BIHL feels premium strain as fiscal crunch squeezes households
Lewanika Timothy | Wednesday September 3, 2025 09:48
The listed BIHL, which is a diversified entity that owns Botswana Life Insurance Limited and Botswana Insurance Fund Management (BIFM), said some retail clients whose revenues are dependent on government contracts have struggled to keep up with policy obligations.
As a result, the company has rolled out payment plans to cushion clients under strain.
BIHL CEO, Catherine Lesetedi, stated last week that the tough economic environment which households and firms operate in was eating away disposable income, causing defaults in collection of premiums.
'We are seeing lapses and delays in the payment of premiums, largely because disposable incomes are under pressure,” she said when announcing the group’s half year results in Gaborone.
“This is not only a reflection of business cash flow difficulties but also the reality that households are tightening belts in a constrained fiscal environment.”
The warning comes as the wider economy adjusts to an era of austerity.
The Bank of Botswana’s latest Business Expectations Survey has found out that firms’ long-term outlook is tilting downwards, with companies bracing for weaker demand due to government’s revenue squeeze. Recently, Vice President and Minister of Finance, Ndaba Gaolathe, told Parliament that cost-cutting across ministries had reduced spending by P5 billion, from P58.2 billion in 2023-24 to P52.7 billion in 2024-25.
The contraction reflects collapsing diamond receipts, which have forced government to delay or shelve budgeted projects.
With the government acting as the biggest buyer in the economy, the slowdown has cascaded into the private sector.
Businesses reliant on state procurement are facing cash flow stress, while households, many of whom depend on public sector wages or government-linked contracts, are grappling with shrinking disposable incomes.
For BIHL, this fiscal squeeze has manifested in higher strain on its retail book, where lapses in premium payments are climbing.
“We have made arrangements with clients to restructure their payments because we recognise that the pressures they face are not short-term,” Lesetedi added.
Analysts say financial services companies like BIHL serve as a bellwether for household financial health, given their close exposure to both salaried workers and enterprises supplying government.