this report is a highlight of how nbfira enforces ethical … annual report 2013… · trustee of a...

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This report is a highlight of how NBFIRA enforces ethical standards in order to safeguard the

Stability, Fairness and Efficiency of the non-bank financial sector.

RATIONALE

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CONTACT

USREGISTERED OFFICE

Third FloorExponential Building

Plot 54351New CBD

Off PG MatanteGaborone

BANKERS

Stanbic BankFairgrounds Branch

Fairgrounds Office ParkBlock DUnit 10

Gaborone

AUDITORS

Ernst & YoungFirm of Chartered

AccountantsSecond Floor

Plot 22Khama Crescent

Gaborone

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06 Corporate Profile08 Chairperson’s Report12 Corporate Governance16 Corporate Services20 Strategy Implementation23 Insurance and Pension Funds40 Capital Markets

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Corporate Profile

ESTABLISHMENT

The Non-Bank Financial Institutions Regulatory Authority (“NBFIRA”) was established as an independent regulatory agency for non-bank financial institutions in April 2008. As outlined in Section 8 of the NBFIRA Act, the principal objective of NBFIRA is to regulate and supervise non-bank financial institutions so as to foster the:

a. Safety and soundness of non-bank financial institutions;

b. Highest standards of conduct of business by non-bank financial institutions;

c. Fairness, efficiency and orderliness of the non-bank financial sector;

d. Stability of the financial system; ande. Reduction and deterrence of financial crime.

LEGISLATIVE FRAMEWORK

The legislative framework governing the operations of both NBFIRA and supervised institutions is known as the “financial services law” and includes:

• The Non-Bank Financial Institutions Regulatory Authority Act;

• The Insurance Industry Act;• The International Insurance Act;• The Pension and Provident Funds Act;• The Botswana Stock Exchange Act;• The Collective Investments Undertaking Act;

and,• Part XVI of the Income Tax Act.

The NBFIRA Act is the main component of the financial services law in the sense that it is an umbrella statute that is intended to work with the other statutes that make up the financial services law. The Act is consistent with international standards and contains sections related to the operations, responsibilities and accountabilities of NBFIRA including staffing, finances, corporate governance and reporting to stakeholders. It also provides a comprehensive licensing regime for supervised entities and provides NBFIRA with the powers to remedy imprudent practices, unethical practices and contraventions of the law through the issuance of notices, the issuance of orders, the issuance of directions, the

acceptance of undertakings, the imposition of civil penalties and the application to the courts in the most serious cases involving offences. NBFIRA also has significant powers with respect to information gathering, the conduct of on-site inspections and the conduct of investigations.

INSTITUTIONS COVERED

There is a wide range of entities that are defined as non-bank financial institutions in Botswana. Table 1 outlines the types of non-bank financial institutions as defined in the NBFIRA Act.

CORPORATE GOVERNANCE

The NBFIRA Act entrusts all corporate governance responsibilities as well as all operational and regulatory functions of the financial services law to the NBFIRA Board of Directors, which comprises:

• Mrs. M. Dube, Chairperson appointed by the Minister of Finance and Development Planning;

• Mr. N. C. Greenland, Vice Chairperson appointed by the Minister of Finance and Development Planning;

• Dr. T. T. K. Matome, member appointed by the Minister of Finance and Development Planning;

• Mr. M. Mbaakanyi, member appointed by the Minister of Finance and Development Planning;

• Mrs. L. K. Mohohlo, ex officio member as Governor of the Bank of Botswana; and,

• Mr. S. M. Sekwakwa, ex officio member as Permanent Secretary of the Ministry of Finance and Development Planning.

Under Section 41 of the NBFIRA Act, the NBFIRA Board of Directors through a written instrument of delegation is empowered to delegate its powers and functions to:

• A member of the NBFIRA Board;• An employee of NBFIRA;• An employee of the Bank of Botswana;• An investigator; or, • A Self Regulatory Organization.

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Corporate Profile

Table 1: Non-Bank Financial Institutions

Asset Manager - means a person who, under an agreement with another person, applies assets of the other person by way of investment, whether the asset manager makes those investments in its own name or not but does not include a custodian or a trustee.

Administrator of a pension or provident fund - means a person who provides administration or similar services to the fund.

Central Securities Depository - means a facility for the deposit, clearing or settlement of securities transactions, whether physically, electronically or otherwise.

Collective Investment Undertaking - means an arrangement, the principal object of which is the collective investment of its funds in real or personal property of whatever kind, including securities and other liquid financial assets, with the aim of giving its members, or unit-holders the benefit of the result of the management of funds and spreading investment risk and the units of which are at the request of holders, purchased, directly or indirectly out of those undertakings assets. A collective investment undertaking can be constituted as a unit trust or as an investment company with variable capital whose articles provide that the actual value of the paid up share capital of the company shall at all times be equal to the net asset value of the company and the shares of the company shall have no par value.

Custodian - means a person who holds property of another person for safekeeping.

Finance and Leasing Company - means a body corporate that provides loans, advances or leasing products, but does not include a bank or a deposit taking institution.

Friendly Society - means an association of persons established with no share capital for the purpose of aiding members of the association or their dependants, being an association that does not employ a person whose main occupation is canvassing for members of, or collecting contributions or subscriptions for, the association.

Insurance Agent - means a person who solicits applications for insurance or collects premiums for an insurer.

Insurance Broker - means a person who arranges insurance otherwise than as agent of the insurer.

