Tuesday, July 16, 2024

Has Botswana failed to become a financial hub?

A little less ten years ago, the then State President, Festus Mogae, launched the Botswana International Financial Services Centre.

The centre was to be a part of government’s concerted efforts to diversify the economy away from minerals, most specifically diamonds.

Specifically, the Botswana IFSC, as it was to be called, aimed at transforming Botswana into a financial hub.

It had become a mantra that Botswana had all the ingredients needed to transforming herself into a world-class financial hub.

Offering some of the most generous packages in the world, including company tax, profit repatriation and free exchange controls, the IFSC sought to attract world class financial companies into Botswana, from where they could operate as they planned their operations across Africa.
The IFSC coincided with a flurry of northward expansion by South African companies.

And it was hoped that with the concessions offered by the IFSC, a good number of those companies would seize the opportunity offered by Botswana IFSC as they extended their operations further north into Africa, using Botswana as their base.

It was envisaged that other than Botswana becoming a financial hub, multitudes of Batswana would come to be employed by what was anticipated at the time to become a booming financial sector.
But almost ten years down the line, it is not clear whether or not the dream of transforming this country into a financial hub is alive or dead.

Save for a tacit statement announcing that the Botswana IFSC will merge with BEDIA – yet another of our economic diversification creations whose true fruits remain doubtful ÔÇô it is not clear whether we have succeeded, or at the very least still committed to the path of one day transforming Botswana economy into a finance based economy.

While in the past the public was always apprised of what was happening to this national project, the silence that has since on descended those who are tasked with running and/or giving the IFSC its strategic direction can only get us worried.

We are worried because the same challenges, which brought about the IFSC in the first place, remain in place. To be true to ourselves, the need to diversify Botswana’s economy has never been greater.
The world economic downturn, which so collapsed our diamond industry and led to a complete shut sown of our diamond mines, has brought to the fore the pitfalls of relying on just one commodity for our survival.

While the challenges to diversify the economy have increased, it is a tragedy of some sorts.
In the past, money used never to be an issue for Botswana. There was plenty of it.
If anything, ministries and departments would fail to use all that which was appropriated to them. But not anymore!

The tables have since changed.
The reality on the ground is that there is simply no more money to play around with.

This has meant that, as a country, we now have a very limited room for maneuver.
Projects have to be carefully prioritized.

Only those projects that promise certain rewards and, in a shorter time, will receive funds.
Thus, we find ourselves asking the question, “Has Botswana failed to become a financial hub, as she had hoped to be nearly ten years ago?”

It would be interesting to get an up to date account of where we stand in that endeavour.

What went wrong? What lessons have been learnt?


Read this week's paper