Oral arguments were scheduled to be heard before Justice Jennifer Dube of the Lobatse High Court on Wednesday. BOFIAWU is specifically suing Finance Minister Peggy Serame as the second respondent, through the Attorney General, who is cited as the first respondent.
According to papers placed before the court, BOFIAWU argues that Section 17 (8) of the Banking Act should be struck down as unconstitutional and discriminatory to bank workers.
The section reads: “No bank shall, directly or indirectly, grant to, or permit to be outstanding by any of its officers or employees (other than a director) unsecured loans, advances or credit facilities the amount of which, in the aggregate, exceeds one year’s emoluments of such officer or employee”.
In practice, the clause means an employee of a bank cannot get a loan from that bank exceeding the amount that an employee makes in a year.
Unsecured loans, many of which are personal loans, are the most popular type of credit product in the country and represent loans that are not backed by security or assets. The section means, for instance, that if a bank worker earns P150,000 per annum, they cannot get an unsecured loan from their bank exceeding that amount, regardless of their credit history, annual earnings or other factors.
“The impugned provision is unconstitutional because it imposes a restriction or limitation on persons by virtue of being employed by banks when applying for a loan, which such restriction and/or limitation is not an application to other persons who are employees in other sectors of the economy,” BOFIAWU said in its papers. “It is known to all that, for the average working-class citizen, loans from banks are utilised to improve one's standard of living and quality of life. “Loans represent an opportunity to invest in themselves and acquisition of assets.” “But for those in the banking industry, their destiny is not in their hands.”
The bank workers added: “It does not matter how much they qualify for based on a settled and universal criterion or the fact that they have throughout their lives shown financial responsibility. “Section 17 of the Banking Act is thus discriminatory in itself or its effect as it restricts persons employed by banks from improving their lives, irrespective of their creditworthiness.”
However, in papers filed on Monday, the Attorney General’s Chambers, dismissed the application as frivolous and vexatious, saying there were no grounds for an argument of discrimination under the constitutional or unfair treatment.
The AG’s Chambers further said the case contained a “fatal error” in that the bank workers failed to include banks and the Bank of Botswana in their lawsuit as these were directly engaged in the matter.
“Rarely does a litigant bring a suit for discrimination which is allegedly outlawed by the Constitution but dismally fails to fit his/her/its case within the grounds of discrimination stated in the relevant provision of the Constitution. “Banking being a different sector of the economy to the other economic sectors, it cannot be expected that the terms and conditions of employment of the banks’ employees who do and perform banking business, must be similar to those employees who are not employed in the banking sector and who are not in charge of the banking business.”
The Attorney General also argues that the section in question is designed to avoid various threats and risks such as self-dealing, over-reliance on unsecured loans, fraud, favouritism and other acts of corruption.
Bank employees, meanwhile, said numerous systems and structures existed within banks to prevent these types of threats from taking place.
