Africa-Press – Botswana. Banks’ reduced cash holdings, the operating account, and primary reserve requirements at the central bank, as well as a decrease in holdings of BoB Certificates and other assets are largely responsible for the slowdown.
The growth of Botswana’s banking sector assets decelerated sharply over the past year, falling from 10.1 percent in February 2024 to 4.4 percent in February 2025.0
According to the Bank of Botswana’s (BoB) Monetary Policy Report released in April 2025, the slowdown was largely driven by reduced balances at the central bank, specifically cash holdings, the operating account, and primary reserve requirements, as well as a decrease in holdings of Bank of Botswana Certificates (BoBCs) and other assets.
Loans and advances, which make up the largest portion of commercial banks’ assets at 61.7 percent, grew by 5.9 percent in February 2025, a drop from the 8 percent recorded the previous year. These gains were primarily funded by customer deposits, which themselves declined by 1.1 percent over the same period.
Credit growth down
Credit growth also lost momentum. Annual commercial bank credit growth slowed from 8 percent in February 2024 to 5.9 percent a year later. BoB has attributed the deceleration to businesses’ decreased reliance on overdraft and revolving credit facilities.
“Lending to the business sector increased by 6.5 percent in the year to February 2025, down from the 12.9 percent expansion seen in 2024,” the report states. “This was largely due to decreased utilisation of overdraft credit facilities.”
Credit to parastatals, in particular, dropped significantly – declining by 17.8 percent in the year to February 2025 compared with a sharp 64.6 percent rise the year before. Credit to private businesses, excluding parastatals, rose by 8.9 percent, also down from the 9.5 percent growth recorded in the previous year.
This reduction was driven by repayments and weaker demand across several sectors, including mining, tourism, transport and communications, and real estate.
Property lending dropped
Growth in household credit also slowed, registering at 5.5 percent in February 2025, compared to a higher rate in February 2024. Notably, there was a substantial decline in lending for property purchases, which dropped from 8.5 percent to just 0.01 percent.
Motor vehicle loans declined from 9.7 percent to 7.9 percent, and credit card-based loans turned negative, from 2.3 percent to -2.1 percent. However, personal loans saw increased demand, rising from 4.2 percent to 7.8 percent, buoyed by a cumulative 75 basis point reduction in the Monetary Policy Rate (MoPR) since December 2023.
“Lower interest rates likely encouraged more personal borrowing,” the report noted. The household sector accounted for 64.3 percent of total commercial bank lending in February 2025, marginally down from 64.5 percent a year earlier.
Outlook worsens
Despite these trends, the credit-to-GDP gap – used to assess risks of excessive credit growth – remained negative at -2.8 percent as of December 2024, well below the 10 percent threshold that signals economic overheating.
Still, the report warns that “growing concerns about the fiscal position are likely to dampen previously positive sentiments about credit growth, as banks may implement more stringent credit standards amid liquidity strain and stagnant public sector wages.”
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