Credit growth remains damp

Credit growth has generally been under pressure in the last two years, as the diamond downturn has weighed on the economy, specifically triggering a liquidity crunch in the banking sector. Bank of Botswana figures indicate that credit growth rose to 8.5 percent in September last year, from 7.3 percent in August, before sliding in the months after that to 2.5 percent in January. However, the banks marginally increased their output of loans in February, suggesting either a temporary uplift or signal of improving conditions.

The country’s banks have generally tightened their credit output and enhanced their collections in response to the liquidity crunch in the financial sector. Commercial banks’ collective profits broke a four-year streak of growth, declining by about nine percent to P3.79 billion last year, as they were impacted by broader economic pressures that saw their provisions for bad debts rise fourfold. It is a clear signal that the government’s purse is empty and that our own behaviour has left veterinary officials fighting with one hand tied behind their backs.

We have been here before. During COVID-19, many of us thought we knew better. We ignored simple rules, we carried on as if the danger was someone else’s problem, and the virus took lives and left our economy on its knees.

[paywall]

We are still broke from that experience. Yet now, with FMD…

[/paywall]