BOTSWANA INTERNATIONAL FINANCIAL SERVICES CENTRE (IFSC) OPPORTUNITIES IN THE FINANCIAL SERVICES SECTOR BOTSWANA INVESTMENT FORUM LONDON 14 TH JUNE 2005

Introduction Botswana: an attractive offshore alternative - Business Environment - Incentives - Technology Infrastructure - People - Sectors - Case Studies - Opportunities Conclusion CONTENT

BOTSWANA Heart of Southern Africa: Angola, Namibia, South Africa, Zambia, Zimbabwe Multiparty democracy, cosmopolitan, high levels of personal safety Top Tourism Destination National language: English Time zone: GMT+2

WHAT IS BOTSWANA IFSC AFRICA’S ONLY “ONSHORE” CENTRE, PROVIDING A RANGE OF INCENTIVES TO COMPANIES ENGAGED IN CROSS BORDER SERVICES

BUSINESS ENVIRONMENT No exchange controls Highest investment grade sovereign credit rating in Africa (Moody’s & Standard & Poors) Most competitive business environment in Africa (WEF) Freest economy in Africa (Heritage Foundation) Least corrupt in Africa (Transparency International)

BUSINESS ENVIRONMENT cont’d Short time to register company A legal / fiscal system that provides the right framework Signatory to International Conventions combating money laundering and financing of terrorism Law protects investor’s property rights (Accenture) Lower operating cost structure to tradition “offshore” centre Botswana IFSC not positioned as a tax haven

INCENTIVES Low corporate tax - 15% No WHT on dividends, interest, royalties, management fees etc Unilateral credit for WHT suffered in other jurisdictions Double Tax Agreements (UK,, SA, Namibia, Zimbabwe, Mauritius Sweden, India etc.) Treaties with other SADC member states under negotiation

INCENTIVES cont’d Tax rebate for training - 200% No Value Added Tax Ministerial Exemption Order (2002) enables importation of specialised personnel Guaranteed in law until 2020

PEOPLE UK cultural alignment (history, legal framework, education system) High per capita expenditure on education, over 25% of annual budget Approximately 28,000 citizens placed in tertiary institutions within and outside Botswana Graduate labour pool, readily trainable Literacy rate approximately 80% Performance culture (Govt. rollout of PM) Unions relatively business friendly

TECHNOLOGY INFRASTRUCTURE Full range of technologies - ADSL - VSAT - VOIP (2005) Data Protection Legislation expected by end 2005 Competitive telephony rates – volume based (UK & USA outbound traffic US$0.1 for >500K minutes per month)

TECHNOLOGY INFRASTRUCTURE Kasane Jwaneng Nata Francistown S-Phikwe Mahalapye Orapa Letlhakane Ghanzi Maun Lobatse Gaborone SDH/ Fibre 140M PDH Radio 34MPDH Radio PDH/ Fibre Palapye Mohem bo SDH / Fibre where population densities highest Microwave & radio for lower density areas

TECHNOLOGY INFRASTRUCTURE Multiple Redundancy International Fibre Optic Links Walvis Bay SAT3/W ASC Lusaka Windhoek EASC Dar es Salaam Maputo Cape Town Mtunzini Luanda

SECTORS Cross Border Banking Corporate Holding Structures / Group Treasury Operations Fund Management / Administration Int’l Insurance / Reinsurance / Captive Insurance Business Process Outsourcing

HOLDING STRUCTURE / GROUP TREASURY Dividend management Head office support functions, such as finance, I.T, training Intra group financial management

INTERNATIONAL INSURANCE Legislation passed by parliament April 2005 Enables reinsurance, captive, & insurance brokerage activities Member of IAIS & CISNA

BUSINESS PROCESS OUTSOURCING Captive Shared Service Centre Third Party Suppliers US$ 8 per seat / hour

CASE STUDY - SICAPITAL Debt securitisation vehicle Purchase debt from technology multinational Issues commercial paper against that debt to regional institutional investors

CASE STUDY – ENTERPRISE BANKING GROUP Bank Holding Company IFSC hub for raising capital with international development finance institutions Invests in banking entities in East and Southern Africa

CASE STUDY – ANDISA CAPITAL Subsidiary of Standard Bank of South Africa Specialist treasury and financial advisory firm Provides management services to SICAPITAL

CASE STUDY Type:Data Ownership:India / Botswana Destination:USA Services:Medical Transcription Projected scale:250

CASE STUDY Type:Voice Ownership:UK / SA / Botswana Destination:UK Service:Telemarketing of Mortgage Products / Lead generation for IFAs Projected scale:500

CASE STUDY Type:Voice Ownership:Canada / Botswana Destination:Sub Saharan Africa Services:GPS enabled Location Based Services, Telemarketing / Sale of GPS Solutions Projected Scale:50

CASE STUDY – AON RISK MANAGEMENT Assist mining and resource companies minimize business & political risk in 13 African countries Parent is NYSE listed, Fortune 500 Company Provide Management Services to Captive Insurance Companies in Botswana

CAPITAL MARKET DEVELOPMENT Botswana Stock Exchange (BSE) - Local Mkt Cap – 2.2 billion (USD) -Foreign Equity Mkt Cap – 39 billion (USD) Pension Funds -2.8 billion USD under management -50% off shore

OPPORTUNITIES – Botswana (Domestic) Sectors / Initiatives: -Banking, ICT, Mining, (financial) advisory, consulting services -Government outsourcing of non core functions -Privatisation – banks, telecomms etc Domestic investments can be used as platform for regional initiatives

OPPORTUNITIES – Regional (IFSC) Growing investment opportunities in Africa However, environment still presents major challenges in many countries Botswana IFSC environment offers “Risk Mitigation” solution

CONCLUSION IFSC active business centre Specialist financial services available locally Business friendly flexible environment

WITFOR 2005 World Information Technology Forum Hosted by Government of Botswana August 31 – September 2, 2005 Theme: ICT for Accelerated Development

SAMPLING OF IFSC COMMUNITY

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