Insurer - means a person who undertakes liabilities by way of insurance (including general insurance, life insurance and reinsurance), whether or not as a member of an association of underwriters and includes a person operating a medical aid fund.

International Insurance Firm - means an undertaking which carries on international insurance business and includes an insurance manager, a principal insurance representative and an insurance agent.

Investment Advisor - means a person who gives other persons investment advice or recommendations (including about holding and disposing of investments) in relation to securities or other assets.

Management Company for a collective investment undertaking means an incorporated body responsible for the establishment, promotion, management and administration of a collective investment undertaking.

Member of the Insurance Industry - means an insurance surveyor, a risk manager, a loss assessor, a loss adjuster or a claims settlement agent.

Micro Lender - means a person who advances loans to persons, where the loans do not exceed a prescribed amount, but does not include a person licensed in terms of the Banking Act or the Building Societies Act.

Pension Fund - means any fund the principal objective of which is to provide for the payment of a pension to a person, who has been a member of the fund, on his retirement.

Provident Fund - means any fund which is not a pension fund where a lump sum payment is made at retirement.

Securities Dealer - means a person who carries on the business of buying and selling securities on behalf of other persons or a person who regularly buys or sells securities on his own behalf otherwise than through a licensed securities dealer.

Securities Exchange - means a market, exchange, place or facility that provides for bringing together, on a regular basis, buyers and sellers of securities to negotiate or conclude sales of securities.

Trustee of a Collective Investment Undertaking - means a person acting as a trustee of a unit trust.

Trustee of a Pension or Provident Fund - means a person acting as a trustee of a pension or provident fund.

Financial Group - means a group of companies under common control comprised of one or more prudentially regulated non-bank financial institutions and their subsidiaries.

Other - Other persons may be prescribed as non-bank financial institutions. As at the date of this report, no other persons have been prescribed.

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Chairperson’s Report

It is my pleasure to present on behalf of the Board, the Annual Report for the financial year 2012 - 2013 in accordance with Section 32(1)(b) of the Non-Bank Financial Institutions Regulatory Authority.

The financial year 2012 - 2013 was an eventful one, as the Authority focused on improving stakeholder engagement, public education and fostering compliance by the regulated entities.

ECONOMIC PERFORMANCE

The Non-Bank Financial sector in Botswana continued to expand during the financial year 2012 - 2013, despite constraints experienced from the depressed global economic environment and subdued growth in the domestic economy. The various reform measures of the Government of Botswana to strengthen demand factors as well as the regulatory initiatives by the Non-Bank Financial Institutions Regulatory Authority (NBFIRA), helped the non-bank financial sector to maintain its growth momentum in size, depth and improved governance systems.

MIGRATION TO RISK BASED SUPERVISORY MODEL

The Authority during the year under review migrated from the compliance-based model to the risk-based supervision model to align with international best practices. The risk-based system will also lead to the development and enhancement of financial soundness and efficiency within the non-bank financial services sector. The project was funded through the African Development Bank’s grant.

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Chairperson’s Report [CONTINUED]

LEGISLATIVE REFORMS

The Authority is responsible for ensuring that regulated entities comply with legislation in order to protect the public interest. The Authority regulate insurance & pension funds and capital markets participants, in accordance with 7 Acts namely;

1. NBFIRA Act2. Insurance Industry Act3. International Insurance Act4. Collective Investments Undertaking Act5. Botswana Stock Exchange Act6. Pensions and Provident Funds Act7. Part XVI of the Income Tax Act

The Authority jointly with the Ministry of Finance and Development Planning is currently conducting a review of all applicable legislations in a quest for continuous improvement of the legislative framework. The on-going review of the Insurance Industry Act, the Pensions and Provident Funds Act, and development of the Securities Bill is expected to align these fundamental legislative Acts to international standards and enhance the Authority’s ability to properly supervise these highly technical and ever-expanding industries.


The Board operated with a full complement during the year and there has not been any change in the composition of the Board. During the year, the Board approved the Board Charter which is a commitment by the Board to improving its oversight role.

NBFIRA STRATEGIC PLAN

The Authority’s Strategic Plan 2010 - 2013 which was the first strategic plan ended on 31st March 2013 and I can proudly say that the plan has provided a baseline needed towards development of the key regulatory areas. Despite human capacity constraints experienced earlier in the financial year, the Authority achieved an implementation rate of 76% which is commendable. It is anticipated that the implementation rate of the Strategic Plan 2013 - 2016 will improve as the Authority is now well resourced.

FINANCIAL PERFORMANCE

The Authority recorded a surplus of P15.9 million due to the combined effects of improved revenue collection following the introduction of the supervisory levies on regulated entities and lower expenditure due to capacity constraints. Total Revenue was P46.1 million while Total Operating Expenditure was P30.5 million.

LOOKING AHEAD

The Authority will focus on improving its visibility and capacity to regulate the non-bank financial institutions in order to attain its mandate. Appropriate information technology platforms will be deployed in order to attain operational efficiencies and improve service delivery. The ushering of the new strategic plan should also bring exciting challenges to the Authority as it will change the current landscape towards improved service delivery.

ACKNOWLEDGEMENTS

I wish to take this opportunity to sincerely appreciate the continued support and guidance by the Ministry of Finance and Development Planning since inception of the Authority.

Let me thank fellow Board Members for their support and cooperation during the year. This support has greatly enhanced our oversight role within the Authority.

I also wish to thank the Executive Management Team and Staff for their continued hard work.

