Botswana Still Important Finance Centre Despite Competition

Although various countries are emerging as offshore centres and are as a result crowding the industry, Botswana, with all its incentives is still uniquely placed as a financial centre, particularly from the African point of view.

International Financial Services Centre (IFSC) chief executive officer, Alan Boshwaen who was addressing journalists, the bulk of whom were South African media powerhouses said the IFSC offers even more incentives for South African businesses.

He said South African businesses would benefit more from using the IFSC instead of going into the offshore market.

"Our proximity to Johannesburg, the major commercial centre in Sub Saharan Africa, enables support for IFSC companies at a lower cost compared to traditional offshore jurisdictions used by corporate RSA," he said.

He pointed out that IFSC accredited companies stand to benefit from a guaranteed corporate tax rate of 15% until 2020 and that from a business point of view, the IFSC offers a comparative advantage.

"This is the lowest tax in mainland Africa and it’s transparent," he said, adding that Botswana abolished exchange controls in 1999 in order to enable the optimal management of exchange risks.

"We are not seeking to be a tax haven, hence we don’t have a nil tax, because others would find that an unfair practice," he said.

He said Botswana’s unique position also lies in its long history as a multi-party democracy, its healthy microeconomic climate, and an enabling legal framework, with procedures for enforcing contracts.

Similarly, he added, Botswana is a signatory to international conventions on combating money laundering and financing of terrorism and has a low risk environment.

He also added that Botswana’s sovereign credit rating, which places it at number one in Africa and a similar rating in its corruption perception index for the last three years also stands it in good stead.

He also added that although Botswana has a significant challenge in skills in the financial sector, there is a shift in that regard.

"Going back 15 years, we have created some potential. We may not have vast experience in the financial services sector, but we have the potential," he said.

Boshwaen noted that Botswana has the telecommunications infrastructure in place to ensure reliable and globally cheap telecommunications.

He revealed that Botswana has more of an advantage as a financial centre, which also serves it well in its drive for economic diversification.

He said in terms of other sectors such as manufacturing, there are other constraints such as transport.

"The mantra has always been diversification," he said, further noting that the history of Hyundai and the textile firms in Selebi-Phikwe, where companies were subsidised only to fold are a good lesson.

"But financial services are more sustainable because there is no subsidy," he said.

Meanwhile, the Minister of Finance and Development Planning, Baledzi Gaolathe, implored the South African journalists to spread the gospel of the IFSC saying some South Africans think that Botswana is too far because South Africa itself is very big.

"You should spread the word that there is an IFSC here and South African businesses should come here because of the environment," he said.

He said Botswana is doing its best to create the right environment and added that the excuses of the country’s small market does not stand, considering that it is part of the Southern African Customs Union (SACU), a member of the customs union within SADC, which has broadened the market.

source - Mmegi Newspapers