According to Bank of Botswana figures, from the P21 billion that households owed commercial banks as at April, 70 percent was in the form of the more expensive unsecured loans while P6 billion was through fenced loan products such mortgages and vehicle loans.In a statement issued after the conclusion of recent consultative discussions in Gaborone, the IMF team led by Lamin Leigh recommended that appropriate measures be put in place to temper the rate of increase in household unsecured borrowing, which can unravel the stability of the local banking sector in the event of a high default rate by borrowers.
"The mission supports the government's emphasis on greater financial inclusion and its commitment to provide adequate safeguards to preserve the stability of the financial system. Thus the high concentration of banks' loans to households and the acceleration in the growth of unsecured lending warrants close monitoring," the IMF said in a statement. According to the latest figures from the central bank, loan arrears attributable to individuals reached P931.2 million in the first quarter of the year, translating to approximately one defaulting borrower in every 20 at commercial banks.
