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Botswana Special Feature: International Financial Services Centre

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By Lowtax Editorial
10 August, 2009


Botswana IFSC “Your Competitive Advantage” for Financial and Business Services Investments

Established in 2003, the Botswana International Financial Services Centre (Botswana IFSC) aims to establish and develop Botswana as a world class hub for financial and business investments into Africa and the region. 

The Botswana IFSC is one of the key strategies that the government of Botswana has put in place to reduce the country’s reliance on mineral revenues, especially diamonds.

The establishment of the Botswana IFSC is further aimed at:

  • The creation of sustainable employment opportunities for suitably qualified citizens
  • The enhancement of the skills base of the Botswana workforce
  • Fostering of innovation and sophistication in financial and business services
  • The enhancement of Botswana's already excellent reputation in the international financial and business community

Positioned in a solid growing economy, the Botswana IFSC is a transparent, open business location with high standards of regulation and rigorous screening and project approval process. To date the Botswana IFSC has attracted world repute companies regionally and internationally.

Calling on financial and business services investors looking to invest in International Business Companies, Call Centers and Business Process Outsourcing, Investment Funds, International Banking and International Insurance, the Botswana IFSC is “your competitive advantage” that will propel your business into the rest of Africa.


Botswana IFSC – Propelling your business into the rest of Africa

Sustainable low tax environment

The Botswana IFSC offers a sustainable low tax environment. Botswana IFSC Companies get a discounted corporate tax rate of 15% of profits, are exempted from Withholding Tax on interest, dividends, management fees and royalties paid to a non resident. They are further exempted from Value Added Tax, Capital Gains Tax and disposal of shares for Botswana IFSC Companies is also tax exempt. These companies also have access to Botswana¹s 200% tax training rebate.

TaxBotswana IFSC CompanyOther Companies
Capital Gains TaxExempt15%
Withholding TaxExempt15%
Corporate Tax Rate15%25%
Value Added TaxZero rated10%

Table 1: Exclusive Advantages of Botswana IFSC Companies


Access to an expanding Double Taxation Avoidance Treaty network

Through the Botswana IFSC, accredited Companies have access to Botswana¹s expanding Double Taxation Avoidance Treaty network and where there is no double taxation agreement yet in place, Botswana IFSC businesses are provided with credits for withholding taxes of up to 15% levied in those jurisdictions.


No foreign exchange controls

Botswana has no foreign exchange control and this allows Botswana IFSC financial and business companies to be able to transfer and repatriate funds across borders easily.


Currency denomination

As a Botswana IFSC business, you are allowed to denominate your capital in any of the internationally recognized currencies and this measure allows your business to be cushioned from losses brought about by the exchange rate risk and exchange rate movements.


Botswana as a world class hub for financial and business investments into Africa

A combination of the spread of democracy, economic liberalization, privatization, infrastructure development, and the growth of consumer services and financial services positions Botswana as a strong and economically sound investment destination of choice.

Botswana’s central geographical positioning in Southern Africa, provides proximity to key Southern Africa Development Corporation (SADC) markets, including South Africa. SADC has an estimated market of 200 million people and the headquarters are located in Botswana.

SADC is currently enjoying satisfactory economic growth rates and provides an attractive opportunity for investors seeking to invest in emerging sectors such as mining, aviation leasing, consumer services, financial services and infrastructure.

Botswana provides to the investor the most suitable and stable base from which to expand your business into the rest of Africa.


Political stability

Botswana is Africa’s most stable democracies. Since 1966, Botswana has held peaceful elections and the country is now governed by the fourth president, who like all his predecessors assumed power peacefully and democratically. Botswana is Africa’s model example of peace, law and order.


Economic and financial development

Botswana is Africa’s fastest growing and performing economy. From independence in 1966 to date, Botswana has transformed from one of the poorest nations in the world to a middle income country. Botswana has enjoyed solid economic growth and double digit growth for over a decade.

The country has a thriving domestic financial sector, which includes banks, insurance companies and a growing stock market. Further Botswana enjoys one of sub-Saharan Africa’s highest per capita GDP.

Botswana has a low country risk perception and an investment grade credit rating. According to the 2008 Corruption Perceptions Index, Botswana ranks 1st and 38th in the world in terms of transparency.


Legal and Regulatory

Botswana operates a sound legal and regulatory environment informed by compliance to international standards and best practice.

Botswana has acceded to international conventions and is strictly observing internationally accepted guidelines on combating money laundering and financial crime.

Botswana is ranked 26th in the world for judicial independence and 2nd in Africa by the World Economic Forum. Further as per the 2007/8 World Bank’s Doing Business Report, Botswana is positioned as one of the world’s top ten reformers for taking measures to protect investors and reduce constraints to starting a business.

The Non Bank Financial Institutions Regulatory Authority (NBFIRA) is the regulator of all non-banking financial entities registered in Botswana including Pension Funds, Asset Management, Consumer/Micro lending, insurance and Collective Investment Undertakings.

