The Non-Bank Financial Regulatory Authority’s (NBFIRA’s) migration from the current compliance-based methodology for supervision to a risk supervision business model will bring it well within the framework of international best practices.
This revelation was made during the launch of the long awaited NBFIRA brand. The migration is expected to facilitate NBFIRA’s development and enhancement of financial soundness as well as efficiency with the sector.
Launching the NBFIRA brand, Kenneth Matambo, the Finance and Development Planning Minister said a sound financial regulatory regime is a prerequisite for any legitimate investor, with NBFIRA as catalyst to investor confidence.
“The migration augurs well for the economy as Botswana’s sustained financial stability is a major factor in attracting foreign direct investment (FDI),” said Matambo.
He added that the Government highly appreciates NBFIRA’s role to provide a desirable location for FDI while diversifying the economy and creating employment.
Matambo, who is also NBFIRA’s founding Chairman from its humble beginnings in 2008, said as Botswana’s relatively nascent financial parastatal, the more its existence, mandate and oversight roles in the economy are appreciated, both locally and internationally and embraced by the public, the greater will be the long-term benefits.
“It is, therefore, most appropriate that we unveil the Authority’s new corporate identity, a key milestone towards enhancing its visibility,” stressed Matambo.
The brand expresses NBFIRA’s commitment to Batswana as outlined in Section 8 of the NBFIRA Act of regulating non-bank financial institutions’ safety and soundness while promoting the highest business conduct, fairness, and proficiency standards.
NBFIRA regulates a diverse spectrum of non-bank financial institutions such. The Authority is responsible for implementing the new prudential regulations covering the micro-lending sector. Matambo hailed the promulgation of Micro Lending regulations in 2012 as major step towards establishing the sector’s financial soundness. “We intend to curb the current abusive lending practices, create an environment with proper business practices, through increased consumer awareness and education on the dangers of unsustainable debt,” Matambo said.
From inception NBFIRA has received funding through an annual Government Subvention, which has, however, proved over the past four years as inadequate for operational needs.
The publication of regulations for the collection of Supervisory Levies and Fees in February 2012 has significantly improved NBFIRA’s funding position; ensuring financial sufficiency and eventually ceasing dependence on Government assistance.
He said NBFIRA has had to rely on expat labour to address the human resources’ challenge of acute shortage of local expertise. “To address the challenge the Authority has developed close working relationships with other regulatory organizations such as the International Association of Insurance Supervisors, International Organization of Pension Supervisors and the African Development. The latter have assisted by training staff in best practices and helping close the skills gap in key areas.
Meanwhile NBFIRA in conjunction with the finance ministry is reviewing legislation pertaining to the insurance industry, retirement funds and capital markets in line international legislative frameworks.
NBFIRA Board Chairperson Mmatlala Dube said the authority has faced serious financial challenges since its establishment. “NBFIRA’s establishment coincided with the global financial crisis, forcing the authority adopt survival tactics such as the indefinite deference of strategies critical to its’ functioning such as branding,” said Dube.
Dube said with the cooperation and support of multiple stakeholders, they foresee the authority increasing levels of confidence in the financial stability of the Botswana non-bank sector.
