Lending and borrowing between relatives and friends in Botswana

A practice rooted in the extended family

In villages as in Gaborone's suburbs, advances between brothers, cousins or colleagues pay for hospital bills, a bogadi or a trip. These loans rest on a spoken promise and rarely on anything in writing, which makes disputes harder to resolve.

The motshelo, a neighbourhood savings club

A motshelo brings together members who contribute monthly in pula and either share out the pot or lend to participants at an interest rate set by the group. At year end, often in December, the profits are divided among all members.

Burial societies and emergency advances

Community burial societies collect regular contributions to cover funerals, a major expense in Botswana. Some grant advances to their members, but their constitutions should set out the conditions clearly to avoid tension between families.

When does a private lender need a licence?

According to NBFIRA, the microlending rules apply to anyone who advances money without being licensed as a bank or building society. An individual who lends regularly for interest is therefore carrying on an activity that requires a licence.

Crowdlending platforms still on the fringe

No major peer-to-peer lending platform operates visibly under a licence in Botswana. A foreign website promising to connect Botswana borrowers with investors without local authorisation is not supervised by NBFIRA in any way.

An IOU in English or Setswana

A simple written note, in English or Setswana, stating names and Omang numbers, the amount in pula, the date and the repayment timetable protects both parties. The signatures of two witnesses strengthen the evidence before a court.

Orange Money or MyZaka transfers as proof

Sending the money by Orange Money, MyZaka or bank transfer rather than in cash leaves a dated record. Repayments made through the same channel then make it easy to reconstruct the outstanding balance if a disagreement arises.

Setting a fair interest rate between relatives

Nothing obliges a family loan to carry interest. If interest is agreed, comparing it with the banks' prime lending rate, around 7% in 2026, helps avoid terms the borrower or a court might consider abusive.

Disputes before the kgotla or the courts

Customary courts sitting at the kgotla settle many small civil disputes between neighbours or relatives. For larger amounts the magistrates' courts have jurisdiction, and a signed acknowledgement of debt makes recovery much easier there.

Formal alternatives to a relative's loan

When the family cannot help, an employee can compare a bank loan or a loan from a licensed microlender. The guide to credit cards in Botswana also covers the revolving facilities offered by banks.

Practices in the Kingdom of Eswatini

In Eswatini, another member of the Southern African customs union, savings clubs and family loans play a role similar to the motshelo. The guide to the peer-to-peer loan in Eswatini describes local rules and recommended precautions.

The informal sector's place in Botswana credit

Lending between relatives complements a banking system concentrated in the larger towns such as Gaborone and Francistown. The overview of credit in Botswana places these practices alongside banks, microlenders and public schemes such as CEDA.

Setting up a loan between relatives in pula

1. Agree together on the amount, the term, any interest and the date of each repayment.
2. Write an acknowledgement of debt with both parties' Omang numbers and witnesses' signatures.
3. Send the money by bank transfer, Orange Money, MyZaka or Smega to keep a dated record.
4. Record each repayment in pula in a notebook and give the borrower a signed, dated receipt.
5. If payments fall behind, propose a new written schedule before taking the matter to the kgotla or a court.

Costs and risks of an informal loan in Botswana

Written records that secure a private loan

• Copies of the lender's and borrower's Omang cards
• Signed and dated acknowledgement of debt
• Repayment schedule agreed by both parties
• Proof of bank transfers or mobile money transfers
• Contact details of two witnesses

Ways private loans go wrong in Botswana

• Handing your bank card, PIN or Omang card to an informal lender as security for an advance.
• Lending to a colleague with nothing in writing, then having no evidence when they are transferred or leave.
• Paying fees to a fake investor met on Facebook who promises a peer-to-peer loan from abroad.
• Letting a motshelo in Francistown or Maun operate without a designated treasurer or a written register of loans made to members.

Lenders to contact

• Letshego Botswana: Botswana subsidiary of the Letshego group, an inclusive lender offering personal loans and digital financial services through its LetsGo app.
• Absa Bank Botswana: Commercial bank in Botswana, part of the Absa group, offering banking services and credit solutions to individuals and businesses.
• First National Bank Botswana: Botswana commercial bank granting loans to individuals and businesses, regularly publishing its deposit and lending interest rates for customers.
• First Capital Bank Botswana: Commercial bank operating in Botswana offering personal loans to individuals to help finance their personal needs and projects.

Motshelo, kgotla and family loans