OFFICIAL LAUNCH OF BANK GABORONE MAUN BRANCH
Keynote Speech
by
Moses D Pelaelo
Governor, Bank of Botswana
September 11, 2017
Good morning and thank you all for being part of the
official opening of the Maun branch of Bank Gaborone.
Today marks yet another important milestone in the history
of Bank Gaborone in Botswana. Last year, on March 22,
the bank opened its doors to the residents of Palapye, that
was just two years after the opening of the Kang branch
(in 2014) in Kgalagadi North, where, by the way, to date,
Bank Gaborone is the only bank in that village. It is,
therefore, commendable that in a period of three years,
Bank Gaborone has added three new branches, to take the
total to 9 and 17 Automated Teller Machines (ATMs). This
becomes even more significant if we consider the fact that
Bank Gaborone started its operations in Botswana in 2006
and, in a relatively short period of 11 years, it has
expanded its network of branches, comparable in number
to, or even, surpassing some of the older banks in the
country. The bank also provides electronic banking
services, which further extends its coverage and footprint.
I should also recognise that, Bank Gaborone employs 261
people, mostly Batswana, hence, contributing to the
economic and social well-being of the employees and their
families.
Distinguished Guests, what I have just said about Bank
Gaborone, demonstrates a clear commitment and
Botswana's financial inclusion
contribution to agenda. The
strategy of expanding the branch network beyond cities,
potentially opens up access to banking services to a
greater number of individuals and businesses, including
small and medium scale enterprises and, indeed, the
informal sector. By so doing, Bank Gaborone is adding to
the inputs and resources needed to enhance productivity of
economic pursuits, and for the community to harness and
profit from business opportunities. The extended outreach
of financial services being undertaken by Bank Gaborone
with the nation's Financial Sector
accords well
Development Strategy and, ultimately, contributes to the
aspiration of inclusive economic growth.
Distinguished Ladies and Gentlemen, as you may be aware,
Bank Gaborone is a member of the Capricorn Group - a
financial services group with its roots in Namibia, offering
banking, insurance and asset management services in
Botswana, Namibia and Zambia. In Botswana, the bank's
financial position has grown steadily since commencement
of operations, in 2006. Total assets increased from P268
million in June 2007 to P4.6 billion in June 2017; lending
increased from P197 million to P3.2 billion in June 2017;
while deposits grew from P188 million to P3.9 billion in
June 2017. The bank has, therefore, in a relatively short
period, mobilised approximately P4 billion worth of financial
resources. These resources have been productively
employed and distributed, in the form of loans and other
credit facilities, to support real economic activity in diverse
sectors across Botswana, including consumption spending.
As a regional bank and being relatively new, it is expected
that the bank and its design of products will continue to be
well aligned to contemporary domestic market
requirements. Notably, for the area around Maun, this
branch of Bank Gaborone is invariably expected to support
the various facets and business value chains in the tourism
and agricultural sectors associated with this region. In this
way, Bank Gaborone would be contributing to sustainable
economic activity and inclusive growth in this part of
Botswana.
It is worth pointing out that the tourism industry, of which
Maun is a significant player, accounted for 3.9 percent of
the country's Gross Domestic
Product (GDP) in 2016,
through industries such as hotels, restaurants, travel
agents, airlines and other passenger transportation
services. The same industries contributed 2.6 percent to
total employment in 2016.
It is therefore expected that the provision of additional or
enhanced financial services, in the form of transactional
accounts, savings products, credit extension, payments
and other banking services offered by Bank Gaborone, as
well as other players of course, should help sustain the
contribution of the tourism sector to GDP. In turn, this
should foster economic diversification and broad-based
private sector development, both of which are critical for
endurable economic growth and raising living standards of
our people.
To the Maun residents and North West community, in
general, w e should recognise that the Maun branch of Bank
Gaborone is a business that needs a good and durable
customer base in order for it to be profitable and
sustainable. Therefore, you are all encouraged to use the
branch and, of course, all other licensed banks in your
area, to save money and undertake other financial
transactions. Similarly, it is my expectation that Bank
Gaborone will take full advantage of the Botswana
payments and other public infrastructure, partnership with
mobile operators and other Electronic Payments Systems,
to enhance financial inclusion; and this includes providing
the much-needed support for the informal businesses in
Botswana in general and Maun, in particular.
