Thursday, April 25, 2024

How Ramasedi set up NBFIRA at the height of the financial crunch

Ramasedi’s journey with NBFIRA started in 2008 when the authority was established as a regulatory body. This was a period when the global financial crisis was at its peak after the collapse of the global markets. As a new born, NBFIRA was negatively affected by the global financial crunch especially because its set up was fully funded by government, which has a direct link to the foreign market through sales of diamonds ÔÇô Botswana’s all time largest revenue earner.

Ramasedi remembers very well that by then a lot of micro lenders were not regulated and they had to be brought into the fold. The domestic capital markets were also not regulated, but were looked after by the Central Bank. Though NBFIRA received funding from government, the funds were not enough to match the levels that the regulatory body had hoped to achieve. Ramasedi revealed that they started with a small team that was transferred from the Department of Insurance and Pension Funds at the Ministry of Finance. The initial team comprised of 15 core staff members.

“My main priority was to make sure that NBFIRA was well capacitated with enough employees. We have been steadily increasing our staff complement and the organization now boasts of 61 members of staff. We are targeting to have 93 employees, in line with international standards where sister regulators have about 150 employees,” said Ramasedi.

One of his first duties was to consult the industry and discuss regulation of the micro lenders.
“A regulator is powerful and he is supported by the laws. The regulator can be a stick carrier.

However, the approach that we decided to adopt was that of consultation. When we started regulating the micro lender, we called them to the table and discussed with them,” he said.

Ramasedi highlighted that they had to consult the industry because the industry has deep pockets that are sophisticated. Others were simply in the dark in terms of understanding why they needed to be regulated and how they were going to be regulated. Currently, NBFIRA is working on regulating medical aid schemes in consultation with the Ministry of Health. He added that the regulator has decided to come up with a model that is understood by both the regulated entities and the regulator. He also said NBFIRA will not hesitate to use the stick and impose sanctions where there is need to do so.

“The only push back that we experienced was when we were talking about how NBFIRA should be funded outside government. They understood because we consulted with them but they did not readily want to part with money,” he stated.

Regulation is becoming more complex by the day and the regulator is faced with the challenges of moving with the times and keeping in tandem with new innovations. Ramasedi gave an example of the non-banking industry which often introduces innovative products that pose a challenge to the regulator. He added that NBFIRA is always on the lookout for financial scams, Ponzi schemes and pyramid schemes. He said the regulator always makes the public aware of such scams.

“My role is to maintain a constant balance between compliance, development and growing the industry. I look into how best to come closer to entities I regulate without compromising the regulatory role,” said Ramasedi.

He explained that the industry is very wide mainly on the pensions, micro lending, insurance and capital markets. He observed that more growth is happening in the insurance space because NBFIRA is receiving more applications from new insurers. He revealed that they recently licensed some short term insurance companies, adding that he does not believe that the market is saturated.


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