s Onkabetse Petlwana, as  well as  bulk vehicle safety tips delivered from Adolf Namate of Unitrans.

TotalEnergies, which is committed to having zero carbon emissions by 2050,  has committed to rolling out the Road safety Campaign to the rest of the country in the future.

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