Distinguished Guests, Ladies and Gentlemen,
In addition to w hat I have just said, I wish to implore the
Maun community to engage banks with viable borrowing
proposals that are sustainable and can yield positive
returns. Equally, important, and having obtained loans and
other credit facilities, borrowers should honour their
obligations by adhering to the repayment programme
agreed with banks. Distinguished Guests, I am making this
point because the Bank of Botswana is concerned about
the recent observed upward trend in non-performing loans.
While this trend could be, in part, due to sluggish global
economic activity and idiosyncratic business performance
and environment, there is some evidence of lack of
financial discipline on the part of some individuals and poor
management practices by some businesses. There is also
an undesirable creeping culture, on the part of some
customers of banks, of failing to repay their obligations to
banks according to the agreed schedule.
Let me, therefore, take this opportunity to remind you,
Distinguished Guests that, in the main, banks in Botswana
by depositors/savers' funds. Therefore
are funded mainly
the Board and management of a bank have a fiduciary duty
and responsibility to ensure that the lending and credit
underwriting standards are sound; the bank is managed in
a safe and prudent manner, to safeguard depositors' funds
and ensure that these borrowed funds are not lost through
uncollectable loans. In this context, I should therefore
caution that, where a borrower is in default, the bank is
entitled to institute lawful, procedural and ethical recovery
procedures including attachment and liquidation of property
pledged as collateral to recover its money. Moreover,
loss or writing off a loan in the bank's
providing for a
books, as a non-bankable asset, does not extinguish the
debt the customer owes to the bank. In this case, the bank
is only being prudent and adhering to sound accounting
and international financial reporting standards. The
defaulting customer continues to be obliged to repay. In
this context, let us always remember that a safe, sound
and stable banking system is a necessary condition for
sustainable economic development.
Director of Ceremonies, Distinguished Guests,
I am reliably informed that Bank Gaborone, which identifies
" to make banking a rewarding
with the mission statement:
experience for all stakeholders"
, has a strong customer-
focus orientation that should make it a good business
partner. I am also aware that customers have
demonstrated their confidence in the bank's service
delivery by voting it the " Best Bank in Customer Care" ,
during a customer service survey carried out by KPMG in
2013 and 2016. This is commendable and trust that the
Maun community will soon have a reason to validate these
accolades.
In terms of Corporate Social Responsibility, Bank Gaborone
qualifies to be called a good corporate citizen, as evidenced
by its participation in charitable activities, including
Financial Literacy Programme, through which the bank
educates Batswana on financial matters. Other Corporate
Social Responsibility initiatives include support for youth
football development; involvement in the Diabetes Apple
Project and Journey of Hope for raising breast cancer
awareness; and sponsoring Lady Khama Charitable Trust,
UB Foundation and Kang Primary School.
Distinguished Guests, Ladies and Gentlemen, allow me to
comment on a few other issues of topical interest. First,
the status of liquidity in the banking system; one of the key
economic functions of a bank is to manage and provide
liquidity to firms and other economic entities. As many of
you will be aware, liquidity and maturity transformation is
the essence of banking. In this regard, banks should ensure
that, at all times, they have adequate funds, including
contingency funding sources, to meet their financial
obligations. These obligations typically include customer
withdrawals and drawdown of loan facilities, as well as the
capacity to accommodate growth and profit opportunities,
such as new credit requirements by their clients. Therefore,
bank's
liquidity is a critical and integral component of a
operations, strategy and governance framework.
Consistent with our principal objectives, as the central
namely, " to promote and
bank and regulatory authority,
maintain monetary stability, an efficient payments
mechanism and the liquidity, solvency and proper
system" , the Bank
functioning of a soundly based financial
of Botswana monitors banks on an ongoing basis to ensure
that they continually meet the minimum prudential
thresholds, in this case, liquidity ratios; and that there is no
constraint to transmission of the monetary policy stance.
It is for this reason that, the Bank of Botswana stands
ready to inject and/or withdraw liquidity from the banking
system and, also, provide overnight credit facilities to
solvent banks, if needed, to meet temporary liquidity
shortfalls. These form of support by central banks is
common across the world, as it is central to the primary
objective of " fostering monetary, credit and financial
conditions conducive to the orderly, balanced and
sustainable economic development" of the country.
