Banking Sector Due For A Facelift

  • Although the entities were not entirely new, the recent granting of two new banking licences by the Bank of Botswana should shake things up for the benefit of the consumer in the banking sector.


The commercial banking sector may be in see vigorous competition that should result in greater benefit to the consumer.

While no completely new bank has entered the market, the recent granting of two new licences by the Bank of Botswana (BoB) of has given the sector a facelift. The year 2021 has seen BBS Limited, a statutory financial institution by origin, being granted a provisional banking licence to conduct activities in the commercial banking sector.

Thereafter, Access Bank Botswana Limited was granted a banking licence to transact commercial banking business in Botswana following its acquisition of majority shares (78.15 percent) in African Banking Corporation Holdings Limited in African Banking Corporation of Botswana Limited’s BancABC Botswana.

Access Bank is a pan-African bank with headquarters in Nigeria. Accordingly BancABC is now called Access Bank Botswana Limited.

The number of licensed commercial banks in Botswana did not materially change. When the central bank finally grants BBS Limited an absolute banking licence, that will bring the number of commercial banks in the country to 10. According to Bank of Botswana, as at 31 December, 2020 the number of licensed commercial banks was nine.

The view of a boost in competition borrows from the trend that was observed when First National Bank Botswana (FNBB) entered the market in 1991. For a long time until then, Botswana’s banking sector was oligopolistic as it was dominated by two British banks, Barclays (now ABSA) and Standard Chartered (StanChart). Along the way came FNBB and its entry was characterised by robust expansion. FNBB quickly climbed to the top and has remained there with ABSA and StanChart.

BoB’s 2020 banking supervision annual report indicates that the large banks in Botswana are ABSA, StanChart, FNBB and Stanbic. The small banks are BancABC (now Access Bank PLC), Bank of Baroda, Bank Gaborone, FCB, BoI and Bank SBI . The remarkable expansion of FNBB is captured by the study of Charles Harvey titled “Banking Policy in Botswana: Orthodox but Atypical,” which narrates the bank’s fortune of opportune acquisitions that it made, which catapulted it to play in the big league.

The study states that FNBB took over Zimbank Botswana, Bank of Credit and Commerce Botswana and Financial Services Company. “It therefore became large enough to compete with the established banks in a very short period of time, including competition for large corporate customers from which newly established banks, being small initially, would normally be excluded by prudential limits on the percentage of capital that could be loaned to any one customer,” the study observed.

FNBB went on to show aggression by bagging quite a number of ‘firsts’ in the local banking sector, many of which have come to be of good service to consumers. It may have been that FNBB leveraged certain situations which allowed favourable acquisitions, but it also proved to be a force to be reckoned with by actively competing to rise to the top.

Additionally. With Stanbic Bank put into the competition mix it was then that the oligopolistic nature of the banking sector was no more. This demonstrated that the race is not about who was first in the game.

The entry of BBS Limited and Access Bank PLC should become another key ingredient in changing the flavour of the local banking sector. BBS Limited comes in with an advantage of mortgage lending, a long standing strength since its origin. If BBS Limited uses this advantage, it could not only advance its position but also bring about benefitting developments. Access Bank PLC, on the other hand, is one of the top banks in Nigeria with a strong footprint in Africa.

The Competition Authority concluded that the takeover of BancABC will not change its market share because Access Bank is a new entrant into the Botswana banking industry without existing banking activities. It added that Access Bank will not obtain any dominant position on account of the transaction. Nonetheless, the Authority noted that the merger “provides an opportunity to implement the acquiring enterprise’s expansion strategy throughout the country and this will not only bring competition in the banking services but also employment”.

It remains to be seen how aggressive Access Bank’s expansion strategy will be and to what extent it will shake things up in the local banking sector.