FNB Acacia

Unschooled in money

SHARE   |   Thursday, 21 February 2019   |   By Lame Modise
INSERT: [L-R] Professor Emmanuel Botlhale and BSB Board Chairman, Kealeboga Molelowatladi INSERT: [L-R] Professor Emmanuel Botlhale and BSB Board Chairman, Kealeboga Molelowatladi

Despite financial institutions’ relentless efforts to educate their clients on matters pertaining to the wise use of money, financial literacy is far from being ingrained in the psyche of Batswana.

As per the Bank of Botswana (BoB) figures released in July 2018, there was a total of P21 billion owed to commercial banks in the form of household debt as of April 2018.


Some 70 percent of the debt was in the form of expensive unsecured loans.

Patriot Business sat down with University of Botswana Public Finance Expert, Professor Emmanuel Botlhale to discuss the matter. Botlhale explains that financial literacy is a problem in the country as sufficiently instanced by pockets of household debt.


“It is common course that household debt is a symptom and the underlying cause is lack of financial literacy. Unluckily, financial literacy is not part of our socialisation, neither is it part of the school curriculum,” he states.

The Professor continues that it is only a few banking and non-banking institutions such as pension funds and Savings and Credit Co-operative Societies (SACCOSs) that provide some form of basic financial literacy. He believes that there is an immediate need to attack the problem at many and various fronts.


“We should pursue socialisation that includes financial literacy by the inclusion of financial literacy in the curricula of primary and secondary schools,” he advises.

Botlhale also believes that the banking and non-banking institutions must do more in respect of financial literacy initiatives.


On the issue of financial inclusion, Botlhale states that financial inclusion, which he explains to be a scenario where individuals and businesses have equal and affordable access to financial products and services is a problem for the poor and small businesses. He continues that this demographic either fails to access financial products and services or when they do, it is at a high cost. “Therefore, the government must create an environment that will promote financial inclusion through, amongst others, facilitating the setting up of micro lending schemes such as the Grameen Bank in Bangladesh,” he notes.

He confidently believes that financial literacy will lead to a good savings culture of which money will be invested in the economy and, therefore, lead to high economic growth and development. Financial inclusion, on the other hand, will favourably enable the poor and small businesses to access credit at affordable cost and, thus, invest it and, in the end, grow the economy.


More needs to be done – BOFILI

The Botswana Organisation of Financial Literacy (BOFILI) chairperson, Albert Gaopelo, stands with the notion that, financial literacy and inclusion share a symbiotic relationship where one cannot be achieved without the other. He believes that though it has become easy to open and set up bank accounts in commercial banks with the latter having dropped their initial account opening balance, more still needs to get done to get everyone on board.


“The privatisation of companies such as the Botswana Telecommunications Corporation (BTC), which gave Batswana priority to own and buy those shares are some of the few cases of financial inclusion,” he cites. Gaopelo applauds efforts by the Government to get locals to participate in the markets but is apprehensive about the approach, which he believes should teach people about the stock market as most don’t know how they work.

“We find that most people don’t understand why these are done or why they should be involved with these and other initiatives hence we find that wrong decisions are made which are later regretted by many,” he states, continuing that government initiatives of helpings grow farmers, formation of cooperatives and setting up of youth funds are other ways of expanding financial inclusion.


He says the initiatives fail because there was no proper education done from the beginning. “We understand that financial inclusion plays an important role of helping individuals to access and use appropriate, formal financial products but without financial education this will not be feasible,” he clarifies.

BOFILI chair also explains that financial literacy and inclusion would go a long way in combating financial crimes and the government can set up laws which prohibit money laundering (anti- money laundering laws) that people cognitively understand.


“Financial institutions should also be required to report suspicious transactions in a way protecting their integrity,” he advises on the anti-money laundering topic and adds that penalties for money laundering should be made steep as a deterrent for such crimes.

Botswana Savings Bank (BSB) Board chairperson, Kealeboga Molelowatladi laments the impediments hindering the provision of services to the nation, citing demographic and geographical challenges.


The Board chair says Botswana is a large country, with a small urbanised population, a situation that does not make much business sense because the financial services sector is grappling with providing financial services to a small population. He highlights that the large size of the country adds substantially to distribution costs, which in the BSB case will be ‘cash – in – transit’ costs.

“Botswana is an upper income country with unequal income distribution although the per capita Gross Domestic Product (GDP) is one of the highest in SADC and Africa,” he says, continuing that the country consists of a small group of well-paid adults and many low income earners and the bank’s normal target is the low income earning group, presenting a difficult balancing act for banking service providers.


Molelowatladi also highlights that, this therefore makes the provision of banking services to such a populace a difficult balancing act.


He was speaking at the launch of his bank’s newest Automated Teller Machine (ATM) in Kang recently.

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