As
regards the current status and health of the banking
system, I can report that banks have sufficient liquidity,
totalling approximately P19 billion, inclusive of Bank of
Botswana Certificates and balances held abroad, both of
which could be liquidated in case of need, w ith minimal
capital loss, to finance any effective and viable demand for
credit. However, it should be noted that the distribution of
liquidity amongst banks will vary from time to time.
Distinguished Guests, Ladies and Gentlemen, the second
issue relates to the conduct of banks in accepting foreign
currency denominated deposits. Consistent with
international norms, and as is the case in many
Botswana's
jurisdictions, banking and other laws permit
non-residents to open accounts in local banks. I should
note here that, similarly, Botswana residents do open and
operate accounts in other countries, subject to compliance
with Botswana tax and other applicable laws. However,
there is a legal requirement to declare any cross-border
transfers, including cash in any currency equivalent to
P10 000 and above.
In opening accounts and accepting deposits by foreigners
(non-resident accounts), the local banks are doing so in
compliance with Botswana laws. Banks are, however,
required to consistently undertake effective due diligence,
including strict application of the Know Your Customer
procedures for any such transactions and/or customers.
These include obtaining customer identity documents,
residence status, address, business location and sources of
income; this is done at account opening and on an ongoing
basis. Banks also need to ensure that any cross-border
cash deposits and similar inward transfers are supported by
duly completed and valid documents, when processing
such transactions.
It is also important to indicate that banks have a screening
process to ensure that entities and individuals on the
International Sanctions Lists do not use the Botswana
banking system as a conduit for illegal activities and other
forms of financial crime. Banks also routinely monitor
accounts for suspicious activity and file Suspicious
Transactions Reports (STR) with the Financial Intelligence
Agency. While it is not evidence of illegality, the Report
triggers appropriate steps, including follow up action by
relevant authorities, such as the Bank of Botswana, Non-
Bank Financial Institutions Regulatory Authority and other
law enforcement agencies.
Having said that, I can confirm that both the Financial
Intelligence Agency and the Bank of Botswana continue to
monitor and enforce, in line with their respective mandate,
local banks' compliance with applicable law s, business
conduct requirements, as well as the Anti-Money
Laundering and Combatting the Financing of Terrorism
protocols.
This leads me to the third topical issue, namely, cyber-
crime and related other financial crimes. Distinguished
Guests, technology is the future of banking and many of us
welcome the benefits of new information and
communication technologies, in various facets of our lives,
including enhanced cost-effective access to financial
services and the associated convenience of conducting
banking and other transactions. However, in as much as
these technologies increase efficiencies and bring other
economic benefits, the speed, scale and the cost of any
fraudulent activity perpetrated through these channels can
be enormous, ruining the lives of many and causing major
harm to institutions and society, in general.
These financial crimes can take many forms including
bank
unauthorised cash withdrawals from customers'
accounts at Automated Teller Machines (ATMs), identity
theft, scanning and cloning of bank cards, disruption or
compromising business processes, internal fraud and, more
broadly, cyber-crime. If not properly mitigated, these
crimes can discourage members of the public from
entrusting their savings with banks and this could
undermine public confidence and trust in the banking
system. Consequently, we need to be on guard, as
institutions, businesses and individuals to mitigate cyber-
crime and other forms of financial crime risks. The
National Banking Week message by the Bank of Botswana,
in 2011, articulated the issue well as follows that;
"
combating fraud is an on-going shared responsibility by all
interested parties; it requires the involvement of the Bank
of Botswana, banks and the vigilance of members of the
public. Vigilance is all the more important as the banking
system diversifies and competition intensifies by way of
new entrants to the market, increased branch network,
new products, and progressive globalisation of banking
services" .
I trust, in closing, that the presence of Bank Gaborone here
in Maun, w ill add value to the community and the broader
region, by expanding banking services and that there w ill
be a mutually rewarding and enduring bank-customer
relationship. Mr Coetzee, once again, and through you, I
would like to thank the Board, Management and staff of
Bank Gaborone, for inviting me to be part of this occasion.
I wish Bank Gaborone every success and hope that it w ill
continue to grow and expand its services across the
country.
Distinguished Ladies and Gentlemen, it is now my honour
and privilege to declare the Maun Branch of Bank Gaborone
officially open.
I thank you for your kind attention.