----------------------Mrs. M. DubeMember - Board Chairperson

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Board of Directors

Mrs. M. DubeMember - Board Chairperson

Mr. N. C. GreenlandMember - Deputy Board Chairperson

Mr. M. MbaakanyiMember

Mrs. L. K. MohohloMember

Mr. S. M. SekwakwaMember

Dr. T. T. K. MatomeMember

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Executive Team

Mr. O. M. RamasediChief Executive Officer

Mrs. M. V. RaphakaActing Director - Insurance and Pensions

Mrs. K. C. Kowa-MophutingActing Director - Capital Markets

Mr. M. P. RamphaActing Director - Corporate Services

Mrs. H. Mocuminyane-RabashwaHead-Legal Services

Dr. H. SadhakDeputy CEO - Regulatory

Mr. M. S. BrownAdvisor in CEO’s Office

Mr. M. M. TlhagwaneDeputy CEO - Shared Services

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BOARD COMPOSITION

The Authority is governed by a Board of Directors appointed by the Minister of Finance and Development Planning in terms of section 11 of the NBFIRA Act Cap 46:08. The Board comprises six non-executive directors drawn from different disciplines to balance skills and experience. The Board is responsible for strategic oversight over the Authority and to ensure adherence to good corporate governance. The Board also ensures that the Authority remains true to its mission, operates legally and ethically.

Corporate Governance

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The Chairperson of the Board is appointed by the Minister, while the Board appoints a Deputy Chairperson from its members. The tenure of office for the Board shall be for a period of not more than five years and members are eligible for re-appointment at the end of the term.

The Board has delegated the day-to-day running of the Authority to the Chief Executive Officer who is assisted by Executive Management.

Corporate Governance [CONTINUED]

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BOARD MEETINGS

The Board shall hold at least nine meetings in each financial year, and such other meetings as are necessary for the efficient performance and exercise of its functions and powers.

BOARD REMUNERATION

The Board is remunerated in accordance with Government Policy. The following rates were applicable during the year.

Board Chairperson - P1,050.00 per sittingDirectors - P840.00 per sitting

BOARD COMMITTEES

The Board has established sub-committees in the exercise of its oversight role and these committees have delegated powers to consider policy issues and improve accountability and governance. There are currently two sub-committees being the Human Resources and Finance & Audit Committees.

The Committees make recommendations to the Board for final decision.

FINANCE AND AUDIT COMMITTEE

The Committee’s core responsibilities are to oversee the existence of an effective and adequate systems of internal control in the Authority, to ensure that the Authority complies with relevant accounting standards, financial policies, applicable laws and the statutory financial provisions of the Act. The Committee is also responsible for approval of the annual budgets and to ensure that there are sound risk management practices.

The Committee meets on a quarterly basis and comprises of three (3) non-executive Directors.

The following were the committee members during the year:

Dr. Tebogo T. K. Matome - Chairperson Mr. Solomon M. Sekwakwa - Member Mr. Modiri Mbaakanyi - Member


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HUMAN RESOURCES COMMITTEE

The purpose of the Human Resources Committee is to assist the Board assume an oversight role of NBFIRA human resources practices which include the organisational structure to support the Authority’s strategy, development and implementation of human resources policies and practices, approval of remuneration policy and compliance with applicable labour laws.

The Committee meets on a quarterly basis to consider matters brought before it by Management.

The Committee comprises three (3) non-executive Directors.

The following were the committee members during the year:

Mr. Navavie C. Greenland - Chairperson Mrs. Linah K. Mohohlo - Member Dr. Tebogo T. K. Matome - Member

BOARD CHARTER

During the year, in accordance with best practices, the Board adopted a Board Charter which sets the obligations and responsibilities of the Board. The charter ensures accountability, transparency and good governance by the Board and its sub-committees.


Name Date Appointed Board Human Resources Committee

Finance & Audit Committee

Meetings Attendance

Mrs. Mmatlala Dube 01/10/2011 8/9

Mr. Navavie C. Greenland 01/10/2012 8/9 2/4

Mrs. Linah K. Mohohlo Ex-Officio 4/9 1/4

Dr. Tebogo T. K. Matome 01/03/2010 5/9 2/4 3/4

Mr. Solomon M. Sekwakwa Ex-Officio 3/9 1/4

Mr. Modiri Mbaakanyi 01/10/2011 6/9 3/4

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FINANCE DEPARTMENT

The department’s core responsibilities are to develop an efficient and effective internal control environment in order to safeguard the Authority’s assets, coordination and control of the Authority’s budget, preparation of annual financial statements, coordination of the external audit function, cash flow management, compliance with statutory requirements, disbursement of funds and collection of supervisory levies from regulated entities.

TOTAL REVENUE

Total Revenue for the financial year was P46.1 million, being an increase of P18.5 million (67%) from the previous financial year figure of P27.6 million. Supervisory levies increased substantially from P4.5 million in 2012 to P43.1 million in the current year owing to a full year collection of supervisory levies. The levies were introduced in February 2012, which was closer to the end of the financial year 2011 - 2012, thus resulting in collections of just over one month. The collections of the supervisory levies has significantly reduced the utilization of Government Subvention funding as only P2.1 million was drawn down compared to an amount of P21.7 million in the previous year.

A significant increase was recorded in Other Income from P1.6 million in 2012 to P2.5 million in 2013 representing an increase of P0.9 million (54%). The increase in Other Income was attributable to the registration of micro lenders, following the promulgation of the Micro Lending Regulations during the year.

