17 July 2008
editorial
The Botswana Building Society (BBS)'s recent launch of its housing loan product, otherwise known as Pinagare, is a major milestone in promoting home ownership and investment in the country.
But there are some critical issues that one has to examine in order to appraise the new scheme.
Pinagare will go a long way in inducing a culture of investment among Batswana youth rather than their frivolous spending on luxuries. BBS should be commended for venturing into promotion of home ownership among the youth that has been a major concern for the nation for quite some time.
It is not understandable that Botswana is a country where young people cannot own property, particularly houses, after completing their studies at tertiary institutions. That is despite the fact that such youth in most case would be working.
On the country, they are able to get loans to buy cars, which lose their value through depreciation or careless driving.
Considering that normally housing loans run for a 25-year repayment period, the Pinagare scheme launched by BBS runs for 30 years. Coupled with that, the lending rate is 14.5 percent, which is prime minus 2.5 percent.
Other institutions must join the BBS in ensuring that the craft lending policies are flexible and encourage property ownership. Government should also wake up to the call to ensure that access to home ownership is achieved through deliberate policies that make it easy to access funding within reasonable time.
For instance, while government has schemes that promote home ownership, there are concerns that it takes too long for housing loans to be processed in comparison to car purchase!
The question is: How many young Batswana will benefit from the scheme given the high rate of unemployment among the youth who are the target of the scheme?
Realistically, can the youth of 30 years old afford mortgages with the paltry remuneration that employers pay inexperienced youth?
Other than that, inflation and soaring fuel prices also erode people's disposable income making it difficult for them to service their mortgages.
At another level, lack of education on personal financial matters also contributes to the situation where a lot of Batswana end up in debt.
Can the youth really manage where their parents, including political leaders, have failed?
It is a common phenomenon to find people of high status who should be role models in their own right being auctioned off for failure to pay their mortgages.
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