Mohohlo chides banking sector
Keikantse Lesemela | Tuesday February 17, 2015 16:38
Speaking at the official opening of Barclays Bank of Botswana head office in the Central Business District (CBD) recently, Linah Mohohlo reminded the banking industry that a modern customer is more discerning and demands better and convenient service as a basic right.
She said the results of a recent customer survey have identified banks as being among institutions that did not enjoy the wholehearted trust of the general public.
“This may reflect to some extent a lack of financial literacy on the part of some customers, but whatever the cause, banks need to take proactive steps to correct this trust deficit if the integrity of the country’s banking system is to be maintained,” said Mohohlo.
BoB imposed a two-year moratorium in January of 2014, on any upward adjustment of bank charges, saying the fees were commensurate with the quality of services offered by banks. The moratorium meant that no bank is allowed to make any upward adjustment of banking tariffs, bank charges, commissions, and other non-interest fees for a period of two years. The Central Bank argued at he time that it imposed the moratorium in response to the growing public concern about the perceived high level of bank charges and other fees, which are deemed not to be commensurate with the quality of banking services.
Mohohlo said while increased competition has motivated banks to improve efficiency and adopt productivity-enhancing technologies, the spreads between lending and deposit interest rates remain a cause for concern. She noted that although there may be some valid reasons for wide spreads, they are nevertheless very large when compared with those of peer countries.
“This should suggest that either productivity gains have not been maximized or the benefit is not fairly shared with bank customers. The wide spreads have also slowed the pace of financial inclusion to some extent as the attractiveness of borrowing and lending products is diminished,” said Mohohlo.
She said inefficiencies persist in banks interactions with one another. “With more banks, the inter-bank money market was expected to be more vibrant, but this is not happening, instead this market generally underperforms and in many instances, functions perversely,” she said. Some banks prefer to access the credit facility provided by the Bank of Botswana as a last resort for funding, instead of borrowing in the inter-bank market.
Mohohlo said BoB believes that financial reform process is on course to achieve its objectives of a banking system that is safe, sound, competitive and efficient and that continues to broaden access to financial services.
“Botswana banking system must be secure, vibrant and must have a well functioning inter-bank market,” she said.
On her note Barclays Africa Regional Management chief executive, Mizinga Melu said Botswana remains key market for the Barclays Africa business growth.
“Barclays Bank sees Africa as a growth opportunity. We will, for this reason, as we have done in Botswana through this building, create world-class services to meet the evolving needs of our diverse customers across the continent,” she said. She said the Barclays strategy is to become the ‘Go-To’ bank our customers and clients across the continent, to bring Africa business together with their global business,
“We will continue combining our global product knowledge with regional expertise and our extensive and well established local presence in Africa to serve our customers and clients even better and continue to develop and invest in our most valuable resource – our people,” she said.