Corporate Services

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Corporate Services [CONTINUED]

TOTAL EXPENDITURE

Total Operating Expenditure for the year was P30.5 million being an increase of P9.20 million or 43% from the previous year. The increase in operating expenditure was due to the increase in staff costs, administration expenses and other expenses.

TOTAL COMPREHENSIVE INCOME

Total Comprehensive Income for the year was P15.9 million being an increase of P9.5 million from the previous year. The introduction of the supervisory levies has improved the funding base of the Authority; as a result, a Statutory Reserve was established in line with the NBFIRA Act, 2006. The objective of the Statutory Reserve is to fund unplanned regulatory expenditure, and this initiative will enhance the capital management interventions of the Authority.

STATEMENT OF FINANCIAL POSITION

As at 31st March 2013 the fair value of the fixed assets was P3.1 million being an increase of P0.8 million (35%) from P2.3 million recorded in 2012. Progress has been achieved in relation to the Risk Based Regulatory Model project, as the Authority has since progressed to the final phase of implementation. The bank balance has increased to P18.4 million from P6.6 million in 2012; this cash position will create a platform for future growth of the Authority.

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HUMAN RESOURCES DEPARTMENT

The Human Resources department’s core function is to attract and retain high performing staff to enable the Authority to meet its mandate, development of policies and procedures, training and development of staff and compliance with labour laws.

STAFFING

The Authority closed the year with a head count of forty three (43) employees out of an approved complement of fifty seven (57) due to a phased recruitment approach. In addition, the Authority faced challenges of acute shortage of experienced citizens in the regulatory field resulting in prolonged search for expertise from the international labour market.

Ninety five percent (95%) of staff were citizens, while five percent (5%) were non-citizens.

EMPLOYEE CLIMATE SURVEY

The Authority carried out its first employee climate survey. The survey was done to afford staff the opportunity to identify areas requiring improvement so that appropriate interventions could be directed towards those activities which are of concern to staff. The survey in addition, served as a baseline for future surveys. The outcome of the survey was shared with Staff and the Board of Directors and have formed the basis of people initiatives.

LEARNING & DEVELOPMENT

The Authority continues to develop and nurture talent in order to achieve its regulatory mandate. A number of employees were attached to different Non-Bank Financial Institutions within the region in order to obtain technical training on the regulatory environment and build internal capacity. Benchmarking exercises were also undertaken with other mature regulatory authorities including Financial Services Board in South Africa, Namibia Financial Institutions Supervisory Authority, the Kenya Capital Markets Authority and the Financial Services Commission in Mauritius.

GOVERNMENT INTERNSHIP PROGRAM

During the year, the Authority participated in the Government internship program and enrolled eight (8) graduates from different disciplines with a view to offering them practical experience.

PERFORMANCE MANAGEMENT SYSTEM

The implementation of the performance management system was intensified during the year to improve both individual and organisational performance. Management and Staff were offered refresher training on performance management in order to improve implementation capacity. Future interventions will mainly focus on compliance to timely signing of performance contracts and appropriate usage of the performance measuring tools.


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INFORMATION TECHNOLOGY DEPARTMENT

The department is responsible for provision and maintenance of appropriate information technology infrastructure to support the Authority. The department has maintained a stable network infrastructure to enable the Authority to communicate with its varied stakeholders.

During the reporting period, the Information Technology (IT) department achieved two major milestones being, the development of the Information Systems/Information Technology Strategy and the Statement of User Requirements (SOUR) for the Authority’s Management Information System (MIS).

The IT strategy and the SOUR are organization-wide and therefore the project scope included all NBFIRA functions and processes. The purpose of the IS/IT strategy is to guide the Authority in a coordinated deployment and exploitation of Information Technology which will result in business being conducted in an efficient and effective manner.

The strategy defines the necessary applications that will automate NBFIRA core and support business processes. It also identifies the technology standards that need to be adopted in line with the current technological trends.

The SOUR is a blueprint for the implementation of the envisioned MIS. The Authority in addition, issued a tender for consultancy services to develop the information technology infrastructure to support the Risk Based Supervisory Model. As at year end, the tender was at the evaluation phase and it is anticipated that the implementation of the system will commence in the second quarter (Q2) of year 2013. IMPLEMENTATION OF RISK BASED SUPERVISION

The Authority continued with the implementation of the Risk Based Supervision Model in the year under review. The major undertakings on the project was training of staff on risk based supervision and the procurement of the consultancy services for the development of the IT system to support the Risk Based Supervision Model.

The procurement of the IT system took a longer time than was anticipated due to stringent procurement procedures associated with externally funded projects. At the time of reporting, the Authority was still evaluating the technical proposals for the implementation of the system. It is however anticipated that the development and implementation of the system will commence in the second quarter (Q2) of financial year 2013 - 2014.

CORPORATE COMMUNICATIONS DEPARTMENT

In our endevour to raise awareness of the existence of the Authority and its mandate, we continued to attend a number of key stakeholder events such as the Northern BOCCIM Trade Fair and the 2012 Consumer Fair, to promote the Authority at which we made presentations on our services.

The Authority adopted a coherent approach to reach out to the public through communication mediums, such as Botswana Television, RB1, RB2 and Gabz FM. At the same time, each intervention is constantly being weighed up on its own merit to establish appropriateness to communicate well our different thematic messages in view of the regulatory frameworks and financial services laws.


