SPEECH BY HIS HONOUR, DR PONATSHEGO H.K. KEDIKILWE: THE VICE PRESIDENT OF BOTSWANA.ON THE OCCASION OF THE OFFICIAL OPENING OF FIRST NATIONAL BANK OF BOTSWANA HEAD OFFICE– FIRST PLAC Director of Proceedings Minister of Finance and Development Planning, Hon. Kenneth Matambo Honourable Ministers here present Honourable Members of Parliament here present Your Worships, Judges of the High Court Governor of the Bank of Botswana, Madam Linah Mohohlo Chairman of the Board of FNB, Mr Peter Stevenson Directors of the FNBB Board Chief Executive Officer, Mrs. Lorato Boakgomo–Ntakhwana Your Worship, the Mayor of Gaborone City, Cllr Haskins Nkayigwa Senior Government Officials and Parastatal Heads and Captains of Industry. Management and Staff of First National Bank of Botswana Limited Members of the Fourth Estate - the Media Distinguished Guests Ladies and Gentlemen A very good afternoon to you. Thanks for the invitation. Thanks for the opportunity that enables me to pontificate; the opportunity to pronounce the beatitudes, ex cathedra. This is a momentous occasion to mark the official opening of the FNBB Head Office - First Place. A home to more than 800 employees and includes a branch, a bulk cash facility, staff double basement parking, and customers designated parking, a gym and a staff cafeteria. A rather congenial working atmosphere. This Head Office, I gather, is a continuation of the Bank’s broader strategy to bring all its business areas, product and services under one roof; Firstly, to benefit from synergies and cost efficiencies of bringing all Divisions under one roof. Secondly, to create a one-stop-shop for customers and lastly to create a conducive place for staff to work and customers to do business. This Head Office Structure is an exquisite architectural masterpiece that enjoys a remarkable state of the art finishing touch. It has presence, presence which has changed the landscape of the Central Business District. This high quality business environment should strengthen Botswana’s position as a global business and financial hub. The financial sector plays an important role in the economic development of any country. Better developed financial systems-mostly aided by access, efficiencies and stability measures are associated with faster economic growth. Botswana’s financial sector is relatively well developed and has a potential to contribute much more to the achievement of sustained broad-based growth. It is in this respect that the Government expects a strong and vibrant financial system to play a critical role in the development of the economy. According to Bank of Botswana Data Chart, the Botswana banking and financial services sector account for more than 3.8% of the GDP. This sector has experienced slow growth. Director of Ceremonies, the financial sector in Botswana is one of the sectors that have been identified to have potential as an alternative source of economic growth and diversification. Of note is that during the global financial and economic crises in vogue, the financial sector in Botswana has shown remarkable resilience with no cases of bank failures. On the contrary, the number of commercial banks increased to 11 with the addition of two new banks during the 2009/2010 financial year. This state of affairs reflects a robust supervisory and oversight role played by the Bank of Botswana. To this end, I am pleased that Botswana continues to get favourable ratings internationally. Exampla Gratia or e.g. Standard & Poor’s has released the 2013 Sovereign Credit Rating and Botswana retained the “A-“ for the long-term and “A-2” for the short-term ratings. The Bank of Botswana in consultation with the Ministry of Finance & Development Planning will continue to apply appropriate supervisory standards over the financial institutions under its jurisdiction to pre-empt any institutional fallouts which could constrain prospects for economic growth and diversification. These standards of supervision and governance have, to a significant extent, been extended to the rest of the financial services sector through the establishment of the Non Bank Financial Institutions Regulatory Authority. These efforts clearly demonstrate that government is determined to ensure that our banks and other financial institutions operate professionally in a stable and well regulated environment. The financial industry in Botswana and the world over is now at an important juncture. Domestically, we are viewing it as a sector with potential means of diversifying the economy. Globally, the industry is undergoing fundamental scrutiny and review. There are new regulations to manage systemic risks, for example, Basel III, regulating derivatives trading, liquidity requirements. There is new anxiety about tax evasion and money laundering; new political pressure on banks and on bankers. Within this context, we continue to seek a stable financial sector to benefit the economy and by extension the people. FNBB has made great strides in growth as a bank. Today, the establishment of a multi-million Pula Head Office adds to the several milestones that the Bank has achieved since its inception 22 years ago. The Bank has been in the forefront of the banking industry attributable to its diverse, efficient and innovative products. Much as I have commended First National Bank of Botswana Limited (FNBB) for its positive contribution to the Botswana banking system, there are a number of challenges facing the financial sector in Botswana. In this regard, I wish to make some poignant observations. Firstly, despite high levels of profitability and solvency of banks in Botswana, FNBB included, the banking system generally does not seem to invest adequately in human capital, payment infrastructure, public education and other social projects. This explains, in part, the comparatively low operating and infrastructure costs which do not necessarily reflect banking sector high productivity and efficiency. I am aware that FNBB has a Foundation that finances social responsibility projects. Nevertheless, the social projects financed so far, are so very small when compared with what is in place in other countries of the region, particularly where your bank is headquartered. Secondly, capacity building is of crucial importance to the development of a sound, efficient, innovative and responsive financial sector. Batswana need to be exposed to the intricacies of banking, such as treasury management, wholesale and investment banking, in a bid to developing