Tuesday, October 27, 2020

Clear off the run way, IFSC is about to takeoff

Switched on Batswana are rubbing their hands gleefully in anticipation of a windfall from the country’s investment in an International Financial Services Centre (IFSC).

Even Botswana International Financial Services Centre CEO Alan Boshwaen is upbeat that with most of the preparatory work now completed the country could be on the cusp of reaping benefits of setting up the centre.

Boswaeng underscores the fact that most of the work covered in the last years had to do with coming up with new legislation and enacting supporting regulations.

In overall Boshwaen says there has been incremental progress in achieving the goals and objectives spelt out for the IFSC.

He however pointed out that no matter how successful the Botswana IFSC may turn out to be it will never be a panacea to the many problems of a lack of economic diversification dogging the country.

Botswana IFSC was launched five years ago with the explicit goal of turning Botswana into a hub of cross border financial transactions.

The Centre offers a number of incentives among them low taxes for corporate entities entering Botswana under its auspices.

Boshwaen says Botswana looks at a mature financial and commercial market like Johannesburg as an opportunity rather than a threat.

He says this is because Johannesburg is home to many multi national companies which are interested in growing northwards outside of th borders of South Africa into the larger continent.
“A lot of companies seeking to grow into Africa are based in Johannesburg. So our proximity to such a large commercial centre is an opportunity,” he said.

Boshwaen says although a lot of ground has been covered in preparing to take off it is important to always bear in mind that internationally, the
financial services sector is one area that evolves quickly.

“The financial services sector is not a static industry. It moves at a speed of light. And it is important that we as a nation we also move at a higher speed to able to take opportunities when they present themselves.”

As such the county should not lose opportunities as a result of delays in making relevant such things as the legislative environment.

He said other than laws as passed by parliament there is often need for supporting regulatory frameworks.

On that score he welcomed the liberalization of the telecommunication sector by cabinet, saying it holds a lot of hope for such things as business
process outsourcing, commonly known as call centres and backroom services.

“Liberalization of telecommunications is our biggest hope,” he said.

Although a few years ago the South African treasury touted the idea of establishing own equivalent of Botswana IFSC, Boshwaen says there is no need
to panic.
He says Botswana has evolved and has advantages such as the absence of exchange controls.
“The important thing is to maintain competitiveness.” Specifically he welcomed announcement by the Minister of Finance in this
year’s budget speech on Capital Gains Tax.
Before the announcement by the minister, investors were complaining that Mauritius was much more competitive than Botswana as a result of its CGT policy.

“Capital Gains Tax made us uncompetitive. But since the minister’s announcement we are now in the running,” said Boshwaen.

He also welcomed the Insurance Act 2005, saying what remains are the enabling regulations that will underpin the Act to make it operational.

The growth of Botswana as world diamond centre also provides opportunities of growth for the sector.

Boshwaen says together with the diamond cutting and polishing houses there will come support services like banking and insurance.

With Africa experiencing a run in investments especially in mining,

commodities and property – (and a lot of fund managers and Venture Capital Companies coming to Africa) Boshwaen says it is important that everything is done to ensure that the money funding such investments are domiciled in Botswana.

“We have a continuing opportunity to scale up the initiative. What is important is that we should not lose the momentum.”

RELATED STORIES

Read this week's paper

The Telegraph October 28

Digital edition of The Telegraph, October 28, 2020.