Call for legislative review to nurture indigenous banks
Pauline Dikuelo | Friday March 3, 2017 15:43
Responding during the ministry’s budget proposal this week, Minister Kenneth Matambo promised to consider the advice.
“We can look at it but I don’t think what is required by BoB is unreasonable, for example, I do not think the P5 million that is required to start a bank is unreasonable,” he said.
However, Matambo said the required experience is important, as people need to be confident in trusting the bank with their money noting that if the applicants do not have experience it might be a problem.
“From my experience, people who have been applying for the licence do not have a problem with that experience because there are other banks from all over the world who are always willing to become partners to the local people consortium,” he said.
Further he said they are lobbying for the establishment of the indigenous banks giving the soon to be privatised National Development Bank (NDB) as an example.
In 2014, the Botswana’s biggest micro lender Letshego Holdings applied for a banking licence from BoB, which was rejected.
However earlier this year, Letshego’s chief executive officer, Chris Low said they will again push for a banking licence in Botswana after giving up in 2014, as the BoB declined to introduced tiered commercial banking licences. Low said a meeting has been scheduled with the central bank’s authorities and was hopeful they will be supportive of a new banking regime.
A banking licence will reduce Letshego’s costs of funding of its loan book, as it will now accept deposits.
Matambo was responding to a concern raised by the Member of Parliament for Bonnington South, Ndaba Gaolathe that the banking system requirements of setting a bank are too high despite the critical role they play in the economy.
“The banking sector is a very important part, not only in developing the economy but the financial services sector.
“The requirements are high not just in terms of the deposits that are required but also in terms of other specific requirements such as need to have conducted banking in some other parts of the world,” Gaolathe said.
In addition, Gaolathe said this is what explains why the country does not have indigenous banks in the same way like other African countries. He said there is no reason why Botswana with the type of resources it has cannot develop indigenous banks, which can later become major multinationals.
“You will find that there are Batswana who have experience and have worked in the banks around the world and if they came together as a consortium, which necessarily have not operated as a consortium internationally as a bank, they will still be able to run a bank because they have a collective ability,” he said.