Botswana IFSCBotswana as an Emerging

Outsourcing and Offshoring Centre

Overview

• Positive Investment Climate• What is the Botswana IFSC?• Attributes of the Botswana IFSC• Opportunities • Business Process Outsourcing /

Call Centres• Holding Companies • Funds• Capital Markets• Catalysts

Positive Investment Climate• The government of Botswana

managed the economy extremely well after independence. A positive climate for private sector investment was established.

Commission for Africa

What is the Botswana IFSC?• Aims to develop Botswana as a

world-class hub to facilitate delivery of wide range of cross-border financial services.

• Encourage skills transfer to develop sophistication of financial sector

• Not positioned as tax haven.

Goals

• Measures• Jobs created• Capital

employed• Tax revenue• Measurable

linkages with rest of economy

Attributes of the IFSC

• Benign tax regime• No exchange controls • Growing Double Tax Agreement

Treaty Network • Withholding Tax exemptions for

jurisdictions without treaties. • No Capital Gains Tax (CGT)

Opportunities

Investment Funds

International

Insurance

Non-financial

Companies

BanksCapital Markets

Cross-Sectoral Activities

AfricanAfricanPrivatePrivateEquityEquityFundsFunds

Pan AfricanPan AfricanInfrastructureInfrastructure

FundsFunds

African Centre forAfrican Centre forInternationalInternational

InsuranceInsurance

Pan AfricanPan AfricanBankingBankingGroupsGroups

Pan AfricanPan AfricanCommoditiesCommodities

ExchangeExchange

Centre forCentre forStructured FinancingStructured Financing

Administration & Shared Services CentresAdministration & Shared Services Centres

BPO & Call CentresBPO & Call Centres

Business Process Outsourcing and Call Centres• Lower total costs than South Africa:

– £150 for new agent to £350 for experienced agent

– Rental rates: £5.00 - £6.50 per square metre

– Affordable international telephony rates (£0.02 – 0.03)

• Readily available pool of skilled labour • Close cultural alignment with UK• Botswana provides Western investors

with a solid business proposition for outsourcing services over the long term - Datamonitor

Holding Companies

• Opportunity for companies with growing African network to consolidate financial and administrative functions.

• Micro Provident – Leading domestic micro-lender

extending model into region. – International investors, including FMO,

IFC, Kingdom Zephyr. – Total projected investment of US$45

million– Operational in 3 countries, opening in

4 more next year

Funds• Second largest pension fund

industry in Sub Saharan Africa with £2.3 billion under management.

• A Fund Manager’s view of Botswana– Access to global financial information– Advanced telecoms/ robust connectivity

at competitive rates – Credit rating could be critical in

attracting investment flows– Botswana's liquidity a potential source

of funding to tap into – Transparency/corruption rating and

abolition of FX controls

Capital Markets

• Pan African Commodities and Derivatives Exchange (PACDEX) – Multi-commodity exchange based in

Botswana– Endorsed by African Union– Sponsored by private company - PACP– Mumbai Commodities Exchange strategic

partner• Operates second largest commodities

exchange globally• Recently opened Dubai Gold and

Commodities Exchange – Will lead to improved price discovery,

increased intra African trade, broadening of financial instruments.

Catalysts

• Diamond Trading Company

Botswana

• Availability of pension funds

• Telecommunications

liberalisation

• Botswana Innovation Hub

Conclusion

• Commission into Africa notes

Africa needs:

A partnership between Africa and

the developed world which takes

full account of Africa’s diversity

and particular circumstances.

Thank You.Botswana International Financial Services Centre

2006.