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INTRODUCTION The Authority developed its maiden strategy, the Strategic Plan 2010 - 2013 in 2009. The strategy was developed using the Balanced Scorecard Approach with the four (4) distinct perspectives of Stakeholder, Financial, Internal Processes and Learning & Growth. The implementation of the strategy started at a slow pace due to the combined effects of inadequate financing and fewer human resources.

Strategy Implementation

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Despite the stated challenges, the Authority proceeded to implement part the strategic initiatives by rationalising its resources. The Authority in addition received financial assistance from the African Development Bank and the World Bank to implement some initiatives.

The Authority had identified ten (10) objectives in its Strategic Plan 2010 - 2013 which are listed below:

Table 1: Strategy Objectives

Perspective Objective

Stakeholder 1 Promote Stakeholder Education

2 Enhancing NBFIRA Brand

3 Create a safe, fair, stable and efficient NBFI sector

Financial 4 Achieve self-funding status

Internal Processes 5 Develop an effective risk based policy and regulatory framework

6 Implement an effective regulatory framework (oversight)

7 Improve internal operational processes

Learning and Growth 8 Attract, retain and develop skilled staff

9 Promote a high performance culture

10 Develop knowledge base/repository

During the review of the strategy in February 2012, nine (9) objectives were prioritised. The development of an effective risk based policy and regulatory framework was dropped as there was substantial progress towards this objective.

PERFORMANCE

The Authority prioritised a number of projects based on the availability of the resources and capacity to implement them. These are the projects that determined the performance of the Authority under each objective.

Strategy Implementation [CONTINUED]

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Graph 1 shows the summarised performance of the Authority for each of the objectives.

Graph 1: Objectives performance

The performance for most of the objectives was above 70% except promoting stakeholder education at 60% and improvement of the internal operational processes at 63%.

The Authority has performed well in the implementation of the strategic objectives despite inadequate funding and human capacity constraints. The strategy implementation as at the end of the strategy period was 76%.

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Strategy Implementation [CONTINUED]

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INSURANCE SECTION

OVERVIEW

NBFIRA regulates and monitors different licensed insurance entities. In accordance with section 42 of the NBFIRA Act, no person is allowed to carry out the business of insurance unless is licensed with the Authority. Table I.1 depicts the number of licensees as at 31st March 2013.

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Table I.1: Number of licensees in the 2012 - 2013 financial year

Type of Licensees Total number

Reinsurers 2

Life Insurers 8

Non-Life Insurers (General) 12

Insurance Brokers 40

Insurance Corporate Agents 204

Individual/sub agents (employed by insurers, brokers and corporate agents) 2875

REGULATORY APPROVALS

During the reporting period, NBFIRA licensed one (1) insurer, two (2) insurance brokers, nineteen (19) corporate insurance agents and three hundred and forty one (341) new individual insurance agents.

There has been notable growth in the number of entities in insurance business over the last years. The continuous growth in the number of registered entities dealing in insurance business is likely to expand the insurance business across the country and therefore increasing insurance penetration rate in the economy.

During the reporting period, NBFIRA cancelled sixteen (16) licenses for corporate insurance agents as their principals had terminated their agency agreements. The decision to cancel the licenses is based on the provisions of the Insurance Industry Act that provides that corporate insurance agents cannot operate without an insurer or insurance broker. The cancellations were attributable to compliance issues, failure to honour agreements, low production while there were some voluntary cancellations on the part of the agents. A total of fifty one (51) individual insurance sub-agents were cancelled due to non-renewal of licenses and resignations.

As at 31st March 2013, the Authority had not received any new proposal for mergers/acquisitions or takeovers. Consultations were however on-going between NBFIRA and Aon Botswana regarding Aon Botswana’s proposed acquisition of Glenrand MIB Botswana. In addition there were also on-going discussions with Metropolitan Life regarding the proposed acquisition of Momentum Life. The acquisition of Glenrand MIB Botswana by Aon Botswana though proposed in the financial year 2011 - 2012, was approved during the financial year 2012 - 2013.

NBFIRA approved three (3) applications from insurance brokers for voluntary de-registration.

One renewal application for insurance brokerage was declined due to its failure to comply with certain requirements of the financial services law.

Insurance Section [CONTINUED]

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REPORTING REQUIREMENTS

In terms of section 31 and 63 of the Insurance Industry Act, insurers and insurance brokers are required to submit statutory returns within four (4) months from the end of the financial year. Corporate insurance agents and individual insurance agents are not required to submit any financial returns as the liabilities are borne by their principal insurers and insurance brokers. With the implementation of insurance prudential rules in March 2012, it is now a requirement for insurers and insurance brokers to submit their quarterly returns to NBFIRA within 30 days after the end of each quarter. Quarterly returns allow NBFIRA to analyze and monitor closely the latest financial position of the licensed entities.

OVERALL INSURANCE FINANCIAL PERFORMANCE

During the reporting period the insurance market generated a combined gross written premium of P3.68 billion, which was an overall increase of 17% from the previous year (2011: P3.1 billion). This growth is significant when compared with the growth rate of 11% recorded in the previous year. The overall trend indicates that life insurance gross written premium growth rate was 33% over the past three years while general insurance gross written premium experienced a growth rate of 22% over the same period. The market share of gross written premium for the period 2011 - 2012 is illustrated in the Table I.2 below.

