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IMF study shows Botswana’s quantum leap in ‘banking the unbanked’

Botswana's unbanked population is getting smaller
The number of adults in Botswana with bank accounts at commercial banks jumped by 72% in the last decade, while mobile money registrations and values transacted equally ballooned, making the country one of Africa’s most banked.

An International Monetary Fund (IMF) study released on Monday shows that from a decade ago when only 41% of adults in the country had access to banking services, by the end of last year most had access either through formal banking or the rapidly rising uptake of mobile money.

The latest numbers are contained in the IMF’s Financial Access Survey, which has tracked trends in financial inclusion and banking service uptake across 180 countries since 2009. The survey is based on administrative data collected by central banks and other financial regulators.

By the end of 2018, depositors with commercial banks numbered 1.1 million, of which households accounted for 1.03 million.  The numbers suggest a banked population close to 72%, which compares to regional rates ranging from 29% in Zambia to 86% in Namibia.

The IMF data also indicates that the explosion in mobile money services this decade has plugged the gap in terms of financial inclusion for many Batswana. According to the Survey, the number of registered mobile money accounts per 1,000 adults has shot up from 455 in 2013 to 1,411, a trend which points to individual subscribers registering for more than one account across the service providers.

“It is quite likely that many of the same people with deposit bank accounts also have mobile money accounts, which to an extent means there is still work to be done reaching the totally unbanked,” a banking industry executive told BusinessWeek.

“However, the numbers do suggest that a lot of ground has been covered from the period when up to two-thirds of adults had no access to formal banking. “Mobile money in particular and services such as

e-Wallet and Cash Send have also spread financial inclusion through mobile telephony across the country.”

By comparison, Zimbabwe has the region’s highest mobile money uptake, with 1,609 accounts per 1,000 adults, due largely to that country’s cash crisis forcing consumers to digital payment and settlement systems.

Zambia, with 1,443 accounts per 1,000 adults is the region’s second highest, while South Africa, Mauritius and Malawi have the region’s lowest uptake of mobile money accounts. In Botswana, all three mobile wireless companies offer mobile money services, with the largest, Orange Money, launching further add-on functionality linking to traditional banking platforms.

Numbers in the survey also indicate that the values being transacted via mobile money locally have ballooned over the years, rising from 0.73% of gross domestic product (GDP) in 2013 to 5.2 percent of GDP last year.

By comparison, in Zimbabwe the value of mobile money transactions was 142% of GDP in 2018, indicating the dominance of the payment method in the crisis-ridden economy.

The latest trends will please the Bank of Botswana (BoB), which has frequently stressed the need for technology and regulations to lead greater financial inclusion.

“Enhanced financial inclusion contributes to inclusive growth as a greater number of businesses and households would be participants in financial intermediation, mobilisation of savings for investment purposes, increased efficiency and productivity of finance as well as risk mitigation and reduction in relative transaction costs through the use of new technologies,” the BoB said in its 2017 Annual Report.

The central bank also said the country’s high mobile density provided the perfect opportunity for “a more inclusive financial sector that offers low-cost financial services to the unbanked and underserved”.




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