Good morning, let’s get into it!
Let’s conclude our series on the companies to be affected by the new monetary policy adjustment.
Financial Institutions: The Transition to Market-Driven Interbank Pricing
The most profound systemic shift catalyzed by the 2026 Monetary Policy is the reorganization of the interbank foreign exchange market.1 For major listed banks such as First National Bank Botswana (FNBB), Absa Botswana, and Stanbic, the new asymmetric margin structure represents a significant departure from the previous reliance on the central bank for liquidity.1
By maintaining the sell rate at 7.5 percent while reducing the buy rate to 3 percent, the Bank of Botswana has created a wide 4.5 percent "incentive gap".1 This encourages commercial banks to source foreign currency from exporters like Chobe and Lucara rather than buying from the central bank. For the banks, this increases the volume of interbank trading and allows them to capture a higher portion of the "spread" between what they pay exporters for USD and what they charge importers for the same currency.1
However, this transition occurred during a period of acute "liquidity crunch" in late 2025, which saw the Bank of Botswana raise the Monetary Policy Rate (MoPR) from 1.9 percent to 3.5 percent to stabilize surging interbank lending rates.18 The 2026 policy seeks to resolve this by encouraging the domestication of export proceeds, thereby injecting much-needed Pula liquidity back into the commercial banking system.1
Monetary Parameter | Dec 2025 Status | 2026 Target/Forecast | Systemic Impact |
Monetary Policy Rate (MoPR) | 3.5% | 3.5% (Accommodative) | Supports 2026 recovery 18 |
Avg Prime Lending Rate | 7.19% | Potential Stabilization | Eases business cost of debt 18 |
Foreign Exchange Reserves | $3.5 Billion | Preservation/Growth | Safeguards currency peg 1 |
Inflation (Headline) | 3.8% | 5.9% (Average) | Breaches 6% upper bound in Q2 18 |
GDP Growth | -0.9% (2025) | +3.1% (2026) | Rebound via non-diamond sectors 4 |
Real Estate and Infrastructure: Asset Valuations and Regional Ambitions
For property-focused entities on the BSE, such as Letlole La Rona (LLR) and Turnstar Holdings, the 2026 monetary policy functions as both a valuation driver and a strategic compass.32 These companies manage large portfolios of commercial, industrial, and retail real estate, much of which is located in Botswana but with significant regional exposure.32
The 2.76 percent downward crawl has a direct inflationary effect on construction and maintenance costs, as specialized building materials, HVAC systems, and elevators are typically imported from South Africa or Europe.18 This "cost-push" inflation increases the replacement value of existing properties, providing a natural uplift to the Net Asset Value (NAV) of LLR and Turnstar’s portfolios.32
Furthermore, as these companies look to "grow into Africa" and create diversified portfolios exceeding P3.0 billion by 2027, the Pula depreciation makes their foreign-denominated rental income more valuable when translated back for distribution as dividends to Botswana-based shareholders.32 Turnstar, with assets in Dubai, is particularly well-positioned to benefit from this "translation windfall," allowing it to sustain high payouts even if the domestic Botswana retail tenant base faces pressure from rising imported food prices.32
Source:
Economic Forecasts and National Rebound: National GDP growth projections (3.1 percent for 2026), inflation forecasts (5.9 percent average), and Monetary Policy Committee (MPC) decisions are based on Bank of Botswana reports and Ministry of Finance budget review statements
[10, 11, 12, 13, 14].Real Estate (LLR and Turnstar): Regional expansion plans, asset valuations in Tanzania and Dubai, and the "Go to Africa" strategy are detailed in the integrated annual reports and regional updates for Letlole La Rona and Turnstar Holdings ``.
