Transcript Phase 1 - Global Expo Botswana

Botswana - Regional Financial
Services Hub
Dr. Thapelo Matsheka
Botswana Conference & Exhibition Centre
20 November 2013
Times are changing…
2010
5.8%
5.5%
1970-1980
1990
Phase 1: 1970’s – 1980’s: poor growth; Cold War Client States,
poor governance, weak economic policies, structural
adjustment and liberalisation programmes.
Phase 2: 1990’s: economic recovery starts and escalates;
economic growth in Sub Sahara Africa was 7% in
2007, 5.5% in 2008 and 4.5% in 2009
Phase 3: 2010’s: impact of global economic crisis is less
dramatic, global race for commodities, improved
macroeconomic conditions & political stability.
GROWTH: 5.5% in 2010, 7% in 2011, 5.8% in 2012,
1/3rd have growth rates of more than 6%
2
Times are changing…
Barclays:
“Africa now represents
20% of Group profits (£
1,3bn pounds)”
May 2000
December 2011
November 2013
March 2013
“After decades of slow
growth, Africa has a real
chance to follow in the
footsteps of Asia”
“… the world’s fastestgrowing continent”
Africa Beauty in Numbers
54
$2T
1B
$400B
$93B
20%
54
Sovereign states
1B
People living in Africa, a ninth of the world’s population 1 (Nigeria 164M, nr.7
500M
globally)
$2T
~85%
20%
7
$400B
5.9%
Africa’s collective GDP (more than India, less than Brazil) 2 being just 1.1% of global
GDP 1
Of total global chromium/platinum reserves held in Africa (40% gold, 15% oil)
Compound growth in FDI projects 2007 to 2011 2
Number of African countries among the fastest growing economies in the world
2010 to 2015
Value of South Africa’s infrastructure program 2
$93B
Funds required p.a. from 2010-2020 to close the infrastructure gap with other
developing regions
5.9%
Average real GDP growth p.a. from 2000 to 2011 1
500M
People in Africa with one or more cell phone (and rapidly increasing)
>50%
Of the total population living in cities by 2030
Sources:
1
Swiss Re; Insurance in Sub Saharan Africa: Gearing Up for Strong Growth; 2012
2
Ernst & Young; 2012 attractiveness survey – Africa
3
Deloitte; Deloitte on Africa, The Rise and Rise of the African Middleclass
FDI into Africa
Total value slightly decreasing but number of (smaller) projects
increasing, mostly in manufacturing, extraction & infrastructure
Growing
diversificati
on
Source: FDi Intelligence, data as of 3 February 2012; Ernst &
Young
5
Botswana in Numbers
Botswana has, uniquely in Africa, all the essential ingredients
for a thriving financial services sector. These include:
Botswana IFSC…
Core activities:
•
•
•
•
Banking and financing operations transacted in foreign currency;
The broking and trading of securities denominated in foreign currency;
Investment advice;
Management and custodial functions in relation to collective investment
schemes
• Insurance and related activities (captive insurance and administration
thereof); e.g. Aon Risk Management which has done work in
Mali, Ghana, Uganda
• Registrar and transfer agency services;
• Exploitation of intellectual property;
• Development and supply of computer software for use in the services
described above;
• Cross border leasing;
• Capital raising
The Botswana IFSC
Through the
Botswana IFSC,
accredited
Companies have
access to
Botswana’s
expanding
Double
Taxation
Treaty network
Source: http://www.botswanaifsc.com/index.php
Requirements for Regional Role
Criteria
Human Capital
Description
 The availability of good personnel
 Flexibility of the labour market
 Business Education
 Development of employment pool
Regional perspective
 Currently a big challenge
 Some areas have access to
a larger pool
Business
Environment









Single regulator
Economic freedom might
be a key differentiator

JSE, BSE, etc.




Regulation
Taxes
Levels of corruption
Economic freedom
Ease of doing business
Levels of securitisation
Volume and value of trading in
equities and bonds
Clustering effect
Cost and availability of office space
Transportation
Communications


Capacity issues
Bandwidth



Price levels
Economic sentiment
Perceived quality of life

Impact of inflation, cost of
living
Living in different area
offer very different
lifestyles
Market Access
Infrastructure
General
Competitiveness

Requirements for Regional Role…
• The country should increase its importance as a ‘gateway’ from South
Africa to continental African markets.
• Creating closer ties with South Africa will create synergies and
opportunities for both nations and will allow Botswana to benefit from
South Africa’s position in the region. Both of these can lead to foreign
firms increasing their presence in Botswana thereby creating a regional
financial hub. Once a regional hub is established, individual companies
will have greater relevance to compete throughout the African continent.
• The challenge for policy is therefore how best to support the synergies
between Gaborone and Johannesburg through co-operative crossborder governance.
• The platform created between the two countries bodes well for
regionalism.
• Removal of visa requirements is a key factor given the historical ties of
Botswana & RSA- from SACU in 1910.
Financial Secrecy Perception
Botswana’s 73% secrecy
score in the 2013 Financial
Secrecy Index (FSI) shows
that it must make major
progress in offering satisfactory
financial transparency.
If Botswana wishes to play a
meaningful part in the modern
financial community and to
impede and deter illicit financial
flows, including flows originating
from tax evasion, aggressive tax
avoidance practices, corrupt
practices and criminal activities,
it should take action and do
away with any laws deemed as
“Secrecy Bills” that regulate the
classification, protection and
dissemination of information.
Source: http://www.financialsecrecyindex.com/
Transparency and Investor Perceptions
•
•
Secrecy has led to corruption in the African continent as evidenced by the
Corruption Index Perception
This African problem hinders regional approach to IFSC. A step required for clearer
perceptions.
Ease of Doing Business
Ease of Doing Business Report presents quantitative indicators on business regulations
and the protection of property rights that can be compared across 189 economies.
Botswana, currently ranked 56, continues to improve its score, but as for most of
Africa, it’s a different story.
Economic Diversification
Botswana is less diversified than South Africa, Namibia and Morocco
Employment Opportunities
IFSCs do provide opportunities to diversify the economy but historically, the are
known to generate less employment opportunities.
E-Legislation
Electronic Commerce
•
•
•
•
•
Data Protection- new legislation required
Electronic commerce- new legislation required
Electronic signature- new legislation required
Cybercrime and Computer Related Crimes Act – review Act
Electronic Evidence Bill – review existing Bill
These legal challenges must be addressed, hence;
 The development of simple, consistent and technology-neutral legislation which
recognizes all ICT processes and transactions.
 Should include recognition of electronic transactions as valid and legal
transactions, with the same force and effect as paper based transactions. This
will give confidence to consumers and the business community and in many
ways enhance economic development of the country and a confidence builder for
regionalism.
Conclusion
• Greater integration of physical and economic infrastructure systems
(friendship bridges)
• Encourage comparative advantages to entrench synergies between
JHB and GBE
• A skilled labour force and flexible labour and immigration policy
• No single country possesses all the attributes for regional leadership
• Address the infrastructure gap to further boost economic growth and
foster integration, not only across the region, but as well as in Africa
• Liberal immigration policy to attract the best skills in the continent and
globally
• As long as Africa continues to have problems of governance, the
challenge for performers like Botswana remain great. A regional hub
requires a regional platform to tap into the opportunities
Thank you