Lending to parastatals in Botswana increased sharply in the year to August 2026, even as commercial banks reduced credit to businesses and households, raising questions about the changing direction of bank financing.
The Bank of Botswana’s October 2026 Monetary Policy Report shows that lending to parastatals grew by 17.2 percent in the 12 months to August, compared with growth of 2.7 percent in the corresponding period a year earlier.
The increase, which the central bank attributed largely to loan drawdowns, contrasts with a contraction in overall business lending. Credit to businesses declined by 1.2 percent, while lending to businesses excluding parastatals fell by 2.8 percent, reversing an 8.6 percent expansion recorded in the year to August 2025.
The figures point to a growing divergence in access to bank financing between state-owned entities and private businesses, many of which remain important drivers of employment and economic activity.
The report says the decline in private business credit was mainly attributable to repayments of overdraft facilities and loans across several sectors, including agriculture, mining, manufacturing, construction, trade, tourism and real estate.
While increased lending to parastatals does not necessarily mean banks are deliberately favouring state-owned entities, the contrasting trends raise questions about credit demand, risk appetite and the ability of private businesses to secure financing.
The central bank also cautioned that sustained growth in government borrowing could increase banks’ exposure to the public sector and potentially compete with private-sector credit for available funding.