07 Jun 2018

Minister of Finance and Economic Development, Mr Kenneth Matambo says government is committed to supporting the establishment of the indigenous banking sector.

Responding to complaints by Members of Parliament during the Banking amendment bill debate, who decried of the non - existence of indigenous banks, Mr Matambo highlighted that government is keen to create a conducive banking environment that will cater for the indigenous to establish banks.

He said Batswana have over the years improved their financial literacy rate and the mushrooming of community savings and credit schemes, popularly known as Metshelo bear testimony to their desire to invest in the banking sector.

Such indigenous saving schemes, he said had the potential to evolve into fully fleshed banks, which could be of great benefit to the communities that reputable commercial banks can serve.

Indigenous banks, he said  also provided financial services that reduced the cost of  moving  funds between borrowers  and lenders thus could  lead to a more efficient allocation of resources  and  faster  economic growth.

He indicated that even though it was important to provide banking facilities to all Batswana despite their localities, the availability of online banking services had however made banking easy even to those communities that banks could not physically reach out.

Thus, he said citizen owned banks were an essential component of modern economies, not only  in  terms of  turnover, but also as primary financiers.

The establishment of the indigenous banking sector, he said would require the adjustment of capital adequacy ratio as well as further amendments to the current Banking Act.

He said that obliterating other stringent bottlenecks that hinders locals from investing in bank ownership will also be consider during  an in-depth review of the Banking Act.

Further, Minister Matambo observed that the bank  shareholding structure acceptable to Bank of Botswana could also be broad, hence need to be trimmed down to certain specifications so as to be more relevant to those willing to apply for banking licences.

 He expressed concern at the dominance of noncitizen shareholders in the banking sector, adding that it could be risky, particularly in an era where money laundering is prevalent.

The minister therefore emphasised the need to review the banking charter so that it further stipulates the minimum number of locals permissible to be shareholders.
 

The Banking Amendment Bill No. 11 of 2018 will be read for the second time and  go for committee stages at a later date. Ends