NBFIRA safeguards the stability, fairness and efficiency of the non-banking financial sector, and ensures that regulation in the Botswana IFSC is in line with international best practice. NBFIRA is further aimed at developing a cohesive marketing and management of the country’s image to ensure that domestic and international perceptions are consistent with the current socio-economic reality and national ambitions.

The regulator of banks and banking operations in Botswana is the Bank of Botswana (BOB) and BOB is committed to monetary stability, a safe, sound and stable financial system, an efficient payments mechanism, an efficient payment mechanism, public confidence in the national currency, sound international financial relations and to provide efficient banking service to clients and provide sound economic and financial advice to the Government of Botswana.

The principle objectives of the regulators are to ensure that investors are protected and that there is transparency in the management and operation of Botswana IFSC domiciled companies


Research, Technology, and Communications

The Botswana Government is committed to positioning Botswana as an economy driven by innovation to attract investment, grow the economy and promote interaction between local and international companies.

Botswana has invested in a world-class multi-service telecommunications system that facilitates provision of services remotely. The telecommunications industry is liberalized with service providers competing in the market for fixed, mobile, and internet services. International communications links Botswana to the rest of the world and international connectivity is available through satellite and terrestrial links to the nearest submarine cable system.

The Government has mobilized funds to provide high capacity international connectivity through participating in undersea cables initiatives off the East and West Coasts of Africa. The country has also invested in international connectivity through shareholdings in undersea cables, which should increase competition and further reduce the cost of telecommunications in the sub-region. Through the Botswana Telecommunications Corporation (BTC), Botswana is part of the Eastern African Submarine Systems (EASSy) consortium. EASSy is a submarine cable system linking Southern, Eastern and Northern Africa to global submarine networks. EASSy will enable regional backhaul to provide terrestrial links for landlocked countries. Once the system is in place, Botswana will enjoy lower costs of connectivity, high speed broadband which is cheaper that the currently used satellite.

To further position Botswana to compete effectively in global markets various programmes and policies on information and communication technologies have been developed and are being implemented to drive the diversification of the economy. These include the Botswana Innovation Hub which is envisioned to become the leading African destination for innovative businesses. The Botswana Innovation Hub positions Botswana as an attractive location for technology-driven and knowledge-intensive businesses, to develop and compete in the global markets. The focus area is ICT-enabled services, including Call Centres and Business Process Outsourcing, but also supporting Knowledge Intensive Business Services.


Skills availability and development

Botswana views its people as a major national resource and has consistently invested a high proportion of its budget on education and skills training. A pillar of growth central to the Botswana’s Vision 2016 advocates for an educated and informed nation to transform Botswana into a knowledge society by cultivating and celebrating innovation, talent and creativity. According to the CIA World Fact book, Botswana’s literacy rate is at 81%, which is above most of the Africa region.

The country provides a pool of highly educated, English speaking labor force in the relevant financial and business sector services. The country boosts of higher institutions of earning including the University of Botswana (UB), The Botswana Accountancy College (BAC) and The Botswana International University of Science and Technology (BIUST.

The University of Botswana (UB) has positioned itself as one of the best Universities in Africa and provides a wide range of high quality programmes including Business, Accounting, ICT, Law and Finance. The graduates are highly competitive as they are absorbed in to international companies as well as both public and private sector to further boost the countries’ competitiveness.  

Botswana Accountancy College (BAC) provides the highest quality UK accredited business education in Accountancy, Computing, Business Management and Insurance. The Botswana IFSC in conjunction with the BAC and the Ministry of Education facilitated the introduction of the course BTEC, a UK Edexcel accredited BPO and Call Centre Course to support the BPO and Call Center industry hence creating a credible offering to investors.

Botswana is at an advanced stage of developing through a Public Private Partnership an international university of science and technology to advance discovery and learning in science and technology with an international perspective. The Botswana International University of Science and Technology (BIUST) is expected to advance the ICT skills base in the country.


Living and working in Botswana

Botswana is Africa’s sparkling model economy, a land of opportunities, a peace loving nation driven by “Botho” a Setswana term synonymous to humanity, kindheartedness, compassion, empathy and benevolence.

Our law enforcement agencies are effective in fighting crime, and we have a good public health system boosting of a chain of hospitals, clinics and private medical practitioners and emergency rescue services in all major towns. The education system is well developed and offers both private and public education from pre-school, primary, secondary to A-level training aligned to world standards.

Living conditions in Botswana are comparable to some of the leading economies in Africa. Gaborone, Botswana’s capital city is a fast developing city with an up market suburb, internationally comparable golf centers, word repute hotels and resorts, an international airport, shopping malls and cinemas.

Botswana’s proximity to Johannesburg, South Africa makes it easily accessible and convenient for travel. It takes less than an hour by flight from Johannesburg to Gaborone, the capital city of Botswana with three airlines competing on the route. At the same time an open skies policy is expected to result in direct flights from Europe and elsewhere to Gaborone.

Botswana is endowed with natural resources and wildlife, and it is a great tourist destination that holds highly it traditions, historical monuments and natural heritage including the world acclaimed, Tsodilo Hills. It is the home to some of Africa’s last great wilderness and the enchanting Okavango Swamps with its game reserves and the famous Kalahari Desert.




 

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