Monday, May 27, 2024

Botswana ranks lowly over its management of foreign reserves

Bank of Botswana is snobbish and secretive in sharing information relating to the foreign sovereign reserves either with its citizens or the international community, the Sovereign Wealth Fund Institute has observed.

The country, which has amassed foreign sovereign reserves to the tune of US $ 6.9 billion, was judged to be not transparent enough under the Linaburg-Maduell Transparency Index, which tracks countries with foreign reserves.

The country introduced the Pula fund in 1994ÔÇölargely based on mineral, especially diamonds — scored one-out-of-ten ranking alongside the conservative and rigid religious states such as Algeria, Iran and Oman in terms of managing information relating to foreign reserves.
The Linaburg-Maduell transparency index is a method of rating transparency in respect to sovereign wealth funds.

According to its website, the Sovereign Wealth Fund Institute said it tracks government-owned investment vehicles, and where there have been concerns of unethical agendas, calls have been made to the larger “opaque” or non-transparent funds to show their intentions.

The minimum rating a fund can receive is a 1, however, the Sovereign Wealth Fund Institute recommends a minimum rating of 8 in order to claim adequate transparency.

In the first quarter of this year (first three months combined) Botswana got three out of ten.
The Sovereign Wealth Fund Institute 10 points score is based on simple things:

1. Reasons for creation, origin of wealth and government structure
2. Fund provides up-to-date independently audited annual reports
3. Fund provides ownership, percentage of company holdings, geographic location of holding
4. Fund provide total market value, returns, and management compensation
5. Fund provides guidelines in reference to ethical standards, investment policies and enforcer of guidelines
6. Fund provides clear strategies and objectives
7. If applicable, the fund clearly indentifies subsidiaries and contact information
8. If applicable, the fund clearly identifies external managers
9. Fund manages its own website
10. Fund provides main office location address and contact information such as telephone and fax

Each question carries a mark and in the last survey, Botswana was able to answer only one question.


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