Table I.2: Market share of Gross Written Premium for insurance sector for the year 2011 - 2012

Gross Written Premium (Pula’s) % Market share GWP

Life Insurers 2,534,011,730 69%

General Insurers 1,149,673,446 31%

Totals 3,683,685,176 100%

Figure I.1: Percentage market share of Gross Written Premiums

Life insurance sector continues to record a larger share of the overall insurance premiums generated in the local market and as depicted in the above figure.


Life Insurers

General Insurers

31% 69%

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Table I.3: Market Trends on Gross Written Premium over a five year period

Source: Annual Returns of insurers. Some adjustments were made to ensure consistent presentation of information

Table I.3 above shows that there had been a continuous increase of gross written premiums for the past five years in the local market. This is an indication that more new business is being written every year as opposed to the previous years. The drop in the insurance growth rates in 2010 could be attributable to the remnants of past years’ economic meltdown.

LIFE INSURERS

As at the 31st of March 2013 there were eight (8) life insurers licensed to underwrite life insurance business. The details of these insurance entities are as listed in Appendix A of this report. Hollard Life Botswana (Pty) Ltd was licensed in the year 2012 to transact life insurance business increasing the total number of licensed life insurers to eight (8). The financial year data of the life insurance sector contained herein is based on the audited annual financial statements of only seven (7) insurers who were in operation with an exception to the new entrant Hollard Life Botswana (Pty) Ltd. The trend is that there has been an annual increase of one life insurer over the last three years. The merger between Metropolitan Life Botswana and Momentum Life which had already been approved by NBFIRA will reduce the number of life insurers to seven (7).


Gross Written Premiums (Pula Millions)

Year GWP (Life) GWP (Non-Life) % growth (Life) % growth (Non-Life)

2008 1391.2 707.3

2009 1698.8 850.4 22% 20%

2010 1900.9 901.7 12% 6%

2011 2136.7 1016.1 12% 13%

2012 2534.0 1149.6 19% 13%

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The table below outlines a condensed financial balance sheet for life insurers for the reporting period.

Table I.4: Consolidated Statement of Financial Position for Life Insurers for 2011 - 2012

Source: Audited annual financial statements of insurers. Some adjustments were made to ensure consistent presentation of information

Table I.3 above shows that there had been a continuous increase of gross written premiums for the past five years in the local market and this is an indication that more new business is being written every year. There was however a drop in the insurance growth rates in 2010 which could be attributable to the remnants of the past years’ economic meltdown.

One of the indicators used to assess the financial health of an insurer is the insurance risk ratio. The insurance risk ratio was 152% which is higher than the previous year ratio of 144%. A life insurer is generally considered to be financially sound if it has an insurance risk ratio of less than 300%. With the implementation of the Risk Based Supervisory Model, this will continue to be monitored more closely. Risk based supervision brings along a concept of risk based capital which requires that capitalization be in line with risks associated with the business of the insurer. This model assists NBFIRA to focus its regulatory resources on risks that have the potential to de-stabilise the insurance market, and this will be attained through continuous monitoring of risks associated with prudentially supervised entities.


Description ABSA Life Metropolitan Life

Momentum Life

Regent Life

BIFM Botswana Life

Liberty Life

Consolidated

Fixed Assets 1,283,000 1,413,000 50,489 483,432 657,680 7,104,000 85,688 11,077,289

Cash and Investments 5,414,000 163,847,000 62,243,476 153,775,339 9,146,712 147,541,000 4,312,499 546,280,026

Financial Assets 88,276,000 873,994,000 - 4,974,541 9,464,116,773 6,089,710,000 32,014,440 16,553,085,754

Tax Related Assets - 2,633,000 3,483,129 5,507,121 - 14,423,000 192,850 26,239,100

Trade & Other Receivables 2,434,000 65,763,000 11,127,942 - 18,052,885 - 6,836,232 104,214,059

Other investments - - - - 575,346,246 34,048,000 - 609,394,246

Reinsurance Assets - - - 5,577,660 - - 5,634,857 11,212,517

Other 16,854,000 24,765,000 99,567 53,555,343 795,011,000 3,131,060 893,415,970

Total Assets 97,407,000 1,124,504,000 101,670,036 170,417,660 10,120,875,639 7,087,837,000 52,207,626 18,754,918,961

Insurance Liabilities 65,201,000 892,320,000 59,938,774 51,478,452 - 5,592,073,000 12,114,149 6,673,125,375

Trade & Other Payables - 10,752,000 755 - 9,953,523,300 - - 9,964,276,055

Related Party Payables - 63,878,000 11,642,687 2,151,409 15,732,864 4,157,000 1,781,387 99,343,347

Tax related Liability 383,000 - - - 6,129,140 12,044,000 12,037 18,568,177

Other Liabilities 3,488,000 - - 14,960,967 4,913,225 339,487,000 15,344,463 378,193,655

Total Liabilities 69,072,000 966,950,000 71,582,216 68,590,828 9,980,298,529 5,947,761,000 29,252,036 17,133,506,609

Share Capital 21,370,000 83,271,000 9,500,000 15,887,895 38,806,268 79,772,000 10,000,000 258,607,163

Reserves 6,966,000 1,991,000 10,963,121 59,385,287 77,513,016 542,973,000 12,915,926 712,707,350

Retained Earnings - 72,294,000 9,624,699 26,553,650 24,257,824 517,331,000 - 650,061,173

Total Capital 28,336,000 157,556,000 30,087,820 101,826,832 140,577,108 1,140,076,000 22,915,926 1,621,375,686

