Botswana - Banking and securities

Prior to 1976, Botswana belonged to the South African Monetary Area. Its currency, like those of Lesotho and Swaziland, was issued by the South African Reserve Bank. On 23 August 1976, however, the central Bank of Botswana was established, and Botswana began issuing its own currency. The Bank of Botswana has responsibility for administering exchange control delegated for it by the Ministry of Finance and Development Planning. As of 1999, the major commercial banks were the following: First National Bank of Botswana, Ltd.; Barclays Bank of Botswana, Ltd.; Standard Chartered Bank of Botswana, Ltd.; and Stanbic Bank Botswana Ltd. Total assets of the four banks came to about $14 million in January 1999. Given a high level of reserves, there was little necessity for the Bank of Botswana to raise domestic interest rates to the real levels of South Africa in an attempt to attract portfolio capital.

The policy of the Bank of Botswana in 1999 was to maintain the relative international prices, and hence competitiveness, of non-diamond tradeables against its most important trading partners, notably South Africa. In 1999, the government launched a new loan guarantee scheme to support new, small businesses in non-diamond enterprises by providing partial security for loans.

The International Monetary Fund reports that in 2001, currency and demand deposits—an aggregate commonly known as M1—were equal to $402.5 million. In that same year, M2—an aggregate equal to M1 plus savings deposits, small time deposits, and money market mutual funds—was $1.6 billion. The discount rate, the interest rate at which the central bank lends to financial institutions in the short term, was 14.25%.

In November 1996, the Bank of Botswana relaxed controls that prevented the dual listing of foreign companies on the Botswana Stock Exchange (BSE). Prior to this, any investment by a Botswanan-based entity in a foreign company was regarded as an external investment covered by the relevant rates and limits. There is now free transferability of shares between the BSE and any other stock exchanges listing the shares. Nine companies had dual listed by the end of 1998, and the BSE had recorded a growth rate of 14%. By the end of 2001, there were 16 companies listed on the BSE, and market capitalization was up 30% from 2000.

In 1998, an investment bank was licensed; Investec Bank Botswana was set up to provide merchant banking and investment advisory services. The Botswana Development Corporation (BDC) and the National Development Bank (NDB) offer specialized development assistance.