Botswana’s commercial banks recorded a P2 billion decline in household lending in May 2026, reflecting the ongoing pressure of elevated borrowing costs. According to the latest Botswana Economic and Financial Statistics report from Bank Botswana, total annual bank lending fell by 0.2 percent in May, a sharp contrast to the 2.5 percent growth seen in January.
The household sector was the primary driver of this downturn. Lending to households dropped 3.6 percent to P55 billion in May 2026, down from P57 billion in the same month last year. Lending to the business sector also slipped, decreasing 0.3 percent from P33.51 billion in May 2025 to P33.40 billion in May 2026.
Within the business sector, the financial services industry experienced the most significant decline, with lending falling by P839 million to P2.12 billion. Other sectors such as trade, mining, and construction saw reductions of P619.6 million, P246 million, and P85.3 million, respectively. Manufacturing and agriculture also contributed to the drop, with lending declining by P62.8 million and P7.3 million.
Local economist Keith Jefferis attributed the downward trend in lending to the high cost of credit amid elevated interest rates. “Due to weaker economic activity and high credit risks, banks are more cautious when lending to the household and business sectors,” he explained.
Jefferis noted that the decline in lending occurred despite improved bank liquidity between January and April 2026. Excess liquidity rose from 6 percent of total banking assets in January to 8 percent in April, while deposits increased by 5.1 percent to P115.24 billion. “The banks now have ample funds to lend, but nevertheless credit growth has dropped to almost zero, largely due to high interest rates that make the cost of borrowing prohibitive,” he said.
He also pointed out that, while lending to households and firms has contracted, lending to parastatals is on the rise, likely because banks can secure higher interest rates backed by government guarantees. “The negative annual growth in lending to households is unusual, and indeed has never happened previously at any point over the past 30 years,” Jefferis added.
The economist previously warned that high interest rates could dampen investment in Botswana, as borrowing for business expansion becomes increasingly unaffordable for many households and firms. Global analysts have projected subdued fixed investment this year, following data showing a P1.2 billion decline in fixed asset investment, from P11.6 billion in the first quarter of 2025 to P10.4 billion in the first quarter of 2026, covering infrastructure, transport equipment, and plant machinery.