Banks caught in liquidity, weak economy spiral

Linah Mohohlo
Linah Mohohlo

The halving of credit growth figures in the first six months of the year, despite the central bank’s interventions to ease lending, reflects a situation where a flagging economic environment is aggravating commercial banks’ quandary with tight liquidity, observes Staff Writer BRIAN BENZA

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.

Editor's Comment
Implement the recommendations Mr. President

The nation is eagerly awaiting this report to have a glimpse of what the recommendations are like, possibly for further debate. Mr. President, it’s our ardent hope that true to your promises, the public will have an opportunity to peruse the report and see if it reflects their interests as the Commission went around the length and breadth of the country collecting views of the people with some choosing to write to the Commission’s...

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