Market Profiles

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Botswana Stock Exchange Limited (BSE Limited)

The Botswana Stock Exchange Limited (BSE Limited), established in 1989, is the only Stock Exchange in Botswana  following the demutualization in August 2018 it is  81.3% owned by Government of Botswana and 18.7% owned by the four (4) stockbrokers(African Alliance Botswana Securities, Imara Capital Securities, Motswedi Securities, Stockbrokers Botswana)

and under the control of the Ministry of Finance. The Exchange regulates the securities market in Botswana, which currently comprises of shares, bonds and Exchange Traded Funds (ETFs) at present. Furthermore, the BSE Limited has the regulatory framework and capacity to accommodate the listing of Investment Funds, Commercial Paper and Global Depository Receipts, among others. Following the recommendations put forward by the NBFIRA, the Minister of Finance and Economic Development has declared the BSE as a self-regulatory organization (SRO). The Order, the Non-Bank Financial Regulatory Authority (Declaration of Botswana Stock Exchange Limited as Self-Regulatory Organization) Order, 2020 was published in the Government Gazette under Statutory Instrument No.26 of 2020 on 13 March 2020.

The Central Securities Depository Botswana (CSDB) is managed by the BSE and is mandated by Bank of Botswana (BoB) to operate a clearing settlement system in accordance with the provisions enshrined in the National Clearance and Settlement Systems Act (No. 5 of 2003). The central bank (BOB) regulates funds settlement processes whereas NBFIRA is responsible for the securities market processes. The CSDB complies with the principles of the International Organization of Securities Commission (IOSCO).

Securities Act and BSE Transition Act

The Securities Act was approved by Parliament on 28 July 2014 and it was enacted on the 1^st April 2017.  The Act consolidates and amends the laws relating to the regulation and supervision of the securities market in Botswana. This Act fall into the bailiwick of the Non- Bank Financial Institutions Regulatory Authority (NBFIRA).

The BSE Transition Act was approved by Parliament in November 2014 and subsequently commenced on 1 December 2015, in preparation for the BSE Limited, converting into a public listed company. Both Acts will have a positive and far reaching impact on the functionality of the capital market and the BSE Limited itself as an organization. In December 2015, demutualization commenced and was completed on 2 August 2018 with the registration of BSE Limited. 

The constitution of the BSEL states that he Board  of the BSEL shall consist of the Chairperson of the Board, the Chief Executive Officer, and such number of directors elected by the shareholders of BSE as is fixed from time to time by resolution of the Board, provided that such number shall not be less than eight (8) and no more than ten (10), inclusive of the Chief Executive Officer. The Chief Executive Officer shall be an ex officio member of the Board of Directors and shall not be entitled to vote.

Stockbrokers Botswana Limited (SBL), Motswedi Securities (Pty) Ltd , Imara Capital Securities (Pty) Ltd and African Alliance Botswana Securities Limited are the four registered stockbrokers in Botswana. 

The BSE implemented an Automated Trading System(ATS) with effect from August 2012.

Brokerage fee are transaction fees levied on any purchase/sale of shares.

ISIN (International Securities Identification Numbering): Yes
Other: Local Codes

Botswana Stock Exchange Committee: oversees brokers and drafts policies for approval by the Ministry of Finance and NBFIRA.

Non-Bank Financial Institutions Regulatory Authority (NBFIRA): Some specified provisions of the NBFIRA were enacted on April 1, 2008 to prudentially regulate non-bank financial institutions such as the asset managers, insurance companies, custodians, brokers, collective investment undertakings etc.

The Non Bank Financial Institutions Regulatory Authority Act 2016 (NBFIRA Act), was promulgated into law by the parliament of Botswana on 1 December 2016). The Act repeals the NBIFRA Act 2006 and  seeks to reset the regulatory and supervisory architecture of the NBFI sector.

The NBFIRA (Authority) established under the repealed 2006 NBFIRA Act  will continue to exist as if established under the 2016 NBFIRA  Act. Its mandate is to regulate and supervise non bank financial institutions so as to foster;

• Fairness, efficiency, safety, soundness and orderliness of the non bank financial sector
• Uphold the highest standards of conduct of business
• Ensure stability of the financial system.
• Reduce and deter financial crime

This, it will carry out by;

• Advising the ministry on matters relating to the non bank financial institutions whether by its own accord or at the request of the ministry
• Promoting public understanding of its mandate
• Making rules and setting standards as well as providing guidelines
• Performing functions as conferred to by this Act and other financial services laws.

