The amount of outstanding loans at commercial banks attributable to households rose by only P72.2 million in February, continuing the weak uptake of credit seen in the local market since the outbreak of COVID-19.
According to recent Bank of Botswana figures, households owed commercial banks P43.1 billion by the end of February, with just over 70% classified as personal loans, as opposed to mortgages and credit cards. Between March and May last year, the value of loans given out by local commercial banks to households slipped in each month, a rare occurrence in a market where credit uptake is usually healthy.
Banks have said the phenomenon was because they imposed tighter risk assessment due to the outbreak of COVID-19 in March, while households also experienced a lower ability to take up new credit due to the impact of the pandemic on incomes and job security.
The latest central bank figures show that household credit growth, or the annualised rate of increase in bank loans, slipped from 14.5% at the beginning of 2020 to 7.3% in December. In January 2021, credit growth among households was measured at 6.7% before dropping to 6.1% in February.
Households however still comprise the largest debtors to local commercial banks, with the P43.1 billion they owed in February, representing 65% of total credit outstanding at commercial banks to all economic sectors.