- All sectors, save for capital markets, recorded increases in total assets from 2019
In its latest annual statistical report in The Bulletin, the Non-Bank Financial Institutions (NBFIRA) found that the sector remained resilient despite the harsh impact of the COVID 19 outbreak on the economy of Botswana.
The sector registered an asset growth of 2.5 percent in 2020, which is lower than the 2019 growth of 4 percent but considerable in the face of the onslaught of the pandemic. The report – which provides industry aggregates for financial performance, financial position capital adequacy and other key financial stability ratios of non-bank financial institutions (NBFIs) – shows that the retirement funds industry continues to dominate the sector with a market share of 71 percent at P92 billion in 2020, registering an increase of 3.7 percent on the P89 billion recorded in 2019.
The Bulletin presents the audited financial information submitted by regulated NBFIs during the year ended 31st December 2020. “All sectors, save for capital markets, recorded increases in total assets from 2019,” says the report. “Albeit (being) lower than the increase of 7.3 percent recorded in 2019, the insurance industry increased by 6.1 percent to P22,878 million in 2020 from P21,556 million in 2019.”
According to the report, lending activities increased by 17 percent from P5,431 million in 2019 to P6,369 million recorded in 2020. Capital markets registered an improved decrease of 23 percent to P8,075 million in 2020 from a decrease of 27 percent (P10,483 million) recorded in 2019. Overall, the NBFI assets ended the year at P129 billion from P126 billion recorded in 2019.
The NBFI sector revenues decreased by 23.6 percent to P17 billion in 2020 from P23 billion in 2019. When expressed as a percentage of nominal GDP, the revenues were 9.5 percent, reflecting a decrease from 11 percent recorded in the prior year. The sector remained well capitalised and ended the year at P8.1 billion from P7.5 billion in 2020. The capital and reserves of the sector, excluding retirement funds, registered a lower increase of 8.8 percent compared to the 10.5 percent recorded in 2019.
Capital Markets recorded a decrease of 8.5 percent, while the Insurance and Lending Activities industries registered growths of 10 percent and 9.7 percent, respectively. Capital Markets, however, registered a decline of 74 percent in total liabilities to P309 million from P1.1 in 2019, due a significant decline of 95 percent in management companies and 73 percent in asset managers.
Assets Under Management (AUM) of the NBFIs recorded an increase of 2.5 percent from P49.9 billion in 2019 to P51.1 billion in 2020. The report attributed the increase to the assets of Non-CIUs (Collective Investment Undertakings) growing by 3.5 percent from P36.6 billion in 2019 to P37.9 billion in 2020. “When expressed as a percentage of GDP at current prices, AUM of local investment institutions registered growth of 3 percent from 25.3 percent in 2019 to 28.3 percent in 2020,” the report says.
Retirement Fund investments by local managers had an increase of 6.8 percent from P38.5 billion in 2019 to P41.1 billion in 2020 despite the adverse negative impact of COVID-19 on the economy. In addition, CIU assets recorded a slight decline of 0.3 percent from P13.3 billion in 2019 to P13.2 billion in 2020 here has been a growth of 7.2 percent in the Gross Written Premiums of Life Insurers from P3.9 billion in 2019 to P4.1 billion in 2020. Overall, the assets of the Life sector also registered an increase of 5 percent from P17.2 billion in 2019 to P18.0 billion in 2020.