Botswana is ideally positioned as a hub for investment fund management and administration activities for the Africa region and beyond. International investment funds can operate under a globally competitive framework. A CIU accredited to the Botswana IFSC is known as a Specified CIU and enjoys a tax exempt status. A tax exempt Specified CIU may be constituted as Unit Trust or an Investment Company with Variable Capital.
The Specified CIU is not liable to withhold on distributions to non-resident investors. Management and administration companies are taxed at 15%. Botswana has a growing network of Double Taxation Avoidance (DTA) treaties and it abolished all exchange controls in 1999 in an effort to make it more attractive to investors. Investors can denominate their share capital in any major convertible currency such as Euro, Pound Sterling or Dollar.
Investment Companies with Variable Capital will be registered once the regulator has approved the management company, articles of association and the custodian. A minimum acceptable level of functions of the Investment Company should be conducted from Botswana, including the provision of fund administration, accounting and auditing services to the Investment Company. There are no requirements to have resident shareholders or unit holders in a Specified CIU. Similarly, there are no requirements to have resident shareholders in a Botswana IFSC-accredited company carrying out fund management and administration activities. There is also an arrangement to fast track work and resident permits for IFSC expert employees.
The Botswana Competitive Advantage for Investments Funds
Botswana’s advantageous as an investment fund centre include a unique combination of sustained economic growth, rule of law and political stability. Botswana adheres to strict international guidelines on anti money laundering and financial crime and has been ranked as Africa’s least corrupt country by Transparency International and has the highest credit ratings in Africa, achieved by Moody Investors Science and Standard and Poors.
Botswana currently has one of the largest Pension funds in Sub Saharan Africa, the Botswana Public Officers Pension Fund (BPOPF), which recently announced that it will in future allocate 14% of its funds to alternative assets including property, private equity, infrastructure and hedge funds.
International fund managers and administrators active in Botswana include Allan Gray, Investec, Stanlib, Aon, Glen Rand, Coronation Fund Managers and Alexander Forbes. In addition, custodial services are provided by international banks such as Barclays Bank, First National Bank and Standard Bank. Finally, Deloitte, Ernst & Young, KPMG, and PWC are amongst a selection of international accounting and auditing firms that can provide services to the investment funds sector.
Africa is rising with greater opportunities and wider perspectives and now is a favorable time for investing in Africa. Botswana IFSC is a growing gateway to opportunities for African focused funds and investments. Position yourself in a solid economy, Botswana and like the following world class company, use the Botswana IFSC as “Your Competitive Advantage” to branch out into Africa.
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AFRICAN ALLIANCE is part of the Brait Group, a large international investment and merchant-banking group listed on the Johannesburg, London, and Luxembourg Stock Exchanges. They have been given two tax certificates to operate under the Botswana IFSC.
The first is for the administration and management of funds that are not Botswana domestic funds, and the second tax certificate is for the provision of structured financing services, which will be carried out through a company called Natgilt Trading Ltd.
Vantage Mezzanine Fund II (Pty) Limited has been accredited as an IFSC fund and the fund intends to raise US$300 million to provide mezzanine finance to medium sized enterprises across different sectors in key target markets in several African countries. Vantage Mezzanine Fund II is promoted by South African based Vantage Capital Group, a private equity group regulated by the Financial Services Board.
Also accredited to the IFSC is Vantage Mezzanine (Pty) Limited, the fund management company that will employ a team in Botswana to carry out the investments and provide fund administration services to the Vantage Mezzanine Fund II. Vantage Mezzanine Fund II will raise funds from international institutional investors which will include development finance institutions. The fund is the first independent mezzanine fund in Africa.
Ariya (Pty) Ltd has been accredited to the Botswana IFSC to provide investment management and other related consultancy and financial services, initially and primarily to its Jersey based parent company, Ariya Capital Group Limited (“ACGL”), and a new $150 Million private equity fund focused on sustainable investments in Sub-Sahara Africa. Ariya (Pty) Ltd will provide four essential services in relation to the Southern Africa Sustainable Investment Fund, namely deal or pipeline origination, due diligence, value creation and exits. All the services will be provided from APL’s Gaborone office as a hub for the SADC region in line with the geographic reach of the Ariya Capital Southern Africa Sustainable Fund.
Investment Regulation and Legislation