a pool and supply of relevant skills in the country. This will ensure that citizens are adequately prepared for meaningful roles in the leadership and management of banks. The skills deficit could also partly explain a growing trend of migration of core banking activities, such as Information Technology support functions, to regional group centres. While cost synergies and economies of scale generally yield positive efficiency benefits to banks, this consideration should not be at the expense of local capacity building and skills development as well as job creation. It is therefore highly desirable for banks to devote a reasonable portion of their budgets to training and skills development; even academic training for deserving staff, as this would lessen the Government burden of financing the education sector. Thirdly, Banks are the primary operators of the payment system and, collectively, they need to show willingness to invest in the country’s payments infrastructure to enhance its security and efficiency. It is hoped that banks will take advantage of the recent developments in payment technology and systems to put in place more cost-effective, timely and secure settlement of commercial transactions. Indeed it’s about time that financial transactions in Botswana, especially cheque clearance, should take place in a shorter period than the current maximum period of four days. The reasons for this length of time continue to illude me. Fourthly, the Government recognises that cost-effective access to financial services by the wider community, including small and medium scale enterprises and the rural population, is a key element of the policy mix required for the promotion of a more inclusive financial sector; it is also an indispensable tool for poverty eradication. In this regard, the cost of financial intermediation in Botswana is a disincentive and a constraint to the financial inclusion agenda. It is also important for banks to design special products that cater for the needs of women’s businesses, their social responsibilities especially with respect to family financial security and children’s education. With regard to bank charges, it is expected that the cost of loans should be low, given that monetary policy is accommodative. But I am reliably informed that, in addition to the onerous arrangement fees and credit insurance protection for loan facilities, some banks continue to charge very high interest rates for retail loans. A reasonable balance should be struck between the drive for profitability and fair pricing for products and services. Fifthly, it is in the public interest that banks streamline the multiplicity of bank transaction charges, including avoiding onerous fees on savings accounts. These charges are a disincentive to savings mobilisation especially for the low-income group. What is equally undesirable is the high bank charges that are not commensurate with the quality of banking services in Botswana, as reflected in slow service at bank counters, long queues at banking halls and ATMs, especially at month end. Six, consumers who are empowered with information and skills make better financial decisions and are more likely to utilise financial services productively. Therefore, increased public education and financial literacy through programmes such as “First Issues” series on Btv, consumer awareness campaigns, regular market commentary on financial news, and similar activities will strengthen the knowledge, understanding and behaviour required for making sound financial decisions. Seven, on a positive note, the growing partnership between banks and mobile cell-phone operators in providing financial services, especially domestic remittances, sms alert and payments for utilities and other services, is a welcome development from the perspectives of financial inclusion, risk management and general economic development. At my recent Smart Partnership Conference in Tanzania, the issue of financial inclusion featured rather prominently.It is widely accepted that the banking sector plays a central role in the economy of any country by intermediating between savers and borrowers. In turn, financial institutions and markets safeguard savings, provide the financing required for a growing private sector and make an important contribution towards the sustainable economic growth and job creation. As indicated in NDP 10, the Government would like the banking sector to be more proactive and innovative in supporting economic activity including ensuring productive employment of the liquidity, rather abundant, in the banking system by identifying bankable projects and other viable lending opportunities. This can be achieved if banks take initiatives to encourage productive ventures, provide advisory services and finance public projects which require large investment outlays. In this regard, the Government has embarked on a number of large infrastructure projects, such as power (electricity) generation, upgrading of the water infrastructure, tertiary education establishments, and others, all of which require long term financing. In the absence of a vibrant capital market, the Government has had to provide the required financing for such projects. Ideally, the financial sector and, in particular banks of the size of FNBB and others, should be partnering with relevant government agencies and utility corporations to provide financing strategies and instruments suitable for such ventures. We need to see more of the syndicated loan structures similar to the approach adopted in financing the Morupule project. I+t is expected that banks should do more to identify themselves with the socio-economic aspirations of the country. As we celebrate this achievement, I wish to urge financial institutions to strengthen their security systems to guard against incidents of fraud where customers lose money from their accounts. This should be seriously addressed to retain the confidence of customers. I am impressed that FNBB continues to educate customers on vigilance and anti-fraud measures. In conclusion I wish to commend and congratulate the Board of Directors and Management of FNBB for taking another step in the right direction to build a state of the art Head Office in this part of the city. It is now my pleasure to declare the First National Bank of Botswana Head Office-First Place, officially open. Thank you. PULA !
Posted on: Tue, 06 Aug 2013 07:09:27 +0000
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