Frequently Asked Questions

Why was the Botswana IFSC formed?
The financial services sector has been identified by Government as one of the means of attracting further investment and contributing to overall economic diversification. The International Financial Services Centre (IFSC) was therefore, established to facilitate and promote the growth of a cross-border financial services industry based in Botswana.
What are cross-border financial services?
This entails providing a broad range of financial services to clients outside the borders of Botswana. These services include:
Banking
Insurance
The investment and management of international clients’ funds
The outsourcing of selected business functions such as finance and administration to Botswana-based companies
Given Botswana’s relatively small domestic market, the major opportunity to grow the financial services industry lies in the ability of companies to tap effectively into markets outside Botswana.
What are the functions of Botswana IFSC?
The Botswana IFSC – a company owned by the Government of Botswana and the Botswana Development Corporation (BDC) was created in 2003.
The key functions of this company are:
Targeted business development activity aimed at attracting the right caliber of financial companies to set up their operations in Botswana.
Facilitating the accreditation and licensing of companies in terms of applicable IFSC legislation.
Monitoring of accredited companies against their approved business plans.
To develop strategies in partnership with the private sector and Government to promote Botswana as an international financial services centre.
Continuously reviewing the IFSC framework and making necessary recommendations to Government to maintain the program’s international competitiveness.
How can a company get accredited to the IFSC and how is the accreditation done?
The key criterion to be accredited as an IFSC company is a sound business plan that demonstrates the capacity to engage in cross-border financial services. The company should have adequate capital, expertise, and a long term strategy that meets IFSC objectives of employment creation and skills transfer.
Applications are presented by the IFSC to the Certification Committee who assess and approve the applications. The Certification Committee is an independent body appointed by the Minister of Finance and Development Planning. This body includes representatives of Ministry of Finance and Development  Planning (MFDP), Botswana Unified Revenue Services (BURS); Bank of Botswana; BDC; BEDIA; and Ministry of Communications, Science and Technology (MCST).
How many companies are accredited to the IFSC to date?
As of November 2006, there are 35 accredited companies. There are 19 companies that are already operational, mainly based in Gaborone. The other companies are at various stages of establishing their operations.
Can a local company become accredited to the IFSC?
Local companies are allowed to accredit to the IFSC. These companies need to demonstrate, on the same standards as the international companies applying, that they have the necessary capital and expertise to carry out sustainable cross-border financial services.
Examples of these are:-
Micro Provident is an IFSC accredited company also listed on the Botswana Stock Exchange that handles selected finance and administration functions for its operations in Swaziland, Tanzania, Uganda and Zambia.
Island View is a Botswana-based IFSC accredited investment company that has financed major property developments in Southern Africa including Tanzania’s largest shopping mall. The main shareholder in the company was also involved in the development of Game City.
How has the IFSC performed since its inception?
The IFSC has recorded measurable achievements since its inception. Since its establishment, 35 companies have been accredited. As of the end of March 2006, companies had invested US$ 18.5 million and used local support services such as consultants and lawyers, telecommunications, IT and insurance amounting to P11 million for the year ending March 2006. Most of the existing companies provide finance and administration functions to subsidiaries in 14 countries in Africa.
The IFSC has also been able to motivate crucial policy changes in Botswana that were identified as impediments. These changes will enable Botswana IFSC to compete more effectively in all sectors typically offered in successful financial centres including banking, insurance and funds management.
Who are the key competitors to Botswana IFSC in the region?
Mauritius established a financial services development programme in 1992. This is the most comparable framework that competes with Botswana IFSC in our region. Mauritius has been successful as a financial conduit for investments into India and other Asian countries.
In addition to this, since 1994, Johannesburg has become a significant financial centre mainly on the basis of the size of the domestic South African economy.
Further afield, successful well known IFSC’s include Singapore, Ireland and Luxembourg.
Botswana IFSC has a continuing opportunity to build on the programme so far and grow it significantly. The unique attributes are that Botswana has a sustainable combination of a low risk profile, specially created low tax for the IFSC, no exchange controls, proximity to growing African economies and a significant domestic capital base that can finance regional expansion.
How do Batswana benefit from the IFSC?
