BoB decries low agric lending
Lebogang Mosikare | Friday August 24, 2018 11:35
Answering questions during an economic briefing by the central bank here this week, the BoB’s director of research and financial stability Tshokologo Kganetsano said their studies had noted that the proportion of lending by banks to agriculture continued to trend low.
Kganetsano was answering a question about the contribution of commercial banks towards lending money for agricultural purposes and whether too much reliance on South African goods was not negative for the country’s economy.
According to the Bank’s data, commercial banks in May 2018, had P994.6 million in loans outstanding to the agricultural sector, marginally down from P1.04 billion in April. At May’s levels, the agric loans represented 1.8 percent of all outstanding commercial bank loans. By comparison, the trade sector, which includes trade, restaurants, bars and other community and social services, owed banks P4.8 billion or nearly nine percent of total outstanding loans for May.
“Banks should lend more money for agricultural purposes in order for the country to be self sufficient and not rely on food imports from South Africa,” Kganetsano said. “Any shocks experienced by the South African agriculture sector may have negative consequences for Botswana.”
He added that agriculture is a very lucrative industry that commercial banks should tap into as agricultural produce had a standing market in the country.
Kganetsano also appealed to farmers to adopt new farming technologies in order to reap maximum benefits from their labour.
“Banks should raise the relative size of financing for mortgages, agriculture and small and medium scale enterprises,” he said.
Central bank governor, Moses Pelaelo echoed Kganetsano’s words and added: “We should build our economy with less reliance on imports. We should engage in a transformative economy.”
Annually, South Africa supplies up to 70% of the country’s imports, particularly in food and fuel, a precarious situation that has frequently exposed Botswana to risks such as when strikes in that country cut off trade.
Meanwhile, the Bank’s deputy governor Dr Kealeboga Masalila advised Batswana to exercise due diligence when dealing with cryptocurrencies.
Masalila was responding to a member of the public who wanted to know the Bank’s position on the emerging investment vehicle.
“The definition of cryptocurrencies presupposes that they are currencies while in actual fact they are not currencies. Cryptocurrencies are assets and not currencies. Cryptocurrencies like Bitcoin and others lack additional characteristics usually associated with currencies. “The central bank cannot protect if you choose to deal in cryptocurrencies and so it is important that people should exercise due diligence when using cryptocurrencies,” said Masalila.