Findings from the Bank of Botswana’s (BoB) Household Indebtedness Survey show that household debt continued to rise, albeit at a moderate pace of 2.5 percent, from P68.6 billion in December 2024 to P70.3 billion in December 2025.
Accordingly, BoB says the increase highlights the need to assess whether household balance sheets remain resilient in the face of a more challenging economic environment. The Survey indicates that household indebtedness remains concentrated among males and borrowers aged 40 to 49 years.
Meanwhile, the central bank says debt servicing costs continue to place significant pressure on household finances, as reflected by an elevated debt service-to-income ratio of 63 percent. Despite the relatively high debt service ratio, other macro prudential indicators do not currently point to excessive household credit growth.
The household credit-to-GDP gap is estimated to have been negative in 2025 and broadly consistent with the downward phase of Botswana’s financial cycle, characterised by tighter liquidity conditions, moderating credit growth and weaker economic activity.
The assessment is reinforced by Survey responses from lenders, which indicate a more cautious lending environment, with banks focusing on preserving asset quality, managing liquidity and limiting exposure to vulnerable borrowers.
On the other hand, micro-lenders are concerned about affordability and repayment risks. For the survey period, hire purchase providers reported subdued demand, reflecting weaker household spending conditions.
According to the survey, the average default rate recorded by banks increased to 4.7 percent in 2025 from 2.0 percent in 2024, indicating deterioration in underlying household credit conditions.
However, the ratio of non-performing loans (NPLs) for the banking sector remained largely stable at 3.3 percent in December 2025, relative to 3.4 percent in December 2024, suggesting that the default rates were not immediately translating into asset quality concerns.
The survey collects data from commercial banks, micro lenders and hire purchase providers to monitor developments in household credit and assess potential risks to financial stability.
