BOTSWANA INTERNATIONAL FINANCIAL SERVICES CENTRE IFSC

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BOTSWANA INTERNATIONAL FINANCIAL SERVICES CENTRE
(IFSC)

• OPPORTUNITIES IN THE FINANCIAL SERVICES SECTOR
• BOTSWANA INVESTMENT FORUM
• LONDON
• 14TH JUNE 2005

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CONTENT

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

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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 GMT2

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WHAT IS BOTSWANA IFSC

• AFRICAS ONLY ONSHORE CENTRE, PROVIDING A RANGE
  OF INCENTIVES TO COMPANIES ENGAGED IN CROSS
  BORDER SERVICES

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BUSINESS ENVIRONMENT

• No exchange controls
• Highest investment grade sovereign credit rating
  in Africa (Moodys Standard Poors)
• Most competitive business environment in Africa
  (WEF)
• Freest economy in Africa (Heritage Foundation)
• Least corrupt in Africa (Transparency
  International)

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BUSINESS ENVIRONMENT contd

• 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 investors property rights
  (Accenture)
• Lower operating cost structure to tradition
  offshore centre
• Botswana IFSC not positioned as a tax haven

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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

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INCENTIVES contd

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

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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

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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 US0.1 for gt500K minutes per
  month)

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TECHNOLOGY INFRASTRUCTURE
SDH / Fibre where population densities highest
Microwave radio for lower density areas
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TECHNOLOGY INFRASTRUCTURE

• Multiple Redundancy International Fibre Optic
  Links

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SECTORS

• Cross Border Banking
• Corporate Holding Structures / Group Treasury
  Operations
• Fund Management / Administration
• Intl Insurance / Reinsurance / Captive Insurance
• Business Process Outsourcing

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HOLDING STRUCTURE / GROUP TREASURY

• Dividend management
• Head office support functions, such as finance,
  I.T, training
• Intra group financial management

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INTERNATIONAL INSURANCE

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

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BUSINESS PROCESS OUTSOURCING

• Captive Shared Service Centre
• Third Party Suppliers
• US 8 per seat / hour

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CASE STUDY - SICAPITAL

• Debt securitisation vehicle
• Purchase debt from technology multinational
• Issues commercial paper against that debt to
  regional institutional investors

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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

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CASE STUDY ANDISA CAPITAL

• Subsidiary of Standard Bank of South Africa
• Specialist treasury and financial advisory firm
• Provides management services to SICAPITAL

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CASE STUDY

• Type Data
• Ownership India / Botswana
• Destination USA
• Services Medical Transcription
• Projected scale 250

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CASE STUDY

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

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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

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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

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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

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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

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OPPORTUNITIES Regional (IFSC)

• Growing investment opportunities in Africa
• However, environment still presents major
  challenges in many countries
• Botswana IFSC environment offers Risk
  Mitigation solution

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CONCLUSION

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

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WITFOR 2005

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

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SAMPLING OF IFSC COMMUNITY
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THANK YOU
www.ifsc.co.bw For more information.