Credit growth defies liquidity crunch
Mbongeni Mguni | Wednesday November 12, 2025 11:30
Figures shared by the Bank of Botswana indicate that annual credit growth, or the increase in the total amount of loans and given out by banks, was measured at four percent in January, rising to 10.3% in June before moderating to 7.3% in August. By comparison, annual credit growth was 9.8% in January 2024, before sinking to three percent in July 2024.
Analysts expected banks to adopt a more cautious outlook to credit extension looking at the tightness of liquidity in the market and the continuing contraction in the economy.
Banks listed on the Botswana Stock Exchange also generally reported flat or marginal increases in their loan books in recent financial reporting periods, confirming that tighter liquidity conditions in the market were impacting credit extension.
However, the annual credit growth rate suggests that lending activities continue at resilient rates, despite the headwinds in the financial sector and the broader economy.
Bank of Botswana data does however suggest that commercial banks, on an absolute basis, are seeing higher impairments this year, with total arrears reaching P6.5 billion in August, from P5.6 billion in January. As a percentage of total outstanding loans, the arrears in August amounted to 7.2%, up from 6.5% in January.