15 Nov 2021

About 7 850 loan accounts in the banking industry had been given a payment holiday as of December 31, 2020, says Minister of Finance and Economic Development, Ms Peggy Serame.

Ms Serame said private sector  enterprises  loans  accounted  for  78.5 per cent.

She highlighted that the National Development Bank (NDB) granted forbearance measures to 104  clients for up to 12  months while Botswana  Building Society Limited (BBSL) assisted 555 mortgage  customers  with payment holidays from April 2020 to end of  December 2020.

“Commercial real estate loans which amounted to 30.4 per cent were the largest share of the loans granted payment moratorium while household loans accounted for 12 per cent of payment moratorium,” said Ms Serame.

She said the number and value of defaulting mortgage accounts that were restructured during the pandemic period under the categories of owner occupied and rented was an average of 329 accounts valued at P289 million per quarter.

In relation to COVID-19 related policy relief measures, Ms Serame said Botswana, like other developing economies, implemented  targeted  fiscal,  financial  and  liquidity  support measures  to  support  the  affected  sectors  of  the  economy, including  households.  

“On the advent of the COVID-19 pandemic, Bank of Botswana undertook  relief  measures  in  the  form  of  reduction  of  the capital adequacy ratio from 15 per cent to 12.5 per cent, bank rate  from  4.75  per cent  to  3.75  per cent,  primary  reserve requirement from 5 per cent to 2.5 per cent, among others,” she said.

She  further indicated that government endorsed the initiative of the banking industry to reschedule the service of loans, including selective moratoria on qualifying performing loans with a good repayment  history  for  up  to  six  months,  effective  April  1 2020.

Minister Serane also noted that the Bank of Botswana suspended the raising of specific provisions by banks against loans qualifying for payment moratorium, thus reducing the credit risk arising from the negative effects of the COVID-19 pandemic  on  banks’  customers.  

She said according to the  banking  supervision  report  2020, loans  granted  payment  moratorium  by  commercial  banks amounted  to  P4.3  billion,  P7.3  billion,  P6  billion  and  P5.6 billion in April, June, September and December 2020 respectively, representing shares of 8 per cent, 11.4 per cent, 9.5 per cent and 8.5 per cent in gross loans and advances.

She said NDB developed and implemented COVID-19 forbearance strategies  which included offering customers repayment holiday up to six months from April 1st  2020 and reducing installment by up to 50 per cent for a period of six months.

Selebi Phikwe West MP, Mr Dithapelo Keorapetse had requested the minister to update Parliament  on measures that  government  took to cushion home ownership protection and to further  explain COVID-19 hardship mortgage forbearance. ENDS