Housing Finance in Botswana


This profile is also available in French here.

To download a pdf version of the full 2020 Botswana country profile, click here.

Botswana is one of the world’s fastest-growing economies, averaging five percent per annum over the past decade. The southern African nation is classified as an upper-middle income country with a GDP per capita of US$7 971 – high by sub-Saharan African standards. Botswana has a population of approximately 2.3 million with an urbanisation of 72.3 percent. This is expected to reach 84 percent by 2050.

Botswana is fortunate to have comparably low inflation rates, which has fuelled property investment as home prices have not only kept up with inflation but outpaced it. Property developers thus earn a positive return through escalating rentals and home prices and have propelled the market to develop more properties to increase the yield value.

The necessary conditions for the development of an efficient housing market exist in Botswana – adequate housing finance, a stable macroeconomic environment, a functioning property market and mortgage market infrastructure. Banks have played a key role in extending mortgage lending, with loan-to-value (LTV) ratios of between 90 percent and 100 percent for commercial banks and up to 100 percent for quasi-government organisations. As part of its measures to mitigate the economic impact of COVID-19, the Bank of Botswana reduced its benchmark interest rate by 50 basis points to 4.25 percent in April 2020.

In general, however, mortgage uptake has been slow in Botswana. This can be attributed to low incomes and high property prices. Affordability has been eroded by the economic slowdown, rising unemployment (currently at 22.2 percent), lower salaries, high land prices and rising local costs of imported materials that make up a considerable portion of the final sales price of residential units.

There are many key actors in the formal housing process in Botswana, including the Botswana Housing Corporation (BHC) which is a public enterprise that concentrates its efforts on main urban centres.

Government initiatives that finance younger lenders provide first-time homebuyers with the opportunity to purchase high-density and multi-residential units. Other programmes include Instalment Purchase Schemes/Agreements, the Self Help Housing Agency (SHHA), and the SHHA Turnkey programme which involves the design and construction of basic houses for eligible low income households.

The role that private property developers play in providing housing is worth noting, as it reduces pressure on state housing provision in Botswana. There are more than 685 property development companies in Botswana. However, the unavailability of affordable land has caused a spike in property prices and rentals, with the demand for housing exceeding supply.

Find out more information on the housing finance sector of Botswana, including key stakeholders, important policies and housing affordability:

Each year, CAHF publishes its Housing Finance in Africa Yearbook. The profile above is from the 2020 edition, which has up-to-date profiles for 55 African countries.

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