Close to a billion Pula is held in community savings and credit vehicles, popularly know as Metshelo, a study to gauge the breadth of access to financial services in Botswana estimates.
A Country Diagnostic Report on financial services called Making Access Possible (MAP) approximates that about 18 percent of Botswana’s 1.3 million adult population participate in Metshelo with an average savings of P3,500 per person per annum.
“About 236,000 people are estimated to partake in Metshelo, which hold P822 million. Usage of this savings scheme was found to be highest among the informal SME groups,” reads the report, complied by economic consultancy firm, Econsult.
The MAP study derived its figures from the 2015 Finscope survey, which was conducted between October and December last year sampling 1,503 respondents from Botswana’s total population of 1.3m adults.
The survey aimed to gauge financial inclusion by measuring the proportion of the population using both formal and informal financial services and products.
Contrary to widespread perceptions, the study established that there is profound savings culture among Batswana with the bulk of the funds invested in pension funds, which hold over P59bn.
The second highest savings vehicles used by Batswana is banks where individuals are holding P12bn in savings accounts.
However, households have actually borrowed more from financial institutions with credit standing at P25bn.
“Savings has the highest financial product usage with 62 percent of households interviewed in the survey saying they save.
“Households save much less with banks (P12.4bn) than they borrow (P25.4bn), despite there being far more savers with banks (422,000) than borrowers (207,000),” added the report.
The diagnostic study also found formal savings to be higher amongst urban dwellers (58 percent) than urban village (49 percent) and rural dwellers (31 percent), most likely because of higher incomes, more formally employed and greater physical access.
On the use of the saved funds, 62 percent interviewed households said they use most of the money to smoothen consumption, while very few people (18 percent) saved for retirement.
The bulk of the households (61 percent) said they depend on government for old age pension schemes.
From the surveyed households in the study, over 60 percent blamed the lack of income as the main barrier to saving with other barriers identified as lack of proximity to banks and perception of high banking costs.
The Finscope study stated that about 90 percent of all individuals earn not more than P10,000 per month, a trend that has contributed to the low uptake of financial services.
The survey also showed that 71 percent of all individuals earn less than P1,500 per month, while 22 percent have no income at all.
According to Econsult managing director, Keith Jefferis, the counter of the perception of high bank charges by potential savers is to shop around for the lowest charges and highest returns.
“It is quite possible to save and earn an interest that can cover bank charges. One just needs to shop around and find out what the different banks have on offer. From our survey, we found out that Bank Gaborone and Barclays are offering the best returns. However, for the low income earners, banks are unlikely going to be interested in developing savings products suiting them as it would probably be unprofitable to do so,” he said.