CIPA is currently in disarray. Directors, who form the Executive Committee, are locked in a dispute with the Caretaker Registrar General (CRG), Joel Duke Ramaphoi, over operational decisions. According to CIPA’s structure, the CRG serves as the accounting officer and reports to the Board of Directors. Below the CRG are departmental directors, with middle managers reporting to them.
Some CIPA directors who spoke to The Business Weekly & Review, allege that Ramaphoi overlooks them and assigns duties belonging to the EXCO, to juniors officers.
They allege that he has sidelined the departmental directors (EXCO) in favour of middle management.
However, sources reveal that middle management is also divided. While some believe the agency urgently needs restructuring, others stand firmly in Ramaphoi’s corner, insisting that all is well within CIPA.
Some managers argue that CIPA’s structural weaknesses have forced Ramaphoi to bypass directors and deal directly with managers in certain instances. For example, the HR Manager, who is not a director, must report directly to Ramaphoi due to the absence of an HR Director. Similarly, the Internal Audit and Strategy positions face the same issue.
The Business Weekly & Review has learned that in August last year, directors approached Ramaphoi to voice their concerns, though his response remains unclear. When contacted, Ramaphoi declined to comment, stating that he prefers to address CIPA matters internally.
Resignations and unrenewed contracts
The Board of Directors is also reportedly a key player in the ongoing turmoil at CIPA. A significant number of board members are said to side with the directors and were present when key decisions about CIPA’s registration system were made. Despite being alerted to the system’s issues for over a year, they have yet to take meaningful action.
On Monday this week, CIPA Chairperson Tshiamo Motsumi resigned amid the agency’s internal turmoil, which includes allegations of millions of Pula being spent on a dysfunctional registration system plagued by revenue leakages.
When contacted by this publication to clarify the reasons for his resignation, Motsumi declined to comment and referred inquiries to the Minister of Trade. When asked if his resignation was linked to the ongoing issues at CIPA, he stated that it was unrelated.
Towards the end of last year, the then CIPA IT Director, Greene Kamakama, resigned. When contacted by The Business Weekly & Review to establish the reasons behind his resignation, Kamakama declined to provide details, only stating that he had found greener pastures.
However, this publication established that there was a fallout between him and the Caretaker Registrar General (CRG) over issues including the online business registration system, which had deficiencies, and other operational challenges.
Revenue leakages and the new OBRS system
The decision to replace the old system with the Online Business Registration System (OBRS) in 2019 was motivated by extreme revenue leakages, which led to millions of Pula being lost by CIPA. It emerged that the old system was not well-designed to identify these revenue leakages.
Under the old system, CIPA’s compliance rate was around 25 percent, meaning only 25 percent of CIPA’s clients or customers complied in terms of paying their annual returns. This resulted in CIPA losing millions in unpaid annual returns. Additionally, CIPA reportedly lost around P7 million annually due to revenue leakages.
However, the agency was unable to detect the areas of these leakages because the system was not designed to identify them.
Moreover, the old CIPA registration system lacked transparency. The Business Weekly & Review established that it was easy to manipulate system records. Information and records, such as shareholding and directorship details of companies belonging to influential individuals, were easily wiped out of the system to ensure that no one could access that information.
The controversial OBRS
The Online Business Registration System (OBRS) was introduced as part of a Government-to-Government agreement between Botswana and New Zealand in 2019. 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 modernising 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.
According to CIPA management, the key reason for implementing the OBRS was that the old system lacked online capabilities. Before OBRS, CIPA relied on a semi-automated system with no online functionality, which 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.
CIPA management also highlighted operational inefficiencies under the old system, noting that pre-OBRS processes were inefficient, leading to unpredictable turnaround times, manual searches in paper files, lost documents, and manual certification of company records.
They argue that 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.
At the time, Botswana’s ranking in the World Bank Doing Business Report was declining, making the country less attractive to investors compared to countries like Mauritius. CIPA argues that 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.
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. Sources within CIPA say that this non-compliance propelled CIPA to write off over P400 million in unpaid annual returns after implementing the OBRS.
CIPA also faced significant backlogs in processing company registrations under the old system, which affected the accuracy and integrity of records, creating challenges for enforcement agencies and investors conducting due diligence.
Inefficiencies and procurement issues
The Business Weekly & Review has established that the inefficiencies of the old system were also partly a result of failing procurement processes, which led to the implementation of a system with flaws. An investigation by the Directorate on Intelligence and Security (DIS) on the OBRS system discovered that the CIPA Registrar General had stated that the Foster Moore contract was signed under duress.
Foster Moore reportedly threatened not to proceed with the contract launch unless it was signed within one week of submitting the draft. Additionally, the CIPA Management Tender Committee had not ratified the system procurement when the contract with Foster Moore was signed and committed.
The New Zealand government funded the project, including provisional out-of-scope items due to law reforms, at P7.3 million. CIPA contributed P8 million towards IT equipment, stakeholder engagement, temporary staff employment, training, and call center services.
The P5.5 million new OBRS System
While CIPA believes the new OBRS has resolved many issues, the system is not flawless and continues to consume millions of Pula. The OBRS was found to have control and operational inefficiencies, pushing CIPA to procure another new system just four years after its implementation.
CIPA has contracted Foster Moore yet again to implement a new system, the Beneficial Ownership Register integrated with the Verne company register software. They say 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 an improved beneficial ownership register, which will publicly provide beneficial ownership information for all registered companies. Shareholders will declare if they hold shares on behalf of others, as required by Section 329A of the Companies Amendment Act, 2022. Additionally, companies must submit constitutions outlining the powers of office bearers and senior executives. The system will facilitate this for new and existing companies.
CIPA says these enhancements are critical for maintaining a robust financial system, improving Botswana’s international reputation, and avoiding economic sanctions or FATF grey-listing. The new integrated Beneficial Ownership Register (VERNE-BO) is estimated to cost approximately USD 400,000.
