BOTSWANA INTERNATIONAL FINANCIAL SERVICES CENTRE (IFSC) OPPORTUNITIES IN THE FINANCIAL SERVICES...

BOTSWANA INTERNATIONAL FINANCIAL SERVICES CENTRE (IFSC)

OPPORTUNITIES IN THE FINANCIAL SERVICES SECTOR

BOTSWANA INVESTMENT FORUM

LONDON

14TH JUNE 2005

• Introduction • Botswana: an attractive offshore alternative

- Business Environment- Incentives- Technology Infrastructure- People- Sectors- Case Studies- Opportunities

• Conclusion

CONTENT

BOTSWANA

• Heart of Southern Africa: Angola, Namibia, South Africa, Zambia, Zimbabwe

• Multiparty democracy, cosmopolitan, high levels of personal safety

• Top Tourism Destination

• National language: English

• Time zone: GMT+2

WHAT IS BOTSWANA IFSC

AFRICA’S ONLY “ONSHORE” CENTRE, PROVIDING A RANGE OF INCENTIVES TO

COMPANIES ENGAGED IN CROSS BORDER SERVICES

BUSINESS ENVIRONMENT

• No exchange controls

• Highest investment grade sovereign credit rating in Africa (Moody’s & Standard & Poors)

• Most competitive business environment in Africa (WEF)

• Freest economy in Africa (Heritage Foundation)

• Least corrupt in Africa (Transparency International)

BUSINESS ENVIRONMENT cont’d

• Short time to register company

• A legal / fiscal system that provides the right framework

• Signatory to International Conventions combating money laundering and financing of terrorism

• Law protects investor’s property rights (Accenture)

• Lower operating cost structure to tradition “offshore” centre

• Botswana IFSC not positioned as a tax haven

INCENTIVES

• Low corporate tax - 15%

• No WHT on dividends, interest, royalties, management fees etc

• Unilateral credit for WHT suffered in other jurisdictions

• Double Tax Agreements (UK,, SA, Namibia, Zimbabwe, Mauritius Sweden, India etc.) Treaties with other SADC member states under negotiation

INCENTIVES cont’d

• Tax rebate for training - 200%

• No Value Added Tax

• Ministerial Exemption Order (2002) enables importation of specialised personnel

• Guaranteed in law until 2020

PEOPLE

• UK cultural alignment (history, legal framework, education system)

• High per capita expenditure on education, over 25% of annual budget

• Approximately 28,000 citizens placed in tertiary institutions within and outside Botswana

• Graduate labour pool, readily trainable

• Literacy rate approximately 80%

• Performance culture (Govt. rollout of PM)

• Unions relatively business friendly

TECHNOLOGY INFRASTRUCTURE

• Full range of technologies

- ADSL

- VSAT

- VOIP (2005)

• Data Protection Legislation expected by end 2005

• Competitive telephony rates – volume based (UK & USA

outbound traffic US$0.1 for >500K minutes per month)

TECHNOLOGY INFRASTRUCTUREKasane

Jwaneng

Nata

Francistown

S-Phikwe

Mahalapye

Orapa

LetlhakaneGhanzi

Maun

Lobatse

Gaborone

SDH/ Fibre

140M PDH Radio

34MPDH Radio

PDH/ Fibre

Palapye

Mohembo SDH / Fibre where

population densities highest

Microwave & radio for lower density areas

TECHNOLOGY INFRASTRUCTURE

Multiple Redundancy International Fibre Optic Links

Walvis Bay

SAT3/WASC

Lusaka

WindhoekEASC

Dar es Salaam

Maputo

Cape Town

Mtunzini

Luanda

SECTORS

• Cross Border Banking• Corporate Holding Structures / Group Treasury

Operations• Fund Management / Administration• Int’l Insurance / Reinsurance / Captive Insurance• Business Process Outsourcing

HOLDING STRUCTURE / GROUP TREASURY

• Dividend management

• Head office support functions, such as finance, I.T, training

• Intra group financial management

INTERNATIONAL INSURANCE

• Legislation passed by parliament April 2005

• Enables reinsurance, captive, & insurance brokerage activities

• Member of IAIS & CISNA

BUSINESS PROCESS OUTSOURCING

• Captive Shared Service Centre

• Third Party Suppliers• US$ 8 per seat / hour

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

HRInfrastructure

CASE STUDY - SICAPITAL

• Debt securitisation vehicle

• Purchase debt from technology multinational

• Issues commercial paper against that debt to regional institutional investors

CASE STUDY – ENTERPRISE BANKING GROUP

• Bank Holding Company

• IFSC hub for raising capital with international development finance institutions

• Invests in banking entities in East and Southern Africa

CASE STUDY – ANDISA CAPITAL

• Subsidiary of Standard Bank of South Africa

• Specialist treasury and financial advisory firm

• Provides management services to SICAPITAL

CASE STUDY

Type: Data

Ownership: India / Botswana

Destination: USA

Services: Medical Transcription

Projected scale: 250

CASE STUDY

Type: Voice

Ownership: UK / SA / Botswana

Destination: UK

Service: Telemarketing of Mortgage Products /

Lead generation for IFAs

Projected scale: 500

CASE STUDY

Type: Voice

Ownership: Canada / Botswana

Destination: Sub Saharan Africa

Services: GPS enabled Location Based Services, Telemarketing / Sale of GPS

Solutions

Projected Scale: 50

CASE STUDY – AON RISK MANAGEMENT

• Assist mining and resource companies minimize business & political risk in 13 African countries

• Parent is NYSE listed, Fortune 500 Company• Provide Management Services to Captive

Insurance Companies in Botswana

CAPITAL MARKET DEVELOPMENT

• Botswana Stock Exchange (BSE)

- Local Mkt Cap – 2.2 billion (USD)

- Foreign Equity Mkt Cap – 39 billion (USD)

• Pension Funds

- 2.8 billion USD under management

- 50% off shore

OPPORTUNITIES – Botswana (Domestic)

• Sectors / Initiatives:- Banking, ICT, Mining, (financial) advisory,

consulting services- Government outsourcing of non core functions- Privatisation – banks, telecomms etc• Domestic investments can be used as platform for

regional initiatives

OPPORTUNITIES – Regional (IFSC)

• Growing investment opportunities in Africa

• However, environment still presents major challenges in many countries

• Botswana IFSC environment offers “Risk Mitigation” solution

CONCLUSION

• IFSC active business centre

• Specialist financial services available locally

• Business friendly flexible environment

WITFOR 2005

• World Information Technology Forum

• Hosted by Government of Botswana

• August 31 – September 2, 2005

• Theme: ICT for Accelerated Development

SAMPLING OF IFSC COMMUNITY

www.ifsc.co.bw

For more information.

THANK YOU