Botswana Tops Africa as Efforts to Unmask Hidden Investors Gain Momentum

The report, which is entitled “Beneficial Ownership Transparency in Africa in 2022,” says while like many others in Africa Botswana does not provide online public access to the beneficial ownership information of all companies, “Botswana provides online access to legal ownership information, which it provides for free.”

However, while media reports say Botswana has committed to providing public access to beneficial ownership through its Companies and Intellectual Property Authority (CIPA), it has not yet implemented it. CIPA describes a beneficial owner of a company as “any natural person who directly or indirectly through any contact, arrangement, understanding, relationship or otherwise, is the ultimate beneficiary of a share or other securities in a company.”

Offence

It says “a beneficial owner of a company enjoys the benefits or proceeds of a company or controls a company without being on record as the official owner.”

CIPA, which has reportedly set August as the date for data on companies’ ultimate beneficial owners to be accessible to the public, warns on its website that “all companies are required by law to provide this information to CIPA when registering or re-registering” and that “failure to do so is an offence which may attract a fine or (a) jail term”.

The report by Tax Justice Network says as of May 2022, the cut-off time for the Financial Secrecy Index’s research cycle, six countries did not have legislation in place, five of the countries with loopholes for legal ownership registration – Algeria, Cameroon, Gambia, Liberia, South Africa and Angola. “Beneficial ownership information has to be updated in Botswana, Egypt, Ghana, Kenya, Mauritius, and Tunisia,” the report says. It notes that Botswana is the best performing country as far as “the interaction between registration requirements for legal and beneficial owners” is concerned.

Not yet provided 

The report says Egypt, Ghana, Kenya, Mauritius and Tunisia require registration and updating of both legal and beneficial ownership information but online public access to this information is not yet provided. “Botswana is the best performer with some level of free online access to legal ownership information,” says the report. It says Egypt, Ghana, Kenya, Mauritius and Tunisia require the registration and updating of both legal and beneficial ownership information but online public access to this information is not yet provided.

The report says South Africa has the highest risk with over 1.5 million registered entities and no comprehensive registration of either legal or beneficial owners. “In contrast, Botswana poses a far lower risk as there are comprehensive requirements for registering and updating legal and beneficial ownership information, and free online public access is provided to legal ownership information,” it says, adding that Botswana has almost 200,000 registered entities.

Loopholes

According to the report, in Algeria, Cameroon, Gambia, Liberia, the Seychelles, and South Africa, not all legal owners have to register or there are loopholes that exempt registration.

It says Botswana, Ghana, Mauritius, Morocco and Tunisia require companies to register beneficial owners upon incorporation domestically and require foreign companies to register if they have domestic presence. In two-thirds of the African countries assessed by the Financial Secrecy Index, all legal owners have to register (Angola, Botswana, Egypt, Ghana, Kenya, Mauritius, Morocco, Namibia, Nigeria, Rwanda, Tanzania, and Tunisia). Of these countries, another two-thirds require legal ownership information to be updated (Botswana, Egypt, Ghana, Kenya, Mauritius, Rwanda, Tanzania, and Tunisia).

For free

However, the report says “only Botswana provides online access to legal ownership information, which it provides for free”. It notes that a country with complete and effective company ownership transparency poses little to no risk of financial secrecy to the world, and of the illicit activity that financial secrecy enables, regardless of the number of companies registered in the country.

“However, a country with low levels of transparency and a large number of incorporated companies poses serious risks the world over,” says the report. Such a country would likely attract people seeking opacity, often for illicit activity. In practice, such a country poses a greater risk than a country with similar levels of company ownership transparency but far fewer companies, the report notes.