Botswana Financial Services

Botswana's financial sector is relatively small, reflecting the small size of the market and perhaps the thorough approach to licensing and supervision. The size of the sector in relation to the economy (as measured by the ratio of broad money to non-mining GDP) declined in the first half of the 1990's but picked up again from 1995 onwards, suggesting positive signs of financial sector development over this period. Botswana financial institutions have remained solvent, liquid and profitable, which to a large extent can be attributed to the central banks supervisory role as well as the overall stable macroeconomic environment. The financial sector comprises the central bank, commercial and investment banks, insurance companies, leasing finance institutions, a development bank, a savings bank, a building society, a development corporation and a number of non-bank financial intermediaries. Commercial banks are the most significant financial intermediaries in terms of their share of savings from the public.

The financial sector has expanded considerably over the past decade, which resulted in an increase in the infrastructure and the range of services offered. The number of accounts provided by banks has risen faster than the population growth, suggesting that a greater proportion of the population have access to banking services.

Th Botswana Financial Services review was commissioned by the Southern African Trade Research Network (SATRN). The objective of the review was to provide a comprehensive overview of the current financial sector environment. To achieve this, an evaluation of the financial sector (banking, insurance and securities sectors) was undertaken. The evaluation centred around market access policies, particularly issues related to entry, ownership and regulatory measures. A further review of the sectors' performance as measured by prices, quality indicators and accessibility to the poor was conducted. For the purpose of future benchmarking with other SADC countries, a similar study was carried out in other SADC countries with the use of World Bank templates for each of the banking, insurance and securities industries.

The rest of the report is organised as follows: chapter 2 briefly touches on the outline of the template of analysis used for each of the sub-sectors. Chapter 3 to 5 discuss the responses given by the regulators and operators to the World Bank Template in the banking, securities and insurance sub-sectors. Lastly, chapter 6 provides the conclusion.