Borrowers need room to breathe
Mmegi Editor | Monday October 19, 2026 06:00
“Every time you borrow money, you are robbing from your future self”
-Nathan.W.Morris
Bank of Botswana’s latest supervision report shows loans placed on a watch list for potential repayment problems rising to P5.5 billion. These loans have not necessarily defaulted, which means there is still an opportunity to address the weaknesses. Meanwhile, loans already in arrears have reached P5.2 billion. For households, this pressure can mean difficult choices between servicing debt and meeting everyday needs. For a small business, weaker sales and rising borrowing costs can leave little money for wages, suppliers and loan installments. With households accounting for most of bank lending, their financial health matters for the sanity of the countries banking system.
Banks themselves are adapting to difficult conditions. Higher income from digital transactions and foreign exchange helped cushion falling lending income, although industry profits still declined. Their ability to earn from several activities has provided some protection against the downturn.
Many borrowers have far fewer options when a salary disappears or a business loses customers.
The Banks should therefore, use their early warning systems to begin meaningful conversations with customers. Where a borrower has a realistic prospect of recovery, lenders should consider repayment arrangements that reflect their changed circumstances. Any restructuring must be explained properly. A smaller monthly installment can offer immediate relief whilst leaving a customer paying interest for longer. Borrowers deserve to understand the full cost before agreeing to revised terms. There is also a responsibility to make everyday banking affordable and transparent. More people using digital services should benefit from convenient, competitively priced transactions. Customers should be able to compare charges and understand what routine banking will cost them.
The increase in non-interest income reflects greater transaction activity; as such it should not be confused with evidence that banks raised their fees. Nevertheless, affordability deserves attention when the same customers generating transaction revenue are struggling with their debts.
Meanwhile, Government must also recognise its role in borrower’s ability to recover. Paying verified supplier invoices on time and giving businesses reliable information about payment schedules would help firms plan, meet obligations and protect jobs. More lending cannot compensate indefinitely for income that fails to arrive.
Borrowers, in turn, should raise repayment difficulties early and provide lenders with an honest account of their circumstances. Assistance works best when both sides do agree on a credible way forward. The industry’s capital buffers offer reassurance, but they should not encourage complacency about the distress building amongst customers. Financial stability also depends on households retaining incomes and businesses remaining open.
The watch list gives the banks time to intervene. Therefore, they should use it to help viable borrowers recover before missed installments become lost assets, closed businesses and deeper hardship.