Making Access Possible BWP Botswana Demand, Supply, Policy and Regulation Diagnostic Report 2015 Table of Contents Table of Contents ............................................................................................................. i List of Figures ................................................................................................................. iv List of Tables ..................................................................................................................vii List of Acronyms and Abbreviations ................................................................................ ix Executive Summary ....................................................................................................... xiv Introduction ......................................................................................................................... xiv Analysing financial inclusion in Botswana ........................................................................... xiv Context drives scope for market development .......................................................... xiv Regulatory framework and financial inclusion ............................................................ xv Current usage of financial services .............................................................................. xv Priority target markets needs ..................................................................................... xvi Small but diverse provider landscape ........................................................................ xvi High level financial inclusion trends ........................................................................... xvi Financial Inclusion Priorities ............................................................................................... xvii Improve the payments eco-system ........................................................................... xvii Facilitate low cost, accessible savings products ....................................................... xviii Develop accessible risk mitigation products ............................................................ xviii Improve the working of the credit market ............................................................... xviii Develop pension provision ......................................................................................... xix Cross-cutting initiatives .............................................................................................. xix Policy & regulatory environment ............................................................................... xix 1. Introduction ............................................................................................................. 1 What is MAP ...........................................................................................................................1 Scope and methodology .........................................................................................................2 Guide to reading this document ............................................................................................3 2. Country Context ....................................................................................................... 5 Physical Context and Infrastructure .......................................................................................5 Size and Infrastructure ..................................................................................................5 Land Tenure and Administration ...................................................................................7 Socioeconomic Context ..........................................................................................................8 Health System and HIV & AIDS ................................................................................... 15 Government programs and welfare programs .......................................................... 17 Political Context .................................................................................................................. 19 Macroeconomic Context ..................................................................................................... 19 Economic Growth and Diversification ........................................................................ 19 Economic Integration and Trade ......................................................................................... 24 3. Overview of the Botswana Financial Sector ............................................................. 25 Introduction ......................................................................................................................... 25 Institutional Overview ......................................................................................................... 25 Distribution channels .......................................................................................................... 30 Traditional channels ................................................................................................... 30 Alternative channels ................................................................................................... 34 Supporting Financial Sector Infrastructure ......................................................................... 36 Credit Information Sharing ......................................................................................... 36 Capital Markets .......................................................................................................... 37 Foreign Exchange Markets ......................................................................................... 37 i 4. Policy and Regulatory Framework ........................................................................... 38 Policy initiatives for financial inclusion ............................................................................... 38 Regulatory Framework ........................................................................................................ 39 Banks .......................................................................................................................... 41 Payments Systems ...................................................................................................... 43 NBFIs ........................................................................................................................... 44 Insurers ....................................................................................................................... 45 Pension Funds ............................................................................................................ 47 Non-bank lenders ....................................................................................................... 48 Co-operatives and other group-based mutual financial service providers ................ 48 Other Financial Legislation ......................................................................................... 49 Other Relevant Legislation ......................................................................................... 49 Consumer Protection .......................................................................................................... 51 5. Demand Side Analysis ............................................................................................. 52 MAP Qualitative Research Analysis ..................................................................................... 52 Take up of Financial Services ............................................................................................... 54 Access Strands ............................................................................................................ 54 Regional Access Comparison ...................................................................................... 56 Usage across localities ................................................................................................ 57 Usage across Products ................................................................................................ 58 Breadth and depth of usage ....................................................................................... 60 Segmenting the Market ....................................................................................................... 63 Formal Income Group ................................................................................................ 67 Informal SMEs ............................................................................................................ 71 Informally Employed .................................................................................................. 72 Farmers ....................................................................................................................... 74 State Dependents ....................................................................................................... 76 Private Dependents .................................................................................................... 78 Target Market Conclusion .......................................................................................... 80 6. Credit ..................................................................................................................... 82 Introduction ......................................................................................................................... 82 Current Usage