Bank Gaborone MD urges fresh thinking on liquidity
Mbongeni Mguni | Tuesday November 4, 2025 11:15
Speaking at the bank’s inaugural Insights and Impact roundtable, Makhupe said that whilst the Botswana Economic Transformation Programme (BETP) held promise for transformation, there was a need for stop-gap strategies whilst its results were awaited.
“Liquidity is the biggest risk that our economy faces right now because what it basically means is that if, as a corporate, you are trying to raise funding for expansion or to fund operations, you have to pay a rate between 25% and 30% and that's going to wipe you out,” she said. “We need to highlight the risk that the liquidity situation that we are facing as a country poses to the strength of our economy, and it calls upon all of us to think differently.”
Financial markets have been facing a liquidity crunch since last year, caused by weaker diamond sales that have impacted government revenues and its spending in the economy. Government has also upped its borrowing from the capital market, squeezing out other participants such as corporates looking to raise funding.
As liquidity has tightened, banks have upped their deposit rates to compete for funding, compensating for this by increasing their rates on loans, thus squeezing borrowers in an already constrained economic environment. The tighter liquidity conditions have also resulted in rising interest rates on the government’s bonds and treasury bills, which are used as the benchmark in the local capital market for other borrowers.
Makhupe said the private sector and banks would have to think outside the country’s borders in terms of their markets as well as their sources of funding.
“As businesses, in terms of your business model, you can't still be relying on looking at Botswana to grow your business,” she said. “That opportunity is not going to be there for a long time. “People are going to start getting strained, which means you have to look at the regional market if you are running a business, and Botswana is not going to be enough. “And as banks, it also means for our funding, we need to look outside the country as well to look at other funding options that are available out there, such as your development financing and all of that.”
The MD said Bank Gaborone was already working with development finance institutions to see how to fund local SMEs using different types of funding products.
“If you don't think differently, both yourselves as customers or as business owners, and we as your lenders or as banks, then we will get into a lot of trouble because of the liquidity situation,” she said.
Ministry of Finance senior policy advisor, Naledi Madala, told the roundtable that the eagerly-awaited BETP would be tabled in Parliament after the debates on the National Development Plan (NDP) 12.
She explained that the BETP was the anchor strategy for the NDP 12 and had been designed with project readiness, impact and private sector investment in mind, under the Big Fast Results methodology led by Malaysian think-tank, Pemandu.
“We ended up at 186 solid investment rating projects, and 60 of these are what we call making the most, meaning that these projects almost have everything. “They just need very minor facilitation, they need a change of land use, they need a permit, they need some small amount of funding that could come from banking, that could come from the different funders, so very strong projects that have come out of the transformation exercise, and we are now moving into the execution part of the exercise,” Madala said.
Debates on the NDP12 are due to end on November 7, followed by the State of the Nation Address.