What is microfinance in Botswana

Microfinance institutions (MFIs) provide small-scale financial services, mainly loans but sometimes savings or insurance, to people or enterprises that might be underserved by traditional banks. In Botswana, microfinance is part of the broader non-bank financial sector.

Regulatory framework

Microfinance and microlending are regulated under the Non-Bank Financial Institutions Regulatory Authority (NBFIRA). The key regulations include:

The Non-Bank Financial Institutions Regulatory Authority Act, 2023, which strengthens the authority’s powers.

Micro Lending Regulations, which govern licensing, disclosures, conduct, and fair treatment of customers.

Rules requiring every micro lender to be licensed, maintain minimum financial requirements, ensure “fit and proper” standards for management, and comply with fair marketing and disclosure practices.

Key players

Some of the major microfinance institutions in Botswana include:

Letshego Financial Services Botswana (Letshego Botswana) – One of the largest MFIs, originally focused on unsecured loans to formally employed individuals, now expanded to include micro and small enterprise lending.

Pachi Micro Solutions – A non-bank financial institution licensed to provide microfinance services.

Agora Microfinance Botswana Limited (AMB) – A newer entrant, part of the Agora Microfinance group, licensed as a financing company.

Peo Finance – An institution working to expand financial inclusion, supported by international partnerships.

There are over 200 registered micro lenders across the country, making the sector highly fragmented.

Challenges

Microfinance institutions in Botswana face several challenges:

Access to funding – Many struggle to obtain stable and affordable capital to grow.

Regulatory compliance – Licensing and financial requirements can be difficult for smaller operators.

Fragmentation – The sector has many small players, making it hard to achieve scale and efficiency.

Borrower risk – Many clients have variable or informal incomes, raising repayment risks.

Limited product range – Services are often focused on simple credit products, with savings, insurance, and more flexible offerings less developed.

Recent trends and opportunities

New institutions are entering the market, showing demand and growth potential.

International organizations have started investing in MFIs to strengthen liquidity and capacity.

Updated regulations aim to improve oversight and consumer protection.

Financial inclusion remains a policy priority, with microfinance seen as a key tool to reach underserved populations.