A bridge into Africa: the Botswana International Financial Services Centre is broadening its activity base and expects to become, among other things, the bridge between international companies wishing to do business with nations north of the Limpopo and the countries themselves.
"This is the strategy I now want to follow--call-centres for companies based in other countries, companies wanting to use Botswana as a springboard into Africa--not necessarily just financial processing," he says. "Our original legislation was limiting, narrowly structured on the traditional requirements of financial services. Our new approach will match the needs of more potential investors."
The remit to attract those traditional financial services would still be the core business of the Botswana IFSC, but there has to be more flexibility. "Our basic objective remains to get regional and international operations to base in Botswana, but we have to move with the markets and give people what they want--companies on the move are more interesting to investors, so it is with countries," Boshwaen says.
His first-line target companies are in South Africa. Many are eager to expand northwards, but, says Boshwaen, have little experience of doing business without the infrastructure of Africa south of the Limpopo to rely on.
"They are realising that the perfectly adequate business plans they have in South Africa often won't work north of their border, and certainly not beyond ours. The new markets to the north have distinct characteristics which need specific solutions," he believes. "Botswana is closer to the countries in which they want to operate in terms of the way business is done and companies have to be run. We can bridge the gap."
He has recently signed up Micro-Provident Africa--a retail lending company--which intends to expand first into Uganda, where it will start operations before the end of 2005, into Tanzania during 2006 and later into more southern Africa states. The company already has a successful Botswana operation which will now be a subsidiary of the Botswana IFSC-based regional operation.
Recent research into the potential to set up international call-centres in Botswana has estimated between 10,000 and 15,000 could be created. "There is interest, it is viable. Two local call-centres are now gearing up to work internationally," Boshwaen says. He is talking to companies not only indigenous to South Africa, but many others that are subsidiaries of international operations and who, he says, are often more aware of the problems of 'going north'.
Strong international approval
Botswana's IFSC has considerable international approval. Micro-Provident has the International Financial Corporation of the World Bank as its partner. IFSC-approved companies also benefit from Botswana's standing with international credit rating agencies Standard and Poor's and Moody's which have given the country the best ratings in Africa--and better than those enjoyed by some European countries.
Finance minister Baledzi Gaolathe also believes that the further development of Botswana's economy is closely linked to regional investment and cooperation.
Centrally placed in the Southern African Customs Union (SACU) and the Southern African Development Community (SADC), markets for its goods and services will develop in the member states of those regional groupings and farther north.
"I am optimistic," he says. "There is the determination in those countries to flourish. They will need goods and services--the more they need, the more we will be able to supply to them."
Botswana's drive to attract foreign direct investment (FDI) had been constrained by its small (1.7m) national market; but the SADC region alone has a market of 200m people. Within SACU there is free movement of goods as there will be within SADC by 2008.
Companies accredited to the Botswana IFSC enjoy a guaranteed corporate tax rate of 15% until June 2020--the usual rate is 25%. They have access to Botswana's expanding double taxation treaty network (at present South Africa, UK, Mauritius, Sweden, France, Zimbabwe, Namibia, India and Russia). Where there is no double taxation agreement yet in place, there are credits for withholding taxes levied in other jurisdictions; tax exemption for Collective Investment Undertakings and access to Botswana's 200% tax rebate on training costs.
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|Date:||Dec 1, 2005|
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