27 Oct 2025

The Financial services sector’s contribution to GDP increased from 4.7 per cent in 2017 to 6.5 percent in 2024, an upward trend reflecting an expanding role of financial intermediation and the mobilisation of long-term savings.

Presenting the proposed priorities for the Financial Services Sector under the National Development Plan 12 (NDP 12), together with its Indicator Framework for performance monitoring and evaluation, Vice President, Mr Ndaba Gaolathe said the size and composition of Botswana’s financial system continued to evolve, with Non-Bank Financial Institutions (NBFis) now accounting for a larger share of total financial assets than the banking sector.

Mr Gaolathe, who is also the Minister of Finance said as at the end of 2023, total assets held by NBFis stood at P160.6 billion, surpassing the P133.6 billion quantum of the banking sector.

He said digital financial services were also gaining momentum, adding that in 2024, the total value of mobile and internet banking transactions reached P85.6 billion, reflecting growing consumer adoption of digital platforms.

“As of March 2025, the value of mobile money transactions alone reached P42.3 billion, underscoring the increasing role of mobile-based financial services in enhancing access and convenience,” he said.

He indicated that several recent policy and legal reforms presented a solid foundation for progress, including the re-enactment of the Banking Act, (which commenced in August 2025), the Medical Aid Bill of 2025 and the Value Added Tax (Amendment) Bill, 2025 which were passed during the July 2025 Parliament session.

This, he said marked key legislative milestones in the financial sector reform agenda, adding that these milestones demonstrated government’s commitment to modernising the sector, enhancing inclusivity and embracing transformation.

Although the financial system remained safe, sound and instrumental in supporting economic activity, Mr Gaolathe cautioned that the sector continued to face challenges.

“These challenges include, among others, the high cost of infrastructure deployment, which hampers the expansion of financial services, elevated transaction costs that undermine efforts to promote financial inclusion, lack of interoperability within the financial ecosystem, which limits the seamless flow of data and of transactions across platforms and institutions,” he said.

He stated that weaknesses such as the underperformance of most  SOEs, governance gaps and fiscal pressures further constrained sectoral performance.

Furthermore, he said access to finance for MSMEs remained limited by informality, lack of collateral and cautious lending practices, adding that the banking sector’s reliance on short-term deposits from Non-Banking Financial Institutions also presented liquidity risks, while global uncertainties and subdued capital markets had dampened investor confidence.

Thus, he highlighted the need to address these constraints in an effort to build a more inclusive, innovative and resilient financial system under NDP 12.

Mr Gaolathe stated that one of the focus areas for the financial services sector under the Botswana Economic Transformation Programme (BETP) was the development of a comprehensive reinsurance ecosystem.

“Africa’s reinsurance market is valued at over US$ 5.7 billion, yet Botswana contributes only 1.5 per cent of Africa’s total reinsurance pool, leaving substantial room for growth,”he said.

To that end, Mr Gaolathe stated that Africa’s reinsurance market presented an opportunity anchored by Botswana’s investment-grade sovereign credit rating, sound regulation and trusted governance.

He said government remained steadfast to position Botswana as Africa’s most secure and competitive reinsurance hub that created high-value jobs, attracted global investment and provided greater protection for the people and businesses. ENDS