Benefits to Batswana of this programme are:
Sustainable employment opportunities
Transfer of skills and technologies
Use of a range of professional and support services procured in Botswana
Additional tax revenue to Government
These benefits would otherwise not necessarily have flowed to Botswana in the absence of the IFSC programme.
Does Botswana IFSC provide loans or other financial assistance?
Botswana IFSC does not give financial assistance or loans. However, various funding mechanisms are available in Botswana through other government agencies.
Is Botswana International Financial Services Centre a tax haven?
We are not a tax haven. Countries offering zero tax rates are often frowned upon internationally. This is because tax havens are regarded as a harmful practice as they are often subject to secrecy, which is not sustainable. Traditional tax havens are also coming under increasing pressure over issues such as money laundering and tax evasion. We do not intend to ruin our international reputation by embracing practices which place us in the category of a tax haven. Our vision and values are predicated on integrity and best practice, among other things. We are by deliberate design, and as matter of stated policy, a transparent, civil business location with internationally benchmarked standards of regulation, complete with rigorous screening and project approval processes.
What are you doing to ensure that illegal funds are not invested through the BIFSC?
The Botswana IFSC is structured as a transparent, open business location with high standards of regulation and a rigorous screening and project approval process. The Bank of Botswana, the IFSC’s designated regulator, uses Interpol, amongst others, to screen companies before they are approved. There is strong legislation to protect Botswana’s reputation as a financial location specifically to combat money laundering, fraud and terrorism. The stringent vetting and screening process coupled with adherence to international anti money laundering treaties ensures that only organizations of good repute are allowed to set up in the IFSC.
We have several pieces of legislation such as Proceeds of Serious Crime Act and Corruption and Economic Crime Act and are a signatory and accede to International Conventions combating money laundering and financing of terrorism. We are signatories to the following Conventions:
Basle Statement of Principles – Sets out disclosure standards aimed at preventing money laundering, these include the adequate maintenance of records, cooperation with law enforcement agencies, and the disclosure of suspicious transactions.
IMF Financial Action Task Force (FATF) – Botswana accedes to the 40 FATF recommendations aimed at addressing and preventing money laundering. FATF is a task force charged by the IMF’s International Monetary and Financial Committee to combat money laundering. Commonwealth Ministers ratified and adopted the 40 recommendations in 1996.
UN Geneva Convention – the convention sought to stem money laundering that emanated from trafficking of narcotic and psychotropic substances.
United Nations Convention on the Suppression of Financing of Terrorist Activities Resolution – this calls on UN member states to freeze assets owned by Terrorists as well as their associates and effectively cut their assets to the international financial system. The convention further calls on countries to make public the list of terrorists whose assets have been frozen and their amounts.
Is the technological capability of Botswana up to the challenge?
Yes it is. The Government has realized that IT enabled services are vital and have developed a national policy on ICT. We have an ongoing investment in various types of infrastructure, such as telecommunications – international data and voice communication.
We have an ongoing commitment to upgrade technology and improve service capabilities and network. Botswana Telecommunications Corporation has built a Virtual Point of Presence in London, thus enabling Botswana to be accessible via multiple technologies to any telecommunications provider.
We have a very liberalized financial climate – locally based commercial banks and service providers are aligning themselves to offer products and services similar to those offered anywhere else in the world. More sophisticated products, services and technology will therefore be acquired as the financial services sector grows to allow transactions of a more complex nature to be handled from Botswana.
How can a company benefit from being an BIFSC accredited company?
Corporate institutions of all types and in all business sectors will find it very beneficial to carry out a broad range of financial services through the IFSC. Botswana IFSC offers a comprehensive package of incentives which includes:
a guaranteed corporate tax of 15% until 2020;
exemption from withholding taxes on interest, commercial royalties, management or consultancy fees and dividends paid by an IFSC company to a non-resident;
access to Botswana’s expanding Double Taxation Treaty network, at present
comprising South Africa, United Kingdom, Mauritius, Sweden, France, Zimbabwe, Namibia and Russia;
where there is no double taxation agreement yet in place, credits for withholding taxes (of up to 15%) levied in other jurisdictions;
tax exemption for Collective Investment Undertakings (CIUs); applicable to units trusts ( mutual funds) and other collective investment structures; and
access to Botswana’s 200 percent tax training rebate.