Did IFSC render Botswana a tax haven?
• Critics say it well did • IFSC contends the view
While critics say Botswana’s pursuit of Foreign Direct Investment (FDI) opened the country to money laundering by international criminal syndicates and turned the landlocked state into a source of terrorism financing, the CEO of Botswana Investment and Trade Centre (BITC), Keletsositse Olebile, holds a different view.
As a matter of fact, Olebile contends the very notion of Botswana being a tax haven. Speaking at a media capacity building session this week, the head honcho of BITC said Botswana was largely compliant with protocols of the Organisation for Economic Co-operation and Development (OECD) of which it was a member.
“We are compliant with the OECD,” he asserted. “Botswana is not a tax haven and we always try to be compliant.”
Olebile told journalists that the OECD’s G20 framework that Botswana belongs to guards against harmful tax practices because its member states share useful tax information.
Giving an account of how the IFSC came into being, Olebile said a Deloitte and Touché study was commissioned under the terms outlined by the Botswana Development Cooperation. The study arrived at the conclusion that Botswana was best placed within the SADC region to be a regional gateway for finance and capital flows into Africa. Key among the advantages was that Botswana had good connectivity and accessibility, as well as a strong and stable currency.
Asked about the EU blacklisting of Botswana, Olebile conceded that failure to comply with EU requirements could spell doom for the nation. “We don’t have an option but to comply,” he said. “This could lock us out of the international world.”
Botswana’s blacklisting came as a result of lapses in the regulatory framework which led to failure to curb illicit financial flows in and out of the country. This stance was also maintained by the Director General of the Directorate of Intelligence and Security Services (DISS), Peter Magosi last week when he told the Public Accounts Committee (PAC) that Botswana lost billions due to such ingresses and egresses of money in an environment of corruption.
During his tenure as president, Festus Mogae had envisaged Botswana becoming a financial services centre within SADC and the rest of Africa and created the IFSC as a vehicle to that end. However, more than a decade later, offering tax incentives for companies setting up in the country and registered with the IFSC has resulted in a nightmare for President Mokgweetsi Masisi who has to deal with growing instances of financial crime within the jurisdiction.