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NBFI sector soars high

Despite the financial year 2021/22 characterized by the adverse effects of Covid-19 at global level and locally, the Non Banking Financial Institutions(NBFI) sector continued to be relatively stable with the asset base recording an 18.4 percent growth to reach P153 billion in 2021 from P129 billion which was noted in 2020.

Therefore this accounts for 57 percent market share in the local financial services sectors.

The growth is attributed to the retirements fund industry which continues to be bullish in the NBFI sector accounting for 72 percent of 2021 good performance of the sector.

Further, licensed entities under the sector increased from 786 to 799 between 2020 and 2021 despite the challenging global and domestic environment.

Nonetheless, the P145 billion assets from the sector is characterized by P24 billion in insurance industry assets, P110 billion from retirement funds, P12 billion and P8 billion from the Capital market & Assets under management and the lending industries respectively.

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“The sector is relatively stable and buoyant with no obvious vulnerabilities in the short to medium term. The growth in the NBFI sector assets and capital was strong in spite of the challenging conditions and the sector remains financially sound,” said Non-Bank Financial Institutions Regulatory Authority(NBFIRA) Chief Executive Officer Oduetse Motshidisi at the launch of the 2022 Report in Gaborone on Wednesday.

Though the turbulence brought about by the pandemic continues to be visible, there are signs of an economic rebound though characterized by slow and uneven growth ,high inflation ,geo political tensions ,supply chain disruptions, increased commodity and energy prices. However, the growth in the asset base of the sector is a welcome development given that in the prior year ,only 2.5 percent growth was recorded.

Furthermore the sector’s financial soundness and robustness improved since it recorded an 8 percent growth in the capital position from P8.1 billion in 2020 to P8.8 billion in 2021,with the changes driven by lending activities and industries.

Meanwhile ,NBFIRA recorded a 4 percent increase in total income from P89.3 million in 2021 to P93.3 million in 2022. However, the total expenses by the authority decreased by 4 percent from P82 million to P79.1 million in 2021 and 2022 respectively.

As a result, the NBFIRA surplus increased from P8 million in 2021 to P14.8 million in 2022 due to the increased revenue generated from regulated entities. Therefore as of March 2022,NBFIRA assets stood at P46.5 million as compared to P29.9 million recorded in the previous year.

“For us the authority performed well and attained success across the key deliverables .Therefore the risk based supervision method remained the cornerstone of the supervisory approach and proved its worth during the unprecedented challenges and risks to the non-bank financial services sector and its customers in recent times,” said Motshidisi admitting that the economic recovery is yet to reach pre-pandemic levels across many parts of the world ,including Botswana.

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