- Increase in economic activity led to loan uptake by local businesses
- Household loan increased from 6.1 % to 6.5 %
Annual commercial bank credit increased from 3.6 percent in February 2021 to 4.6 percent in the 12-month period to February 2022, a Bank of Botswana report says.
The latest Monetary Policy Report (MPR) attributes this increase in part to an increase in loan uptake by businesses as the economy opened up, as well as recovery from a low base arising from the impact of the COVID-19 pandemic in 2020. “Household loans increased by 6.5 percent in the year to February 2022, from 6.1 percent in February 2021,” it says. “The higher growth in household credit was mainly attributable to the increase in growth of property, personal unsecured lending, and credit card loans.
“There was, however, a decrease in motor vehicle loans in the year to February 2022. The share of the household sector in total lending by commercial banks increased to 66.4 percent in February 2022, from 65.2 percent in February 2021.” According to the report, lending to the business sector increased by 1.1 percent in the year to February 2022, compared to a contraction of 0.7 percent in the corresponding period in 2021. Credit to businesses (excluding parastatals) also increased by 4.5 percent in the year to February 2022, compared to an annual contraction of 2.3 percent in February 2021.
The increase in credit to businesses (excluding parastatals) was mainly due to utilisation of loan and overdraft facilities by some companies in the manufacturing, agriculture, finance, real estate and business services industries as economic activity increased following the end of the State of Public Emergency in September 2021. However, the report notes, credit to parastatals decreased by 32.4 percent in the year to February 2022, compared to the 18.1 percent expansion in the corresponding period to February 2021 due to repayment of overdraft facilities.