The operational aspects of the repealed NBFIRA  2008 Act will now be detailed in the different sector specific legislation such as the Securities Services Act which is yet to be promulgated and the CIU Act  which will regulate custody and administration of securities and collective investments respectively.

Bank of Botswana: is the central bank which regulates the financial system. It was established on July 1, 1975 and monitors financial institutions and their foreign exchange exposure, issues short-term instruments (BoBCs) to improve domestic liquidity and short-term interest rates.

Ministry of Finance: appoints the committee of the BSE, endorses policy and has overall responsibility for securities dealings.

The Financial Intelligence Agency (FIA) was established in 2010, based upon the provisions of the Financial Intelligence Act No.6 of 2009, for the purpose of combating money laundering and the investigation of suspicious transactions. The FIA requests, receives, analyses and disseminates information on financial disclosures on suspicious transactions to law enforcement agencies, Supervisory Authorities and Comparable Bodies. Additionally, the FIA acts as the secretariat of the National Coordinating Committee on Financial Intelligence (NCCFI), which is the national policy making body for combating financial offences.

The Financial Intelligence Act, 2019 came into effect on 4 September 2019. The Act has been re-enacted to continue the establishment of the Financial Intelligence Agency and the National Financial Intelligence Coordinating Committee an aim to:
• Provide the reporting of suspicious transactions and other cash transactions;
• Provide for mutual assistance with comparable bodies outside Botswana in relation to financial information and for matters connected there with and incidental thereto.

Botswana Stock Exchange (BSE) implemented a Central Securities Depository known as Central Securities Depository Company of Botswana Ltd (CSDB) on 22 May 2008 for the clearing and settlement of equities. It is structured as a central share registry and not as a trust.  It is currently 100% owned by Botswana Stock Exchange.  There are electronic standalone points with participants, brokers, custodian banks and Transfer Secretaries.

NBFIRA through a directive No1, 2014, issued a directive for the full dematerialization of securities. Subsequently by the 31 March 2016, all listed shares were dematerialized. The dematerialization of listed bonds started by August 2016 and is currently ongoing and the progress is currently estimated at 99%

Government bonds and money market instruments are dematerialized at the Bank of Botswana.

Registration at the CSDB is at a segregated, beneficial owner level and registration at the Bank of Botswana is at omnibus level. Each Bank of Botswana participant has 2 accounts i.e Client and OWN accounts. All custody clients are registered in the Banks CLIENTS account. This set up ensures separation between client assets and proprietary assets.

In November 2018 the Botswana Stock Exchange and the Central Securities Depository  hopes to roll out the new depository system supported by CMA Small Systems called DEPOx in mid 2020.

The new systems functionalities  will address the gaps in the current system and also address the recommendations in the single CSD  case. Other Functionalities include e-voting, linkages with market participants to allow for simultaneous settlement of cash  and securities, settlement using central bank money, securities lending as well as the settlement  and investor guarantee funds. The functionalities will ensure alignment  and growth within the Financial markets.

For equities, the minimum price variation unit is BWP 0.01.

BWP

OTC market named Serala OTC board. Trading on the Serala OTC Board follow the BSE ATS trading rules for Equity Securities. Securities should be dematerialised to be registered on this Board. Currently the only counter listed on the Serala OTC is the BBS Limited.

Book Entry: There is a DVP/RVP system for the securities which have been transferred to the CSDB. Securities are transferred by the CSDB via book-entry transfer upon confirmation of cash settlement by the settlement bank (Standard Chartered Bank Botswana). There is a 30 minute gap at settlement due to the use of different systems.

Physical: On TD, trades are executed by brokers on BSE. On TD+1 at the latest, the contract note is sent by the broker to its client and to the local subcustodian, if requested by the client. Even if it is not compulsory, settlement cannot occur without successful pre-matching which is performed by the local subcustodian. 

Affirmation is performed on T+2 at 9.00 am with the depository. Funding of trades should be done before affirmation or prior arrangement should be done before SD-2 by 17:00 to cover settlement.

Security name, price, number of shares, net amount, settlement date and contract note reference are verified and should the trade be not pre-matched, the instruction remains outstanding until the client cancels or amends it.

On TD+3, the foreign exchange contract is executed.

On TD+3, the broker and the local subcustodian settle through CSDB.

At present, the stockbrokers maintain accounts with the settlement bank which in this case is Standard Chartered Bank Botswana. 

CSDB Penalties on settlement failure will be applied as per the CSDB rule:

Market deadline T+2 12:00hrs.

Market deadline T+2 12:00hrs.

