Parliament recently approved the Non-Bank Financial Institutions Regulatory Authority (NBFIRA) Bill which will contribute significantly to the development of the non-bank financial sector in Botswana.
According to the minister of Finance and Development Planning Kenneth Matambo, the bill seeks to bring the regulatory and supervisory structure in line with international standards. “In drafting that NBFIRA Act, it was considered that several non-bank financial institutions, were not subject to any form of regulation or supervision and yet their operations posed financial risks to the economy,” he told parliament recently.
He also said it is important for Botswana’s financial services regulatory environment to be harmonised with regional regulatory frameworks, particularly those that apply to the SADC region, and are in accordance with the SADC Finance and Investment Protocol.
“Since NBFIRA is expected to be financially independent of government, part of the Bill deals with the sources of funds and their application in the running of NBFIRA. It also covers the oversight of the usage of funds and NBFIRA’s obligations in administering its funds,” Matambo stated.
He spoke of the first part of the Bill that deals with preliminary matters which include the short title of the NBFIRA Bill and the definitions of the key terms used in the Bill. He said included in the definitions is a detailed definition of “financial crime”, to cover the offence of money laundering, dealing with the proceeds of a criminal offence and the financing of terrorist activities.
“The constitution of the Board of Directors of NBFIRA and the required qualifications for members, are covered in this. The other part deals with the terms and conditions of employment of the CEO and other staff of NBFIRA,” he stated.
He further spoke of the self-regulatory organisations saying this part provides the criteria applicable to the approval of self-regulatory organisations and gives direction to them in carrying out their functions.
“The passage of this Bill will contribute significantly to the development of the non-bank financial sector of Botswana, as it seeks to bring the regulatory and supervisory structure in line with international standards,” said Matambo.
He stated that the profits of approved international financial services entities are taxed at a preferential rate (currently 15 percent). He said NBFIRA is given the authority to supervise such entities for compliance with the terms and conditions of trade.
“Where a regulator has the extent of power that is vested in NBFIRA, it is international best practice for there to be a facility from which licensed entities may seek relief, from the decisions of the regulator,” Matambo stated.
However Matambo also says the detailed regulatory and supervisory conditions have been left out in the current legislation as these are in the sector-specific legislation. He gave an example that Parliament has already approved the Securities Act which replaced the Botswana Stock Exchange Act; the Retirement Funds Act, which replaced the Pension and Provident Funds Act and the Insurance Industry Act which replaced the old Insurance Industry Act, adding that therefore the current Bill before Parliament excludes specific sectoral matters.