Total Capital + Liabilities 97,408,000 1,124,506,000 101,670,036 170,417,660 10,120,875,637 7,087,837,000 52,167,962 18,754,882,295

28

Table I.5: Consolidated Life Insurance Income Statement 2012 (Pula Thousands)

Source: Audited financial statements for insurers. Some adjustments made to ensure consistent presentation of information

The gross written premium for the life insurance market was P2.5 billion being an increase of P397 million from the P2.10 billion recorded in the previous year (2011). The market ceded a total of P65 million of premium through reinsurance and coinsurance which represents 3% (2011: 1%) of gross written premium by primary insurers. This growth constitutes a huge increase of 124% over the year. It has been noted that almost half of the number of insurers have experienced underwriting losses, resulting in the combined total gross losses of P1.8 billion. These losses were attributable to high claims experiences and acquisition costs.


Description ABSA Life

Metropolitan Life

Momentum Life

Regent Life

BIFM Botswana Life

Liberty Life

Consolidated

Gross Premium Written 137,981,000 300,080,000 41,134,130 75,790,656 - 1,928,869,000 50,156,944 2,534,011,730

Premiums Ceded - 8,143,000 25,333,891 4,286,070 - 20,828,000 6,600,229 65,191,190

Net Premiums Written 137,981,000 291,937,000 15,800,239 71,504,586 - 1,908,041,000 43,556,715 2,468,820,540

Change in UPR (34,880,000) 145,219,000 (18,896,297) (6,846,977) - (1,026,888,000) 3,140,544 (939,151,730)

Adjusted Net Premiums 103,101,000 146,718,000 34,696,536 64,657,609 - 881,153,000 40,416,171 1,270,742,316

Incurred Claims - 112671000 4,940,137 22,311,282 - 899,470,000 17,214,187 1,056,606,606

Reinsurance Recoveries - 6,904,000 - 7,355,174 - 10,729,000 - 24,988,174

Net Claims Paid - 105,767,000 4,940,137 14,956,108 - 888,741,000 17,214,187 1,031,618,432

Acquisition Costs 66,718,000 50,017,000 17,662,789 18,166,560 - 216,884,000 7,387,735 376,836,084

Operating Expenses 22,168,000 54,136,000 8,199,214 11,454,949 1,384,329,398 197,115,000 7,219,229 1,684,621,790

Total Underwriting Expenses 88,886,000 104,153,000 25,862,003 29,621,509 1,384,329,398 413,999,000 14,606,964 2,061,457,874

Total Underwriting Income 14,215,000 (63,202,000) 3,894,396 20,079,992 (1,384,329,398) (421,587,000) 8,595,020 (1,822,333,990)

Investments Income 3,122,000 49,280,000 2,972,787 8,747,280 1,430,284,213 464,502,000 1,440,234 1,960,348,514

Other Income - 34,921,000 - 555,000 3,923,217 246,399,000 - 285,798,217

Retrocession - - - - - - - -

Net Profit Before Taxes 17,337,000 20,999,000 6,867,183 29,382,272 49,878,032 289,314,000 10,035,254 423,812,741

Tax 1,702,000 3,284,000 1,558,195 6,698,896 9,053,051 64,217,000 2,207,756 88,720,898

Net Income After Tax 15,635,000 17,715,000 5,308,988 22,683,376 40,824,981 225,097,000 7,827,498 335,091,843

29

GENERAL INSURERS

As at the 31st of March 2013 there were twelve (12) primary insurers licensed to underwrite general insurance business. The details of these insurance entities are as listed in Appendix A of this report.

Table I.6 below outlines Gross Written Premium by class of insurance or business for the year 2011 - 2012

Table I.6 and figure I.2 indicates that the most insurance business were property market followed by motor insurance.

Source: Annual returns for insurers

Class of Insurance Total (Pula’s)

Property 420,295,095

Transportation 30,051,169

Motor 387,251,673

Accident 52,769,971

Health -

Guarantee 14,962,000

Liability 94,237,681

Engineering 64,776,743

Miscellaneous 85,329,114

Total 1,149,673,446


30

Table I.7 below outlines a condensed balance sheet for general insurers for the reporting period. Total assets of general insurers increased by 23% from P1.3 billion in 2011 billion in the current year.

Table I.7: Consolidated Balance Sheet for General Insurers 2011 - 2012 (in Pula)

*Half year results

Source: Audited annual financial statements of insurers. Some adjustments were made to ensure consistent presentation of information

Cash & cash equivalents and other current assets accounted for 39% and 55% respectively of total assets of general insurers while total current assets exceeded total current liabilities by 52% which falls within the expected range of the level of liquidity required for a general insurer.

Technical provisions including the unearned premium and claims provisions were P687 million or 67% of total liabilities. On the other hand, NBFIRA continues to monitor closely the investment strategies and mix of characteristics of the portfolio through regular prudential reporting and to ensure that these are always in line with insurers expected future liability profiles.

Section 9 of the Insurance Industry Act requires each general insurer to transfer 15% of net after tax income to a Capital Reserve Account annually. In addition, Section 11 of the same Act requires that the lesser of 10% of gross profits or 25% of gross premiums written be transferred to a Statutory Reserve Solvency Account. At the end of 31st December 2012, general insurers reported a total of P216 million for these two accounts, being an increase of 16% from the previous year (2011). Retained earnings were P198 million, which is an increase of 26% from P157 million recorded in the previous period.