PENALTIES

Failure to settle money obligations on the due settlement day shall attract a penalty of 15% of the value of the failed trade as detailed in section of Failed Trades in the CSDB Rules.

Failure to pay the above penalty on due date shall attract an additional daily penalty fee of the prevailing Prime rate +3% on the value of the transaction.

Penalties collected from Depository Settlement Participants during clearing and settlement shall be deposited to the CSDB by T+4 12:30hrs.

Short selling is not yet available to the market in Botswana, it is currently only open to the brokerage community once they have  sought approval  from the CSDB/BSE.

Turnaround trades are not allowed in the market.

None

On May 22, 2008, the Botswana Stock Exchange (BSE) launched a new Central Securities Depository for equities and corporate bonds  called The Central Securities Depository Company of Botswana Ltd (CSDB).

The Central Securities Depository Company of Botswana Ltd (CSDB) is incorporated as a public company and operates as a central depository to the Botswana Stock Exchange (BSE).CSDB will be regulated under the Botswana Stock Exchange Act (BSE), Non-Bank Financial Institutions Regulatory Authority Act (NBFIRA), and the National Clearing and Settlement Systems Act no.5 (NCSS).

Securities will be held in dematerialised form in the name of the subcustodian with client designation. An investor who wishes to buy/sell listed shares on the BSE will need to open an account and, if selling, deposit them at the CSDB. Purchasers of securities will be credited with securities in dematerialised form to be held at the CSDB, however investors can opt to withdraw the shares from the CSDB and convert them into physical certificates.

The following fees will be charged by the CSDB:

• CSD fees on transactions will be charged at 0.12% of the total value rounded up to the nearest BWP 0.50
• Transfers within the CSD will be charged at BWP50 per transfer to the transferor
• Withdrawals from the CSD will be charged at BWP100.00 per transaction
• Reallocation P25

All local listed and foreign companies securities are now dematerialised. The dematerialisation process of transferring all other securities (corporate bonds) is currently underway. We do not have a target timeline for the completion of this project.

All government debt is safe kept at the Bank of Botswana depository. This is separate from the CSDB.

CSDB introduced a new depository system, DepoX on September 23, 2022. All migrated accounts will be available in Depo-X as a read-only field for 2 years after go-live.

BIS is an international organisation which fosters cooperation among central banks and other agencies in pursuit of monetary and financial stability. The Committee on Payments and Market Infrastructures (CPMI) uses three common structural approaches, or models, to categorise the links between delivery and payment in a securities settlement system.

CSDB securities - Securities for the listed companies transferred to CSDB are held in dematerialised form and settle in the depository by DVP. Funds are transferred to the buyers and sellers through the settlement bank (currently Standard Chartered Bank Botswana). The CSDB has adopted BIS Model 2 (gross settlement of securities transfers followed by net settlement of funds) as a structural approach for linking delivery and payment is a securities settlement system. The Bank of Botswana and The CSDB have agreed to move the settlement to the central bank. 

CSDB acts as the central registrar. Agents (National transfer secretaries) are appointed by issuers as registrars. The main registrar in the market is PricewaterhouseCoopers who have about 60% of the market share. The other registrars in the market are Corpserve and Grant Thornton.

CSDB has been structured as a Transfer Secretary to all listed entities at BSE. CSDB in turn outsourced its services to the different transfer secretaries in the market through a Tripartite Agreement entered into between the Issuer, CSDB and the respective Issuer. The main registrar in the market is PricewaterhouseCoopers. The Central Securities Depository Company of Botswana (CSDB) intends to terminate the tripartite agreements that it has in place with the listed companies and nominated transfer secretaries (NTS). The Securities Act No. 24 of 2014, requires transfer agents to be licensed and regulated by the Non-Bank Financial Institutions Regulatory Authority (NBFIRA). As NTS's are not transfer agents as defined in the Securities Act No 24 of 2014, none of the NTS's have been licensed. The tripartite agreements that were entered into by the CSDB with listed companies and all NTS service providers prior to the enactment of the Securities Act No 24 of 2014 do not properly align with the legislation. The CSDB therefore, intends to terminate all these tripartite agreements by 31 March 2020.

Share holdings may be required to be disclosed by the beneficial owner, particularly when holdings reach or exceed prescribed disclosure limits. Investors must ensure that they comply in full by reporting such holdings to the appropriate organisations for this market, within the timeframe required. If you have any questions regarding this issue, we encourage you to consult your legal counsel. 

