botswana international financial services centre (ifsc) opportunities in the financial services...
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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