By Staff Writer | for Moakanyi Magazine
This is an extract from the introduction and executive summary of the report on financial inclusion in Botswana, a road map by the Government of Botswana. The report says;
Financial inclusion can aid national growth and welfare in a number of ways, notably by helping generate employment (by supporting farmers and SMMEs), developing human capital (financial services for access to education and to mitigate health risks), and by directly improving household welfare (products to support household needs, new technologies that reduce cost and improve access, financial services to mitigate households risks, and by aiding asset accumulation).
The purpose of the Botswana Financial Inclusion Roadmap is to assist the government and stakeholders to identify and implement actions that best improve financial inclusion in support of these goals, based on the research as documented in the diagnostic report.
The diagnostic is based on the application of the MAP diagnostic and programming framework, which explores the linkages between financial inclusion and the real economy so as to impact people’s welfare. It is set apart from other diagnostic exercises in that it: (i) sets a detailed understanding of the target market and their needs at the core of the analysis; and (ii) is fundamentally linked to a multi-stakeholder process towards the implementation of a roadmap for financial inclusion.
The key research findings from the diagnostic are captured in the comprehensive demand-side, supply-side and regulatory analyses (“Making Access Possible: Botswana Country Diagnostic Report’’, 2015) prepared by Econsult Botswana with support of the Centre for Financial Regulation and Inclusion (CENFRI). The diagnostic report and the accompanying summary (MAP Botswana Synthesis Report, 2015) include a comprehensive study of four product markets: credit, payments, savings and insurance, and therefore provide an understanding of financial inclusion in a broad context.
The demand-side component includes an analysis of access, usage, perceptions and attitudes of financial services by target groups. The demand-side analysis draws from quantitative data provided by the Botswana FinScope Survey 2014 and qualitative research in the form of Home Visits and Key Informant Interviews. The research was supplemented by information from the national Population and Housing Census of 2011, and the 2009/10 Botswana Core Welfar Indicators Survey (BCWIS).
The sampling framework and weighting for FinScope is based on the 2011 census data, and was developed in close collaboration with Statistics Botswana
This roadmap summarises the findings of the diagnostic, and presents a way forward on the recommended priority areas. It is unique in that it is based on a comprehensive diagnostic, has been developed in a stakeholder intensive process, and has a strong implementation focus.
MAP Botswana was requested by the Government of Botswana as input towards the development of a financial inclusion strategy for Botswana. The Ministry of Finance and Development Planning has set up a steering committee for the MAP project to guide the process.
The Botswana Financial Inclusion Roadmap 2015 – 2020 lays out the national priorities for the enhancement of financial inclusion in Botswana, in order to help improve citizen’s welfare and support national objectives. The Roadmap is based on the diagnostic findings contained in the Making Access Possible: Botswana Country Diagnostic Report, 2015, which in turn draws on in-country research and interviews, demand-side analysis from quantitative data provided by the Botswana FinScope Survey 2014 and qualitative research.
The Making Access Possible (MAP) Botswana research and programme has been conducted at the formal request of the Government of Botswana through the Ministry of Finance and Development Planning (MFDP), in order to inform the financial inclusion agenda in Botswana.
The research demonstrates that the issue of basic access in Botswana has been largely resolved: formal access stands at 68%, with most segments having broad access to financial services – 46% of adults use more than one product category (i.e. savings, credit, insurance and payments).
However, access is still a challenge in certain segments, and 24% are completely excluded, mainly in the lower income, rural and remote populations. Men have a slightly higher level of formal access (71%) compared to women (65%).
This duality in the financial inclusion realities of Botswana is reflected in the main opportunities identified to improve financial inclusion, being (1) assisting the excluded and often vulnerable communities to get access, which will need to build on social welfare and subsidised provision as most financial institutions do not see profit-making opportunities in these mainly rural, often poor, and remote locations, and (2) deepening financial inclusion for the included population through improved efficiencies and value for money products.
These two opportunities are reflected in the policy goal chosen to provide a vision and direction for financial inclusion, which is as follows:
“Improve household welfare, increase economic efficiency and support growth by reducing the percentage of adults who are excluded from 24% to 12%, and increasing those with access to more than one formal financial product from 46% to 57% by 2021 by extending financial inclusion to lower income households and target groups that are currently less well served; enhancing financial sector infrastructure, encouraging competition, improving regulation and reducing risks; and facilitating well targeted credit to productive enterprises and for investment in assets ”.
The Roadmap proposes six priorities to support this goal, namely (1). Developing the payment ecosystem (2). Facilitating low cost savings, (3). Developing accessible risk mitigation products, (4). Improving the working of the credit market, (5). Consumer protection and empowerment, and (6) National coordination.
These priority areas of action have been identified based on the most urgent customer needs and barriers identified in the MAP research, and will further inform the financial inclusion agenda over the next planning cycle, and inform broader sector strategies as these are developed, i.e. the Financial Sector Development Strategy and the National Development Plan (NDP11).
It is envisaged that the proposed interventions will result in an increase in depth and quality of financial inclusion in Botswana, in order to enhance citizen welfare, create economic growth, and hence support national goals.
