Banks caught in liquidity, weak economy spiral

According to Bank of Botswana (BoB) figures released this week, the rate of loans uptake by both business and households dropped 45 percent in the first half of the year, from 13.5 percent in December 2014 to 7.4 percent in June 2015. The slower credit growth comes on the backdrop of a two pronged intervention by the BoB in the period, raising suggestions that the simple matrix of supply and demand of credit in the banking system has been caught up in other industry-bred complexities. 

In a bid to bolster economic growth through reduced cost of lending by commercial banks, the central bank cut the benchmark rate by a percentage point in the first half of the year.