Failure to comply with reporting requirements may lead to penalties and/or other sanctions.
5% and above of the total number of securities of a class that have been issued. The Companies Act provides that any person who becomes a substantial shareholder(defined as a person who holds beneficial interests equal to or in excess of 5 percent of the total number of securities of that class issued by the Issuer) shall inform the Issuer/Botswana Stock Exchange within 14 days of becoming a substantial shareholder, falling which you may be liable for a fine of P100 000.00 or imprisonment for not more than 2 years.

Failed trades are not common, there are no set procedures for buy-ins.

The BSE CEO can order the defaulting broker to buy-in the necessary securities within one week of notification but this is entirely at the BSE CEO’s discretion and rarely happens in practice. The CEO can also set aside the failed trade or refer it to the Investigations Committee for review. There are penalties for failed settlement. Currently failed trades penalties are levied 15% of the trade.

There is no central securities lending facility in Botswana. Market participants are permitted to engage in securities lending on a bilateral basis although this is not common market practice. Talks to formalise the securities lending is still at the infant stage.

The BSE maintains a small guarantee fund known as the Security Fund which can be used to compensate investors in the event that a BSE member defaults. It is also mandatory for brokers to hold an insurance policy of not less than BWP 500,000.  The Securities Act 2014 also contemplates the establishment of the settlement assurance fund . The BSE/CSDB has communicated their wish to have this up and running within the next 2 years.

The Non-Bank Financial Institutions Regulatory Authority (NBFIRA) had approved the Investor Compensation Fund Rules (ICF rules). The Investor Compensation Fund, among other things grants the compensation to investors for loss suffered as a result of non-fulfilment of contractual obligations by Securities brokers who are members of the BSE, the Central Securities Depository Company of Botswana and any other entity as the BSE may determine from time to time.

Botswana is not a member of the Financial Action Task Force on Money Laundering (FATF), and is not on FATF’s blacklist. Botswana is a member of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), a regional FATF-affiliated body and has signed the ESAAMLG Memorandum of Understanding on money laundering. Botswana has signed and ratified the UN Convention Against Illicit Traffic in Narcotics Drugs and Psychotropic Substances of 1988 . 

The Directorate on Corruption and Economic Crime (DCEC), along with the Bank of Botswana, co-ordinates the efforts of, and co-operates with, all organisations involved in the anti-money laundering fight. Banks and financial institutions are required to report suspicious activities of all clients under the Banking Act, and bankers are protected by law if requested to co-operate with law enforcement entities. The Botswana government has established an agency that will combat money laundering The new organ is called Financial Intelligence Agency and is expected to be fully operational by April 2011. 

Botswana’s legislation that addresses the issue of money laundering, the Proceeds of Serious Crime Act 1990, provides penalties for those involved in money laundering including the confiscation of the proceeds.

Below is a list of Botswana laws and regulations that provides for the need for a bank to have necessary money laundering prevention measures in place as a core part of the business: 

• Banking Act, 2003
• Banking (Anti-money laundering) regulations, 2003
• Financial Intelligence Act, 2013
• Financial Intelligence Regulations, 2013
• Proceeds of Serious Crimes, 2002
• Counter Terrorism Act, 2015

For clients serviced out of certain locations this is an FII market. Please refer to the Terms & Conditions for Global Custody or contact your RBC Investor Services' Client Manager before making portfolio investments.

Foreign and local investors are not permitted to purchase Bank of Botswana certificates (short term papers with a maximum 90 day maturity).  Foreign investors are also not allowed to invest in Botswana Telecommunications Corporation equity shares.

There are no prefunding requirements as BWP can be purchased with same, next or two-day value. Foreign investors must open non-resident BWP accounts, funded by the inward remittance of foreign currency. Foreign investors may repatriate sale proceeds and income freely, subject to the availability of foreign currency reserves.

The repatriation of capital, capital gains and income is not subject to any exchange controls. The Botswana Pula (BWP) is freely convertible.

Payments for physical securities transactions can be made by cheque payment. Broker-to-broker and broker-to-custodian payments can be effected by RTGS.

Effective October 1, 2009 the threshold for large value payments has been set at BWP 500,000.00. Therefore any payment made by cheque in excess of BWP 500,000.00 will no longer be processed by the ECHB. All high value payments will be directed through the Botswana Inter-bank Settlement System (BISS) for immediate and guaranteed settlement. Fund availability to payee accounts will also be improved.

Effective January 1, 2024, the use of cheques will be discontinued. 

