Q: CIPA acquired the online business registration system from Foster Moore International Limited in 2019. What were the reasons behind the procurement of this system?
A: The Online Business Registration System (OBRS) was introduced as part of a Government-to-Government agreement between Botswana and New Zealand. Recognising New Zealand’s consistent performance in the World Bank’s Doing Business ranking, particularly on the Starting a Business Index, the Government of Botswana sought New Zealand’s assistance in modernizing the Companies Register. This initiative was part of broader Doing Business Reform efforts spearheaded by the then Ministry of Trade and Industry to enhance Botswana’s business landscape.
A Memorandum of Understanding between the two governments was signed on July 14, 2016, marking the official start of the project. The agreement was signed by Peggy Serame, the then Permanent Secretary in the Ministry of Trade and Industry, and Richard Mann, the then New Zealand High Commissioner to Botswana. Foster Moore International was engaged by the Government of New Zealand to develop the system, while the New Zealand Companies Office provided ongoing support to CIPA throughout the project.
The key reasons for implementing the OBRS were:
- No online capabilities: Before OBRS, CIPA relied on a semi-automated system with no online functionality. This caused long queues and customer dissatisfaction, as clients often traveled long distances to access services. OBRS now enables investors to register companies 24/7 from anywhere in the world.
- Operational inefficiencies: The pre-OBRS processes were inefficient, leading to unpredictable turnaround times, manual searches in paper files, lost documents, and manual certification of company records. OBRS has improved these processes, allowing free online searches and verification of documents, which benefits stakeholders such as financial institutions, procurement officials, licensing authorities, tax agencies, the media, and the general public.
- Poor performance in the Doing Business Report: Botswana’s ranking in the World Bank Doing Business Report was declining, making the country less attractive to investors compared to countries like Mauritius. OBRS reduced the company registration process from over five days to just one day and simplified the procedure by merging three stages into one online process.
- Low compliance rates: Compliance with annual returns was around 25 percent before OBRS due to a lack of automated reminders. Since OBRS’s implementation, compliance has improved to over 65 percent and continues to rise.
- Unreliable data: CIPA faced significant backlogs in processing company registrations, which affected the accuracy and integrity of records, creating challenges for enforcement agencies and investors conducting due diligence. OBRS has resolved these issues.
Q: How was the system funded, and what was the total cost?
A: The system was a donation from the New Zealand Government to the Government of Botswana, valued at NZD 1,050,000. The New Zealand Companies Office, under the Ministry of Business, Innovation and Employment, was tasked with implementing OBRS. They subcontracted third-party software developers to build the system. CIPA is responsible for ongoing maintenance costs, which are covered under a formal agreement.
Q: Are you aware of any investigation by law enforcement into the procurement of the system to identify control gaps, weaknesses, or deficiencies?
A: CIPA is not aware of any investigations by law enforcement regarding the procurement of the system. We remain committed to ensuring transparency and proper oversight in all procurement processes. While we support inquiries into our systems and operations, discussions on ongoing investigations are confidential by law.
Q: Can you share the system control gaps, weaknesses, or software deficiencies identified in external probes or internal reviews of the OBRS?
A: The Authority conducts regular system audits to ensure OBRS functions optimally. Any identified deficiencies are promptly addressed following recommendations.
Q: We have information suggesting incidents of employee fraud at CIPA’s Francistown branch and cheque forgery at the Head Office. How did these occur, and how has CIPA resolved them?
A: Instances of employee fraud have occurred at some branches. These activities were uncovered through OBRS’s audit trail capabilities, which track all transactions, including the name of the individual, IP address, date, time, and amount paid. These incidents are isolated, and appropriate actions have been taken against the individuals involved. Fraud cases are reported to the Board and law enforcement agencies. While ongoing cases are under investigation, we cannot disclose further details to avoid jeopardizing the process. CIPA remains committed to safeguarding the integrity and security of its systems.
Q: Was due diligence conducted to ensure the system worked flawlessly and identify control gaps before implementation?
A: The system was donated, not procured. However, thorough User Acceptance Testing (UAT) was conducted to ensure the system met all specified requirements. Upon deployment, the system operated seamlessly. As with any system, deficiencies may arise as it matures, but these are addressed promptly.
Q: What training did CIPA provide to ensure staff were equipped to use the system?
A: During the OBRS project, system developers trained the project team using a train-the-trainer model. The internal project team then trained other staff members. Practical, department-specific training was conducted, and regular refresher training sessions continue to be held.
Q: Will CIPA procure a new system or conduct an upgrade? Please provide details.
A: CIPA has contracted Foster Moore to implement a new system, the Beneficial Ownership Register integrated with the Verne company register software. This upgrade is necessary to comply with the Companies (Amendment) Act, 2022, and align with the Financial Action Task Force (FATF) and East and Southern African Anti-Money Laundering Group (ESAAMLG) recommendations. The system enhancements include:
- Improved Beneficial Ownership Register: The system will publicly provide beneficial ownership information for all registered companies.
- Declaration of Nominator Information: Shareholders will declare if they hold shares on behalf of others, as required by Section 329A of the Companies Amendment Act, 2022.
- Mandatory Constitutions: Companies must submit constitutions outlining the powers of office bearers and senior executives. The system will facilitate this for new and existing companies.
These enhancements are critical for maintaining a robust financial system, improving Botswana’s international reputation, and avoiding economic sanctions or FATF grey-listing.
Q: How much will the upgrade cost CIPA?
A: The new integrated Beneficial Ownership Register (VERNE-BO) is estimated to cost approximately USD400,000.