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More lending rates to rise on liquidity squeeze

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More banks are set to increase the interest rates they charge on loans, while others intend to narrow their lending to clients with the highest returns, as a long-running liquidity crisis in the banking sector tightens its grip.

This week, BBS Bank and Access Bank joined Absa Bank Botswana and Stanbic Bank Botswana in increasing their prime lending rates, the first time commercial banks have uncoupled from the Bank of Botswana’s interest rate guidance since the freedom to do so was granted in April 2023.

The increases in the lending rates range from 75 basis points to 115 basis points, as the cash-poor government’s higher appetite for debt sucks up liquidity in the local capital market.

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More lending rates to rise on liquidity squeeze

More banks are set to increase the interest rates they charge on loans, while others intend to narrow their lending to clients with the highest returns, as a long-running liquidity crisis in the banking sector tightens its grip.