The Bank of Botswana introduced the BISS, a real-time gross settlement payment system on November 17, 2006, which performs four main functions: 

• BISS settlement accounting on behalf of participants and associated liquidity management facilities
• Handling Central Bank's inward and outward BISS payments
• Processing BISS account transfers (initiated by Central Bank) across participants' accounts.
• Payments over BWP 500,000

However, BISS is limited to local currency funds transfer and foreign investor's transfers are still conducted using the current system.

Overdrafts are not permitted in the market. Should client require credit lines, they may get into contact with their relationship managers.

Record date is usually on a Friday followed by ex-date on the Monday. There is no standard timetable for dates relating to income payments and pay date can be between two and four weeks after books closing date. 

Physical: entitlements are based on the traded positions at record date.
Book entry: entitlements are based on the settled positions at record date.

Quarterly and semi-annually

Semi-annually and Quarterly

Not applicable

It is mandatory for issuers to notify corporate actions announcements to the stock exchange and publish details in local newspapers. BSE posts this information on its website. Such information is also published in weekly bulletins from brokers and may also be published in the local press by the issuers themselves. Market practice is for announcements to be made at least 21 days prior to the event (Annual General Meeting). 

Bonus shares and shares resulting from corporate events rank pari passu 10 days after pay date.

Key dates are:

• Last date to Register (LDR) normally a month after announcement
• Ex date normally LDR+1
• Payment date normally a month after LDR.

Book Entry: Only those shares registered in the names of the account holders as at the date of entitlement will be taken into account. i.e. transactions pending will be excluded in generating the entitlement schedule.

Unrestricted voting rights

No

Provided in English. 

Companies are required to hold their Annual General Meeting (AGM) within 15 months of the previous year’s meeting. AGMs are held throughout the year. Annual general meetings and extraordinary general meetings must be announced at least 21 days in advance. Meetings that do not require the passing of a "special resolution" must be announced 14 days in advance. Meeting information is sent to registered shareholders by post.

On request subject to availability

Available, subject to request.

Not required for holdings registered in nominee name

Votes can be exercised in person or by Power of Attorney (POA). Physical attendance at the AGM is not required, although votes exercised by proxy card will need to be returned to the company at least 48 hours prior to the meeting. Votes can be taken by a show of hands at the meeting. Shares held in physical form are not blocked from trading or settlement around the date of the meeting

10% withholding tax at source.

Interest on government and corporate bonds is taxed 15% at source.

Since July 1, 2011, any shares, units or debentures of a resident company listed on the Botswana Stock Exchange and held for a period of less than one year are subject to Capital Gain Tax (CGT). 

Bonds and debentures issued by the Government of Botswana, Bank of Botswana, statutory body and special purpose vehicles formed by the Government of Botswana for securitisation of public debt and any shares in an International Financial Services Centre company are exempted from CGT.

Overview of the CGT regime:

Any shares, units or debentures of a resident company which have been held for a period of at least one year prior to disposal are exempt under the following conditions:

• The company is a public company under section 130
• The shares, units or debentures are traded on the Botswana Stock Exchange
• The company has released for trading 49% or more of its equity shares on the Botswana Stock Exchange

Non-resident investors eligible to a Double Tax Treaty Agreement between their country of residency and Botswana may be exempted from CGT. 

As of February 9, 2012, Botswana entered into a Double Tax Treaty Agreement with Russia, Mauritius, Sweden, UK, India, South Africa, Namibia, France Barbados, Seychelles and Zimbabwe. See full list of countries which Botswana currently has DTTs with: 

2) Calculation 

For corporate shareholders, 75% of the net aggregate capital gain of a company is subject to a 22% withholding tax rate.
For other shareholders, the tax is calculated pursuant to a progressive tax table. 

RBC Investor Services would like to remind our client about the following:

• 5% withholding tax rate on dividends when paid to both resident and non-resident investors
• 15% withholding tax rate on interests when paid to non-resident investors
• Interests from International Financial Services Centre companies, banks and financial institutions which are supervised by the Bank of Botswana or other statutorily established agencies are not subject to tax
• Need to register for Income Tax for non-resident investors

The appointment of a local Tax Consultant for the tax computation and filing is mandatory even if this is not requested at the securities account opening. Clients are requested to contact the tax agent of their choice on the market

None

Value Added Tax (VAT) is 14% from April 1, 2021. 

VAT is reduced for 6 months to 12% from March 31, 2022.

Botswana Holiday Calendar

• Botswana Stock Exchangebse.co.bw
• Republic of Botswana gov.bw
• Ministry of Finance and Development Planning finance.gov.bw
• Bank of Botswanabankofbotswana.bw
  
• Non-Bank Financial Institutions Regulatory Authority nbfira.org.bw