BECI BIC BIHL Hollard Maemo Mutual & Federal

Phoenix Prefsure Regent Sesiro Sunshine Zurich Totals

Period 30-Jun 31-Dec 31-Dec 30-Jun 30-Jun 31-Dec 31-Dec 30-Sep 30-Jun 31-Dec 30-Jun 31-Dec

Balance SheetCash and Equivalents 38,943,784 47,195,115 41504168 89,297,941 2,841,005 109,356,000 829,535 12,594,990 245,801,504 34,496,123 6,284,707 4,613,533 633,758,405

Fixed Assets 9,007,528 31,706,762 6,228,529 2,552,548 436,516 1,165,000 221,615 42,400,286 1,072,013 - 570,463 1,558,888 96,920,148

Other Current Assets 9,519,718 324,836,298 8,716,732 49,283,690 3,255,685 88,135,000 4,424,717 8,453,297 42,043,436 94,846,312 4,661,643 244,770,200 882,946,728

Total Assets 57,471,030 403,738,175 56,449,429 141,134,179 6,533,206 198,656,000 5,475,867 63,448,573 288,916,953 129,342,435 11,516,813 250,942,621 1,613,625,281

Insurance Liabilities 1,921,937 208,598,641 9,275,473 67,513,797 2,316,814 88,995,000 1,201,476 22,748,575 99,639,741 - 1,339,818 178,502,201 682,053,473

Long-term Liabilities 4,111,038 6,736,586 253234 409,072 - 8,011,000 - - 4,942,659 582,198 - - 25,045,787

Other Current

Liabilities

26,960,260 17,889,960 40,298,960 27,358,053 7,129,585 26,834,000 1,185,483 7,348,505 43,890,851 105,555,573 8,129,507 3,457,756 316,038,493

Total Liabilities 32,993,235 233,225,187 49,827,667 95,280,922 9,446,399 123,840,000 2,386,959 30,097,080 148,473,251 106,137,771 9,469,325 181,959,957 1,023,137,753

Share Capital 13,436,788 52,292,654 5,968,223 11,908,651 9,760,599 21,545,000 4,000,000 5,746,854 9,530,000 3,940,163 5,000,000 19,105,392 162,234,324

Reserves 7,384,077 72,633,701 2,144,297 7,921,177 - 29,346,000 - 11,831,043 51,012,259 3,886,893 - 33,217,424 219,376,871

Retained Earnings 3,656,930 45,586,633 -1,490,758 26,023,429 -12,673,792 23,925,000 -911,092 15,773,596 79,901,443 15,377,608 -2,952,512 16,659,848 208,876,333

Total Capital 24,477,795 170,512,988 6,621,762 45,853,257 -2,913,193 74,816,000 3,088,908 33,351,493 140,443,702 23,204,664 2,047,488 68,982,664 590,487,528

Total Liabilities& Equity 57,471,030 403,738,175 56,449,429 141,134,179 6,533,206 198,656,000 5,475,867 63,448,573 288,916,953 129,342,435 11,516,813 250,942,621 1,613,625,281

31

The solvency ratio and the insurance risk ratio were used to assess the financial health of a general insurer. A general insurer is considered to be financially sound if its solvency ratio is in excess of 25%. The solvency ratio is a critical requirement for a general insurer than a life insurer because of the relative volatility and uncertainty associated with a general insurer’s liabilities. The solvency ratio for the general insurance sector as a whole was 61% being 3% lower when compared to the 64% recorded in the previous year. All insurers listed in Table I.7 exceeded the 25% minimum requirement except for one insurer.

A general insurer is considered to be financially sound if it has an insurance risk ratio of less than 300%. The rationale for this test is to place a cap on the amount of insurance to be written since writing more business exposes the insurer to more risks as it may not have enough capital and reserves to cover possible fluctuations in claims. On the other hand, if the insurer has underwritten insufficient business, the insurer may not have enough cash to cover its expenses. General insurers experience greater fluctuations in results from year-to-year than long term insurers as renewals are made annually. Therefore, general insurers have a higher restriction on the amount of business they are permitted to underwrite as a risk mitigation strategy. The Prescribed Capital Target (PCT) is therefore a more refined indicator to use for a general insurer and this measure is being emphasized under the newly implemented insurance prudential rules and risk based supervision framework. The information presented in Tables I.7 and I.8 indicates that the insurance risk ratio for general insurance industry was 136% being 5% lower than the 141% recorded in 2011, which is within the recommended range for general insurers. All general insurers in the market have insurance risk ratios of less than 300% save for two insurers.

Table I.8 below outlines the operating performance of the general insurance market for the reporting period.

Table I.8: Consolidated Income Statement for General Insurers 2011 - 2012 (in Pula)

*Half year results Source: Audited annual financial statements of insurers. Some adjustments were made to ensure consistent presentation of information

BECI BIC BIHL Hollard Maemo Mutual &

Federal

Phoenix Prefsure Regent Sesiro Sunshine Zurich Totals

Period 30-Jun 31-Dec 31-Dec 30-Jun 30-Jun 31-Dec 31-Dec 30-Sep 30-Jun 31-Dec 30-Jun 31-Dec

Income Statement

(Pula) (Pula) (Pula) (Pula) (Pula) (Pula) (Pula) (Pula) (Pula) (Pula) (Pula) (Pula) (Pula)

Gross Premium Written 16,234,417 254,644,380 46,383,587 110,768,350 10,928,417 134,097,000 2,534,063 27,223,128 189,343,895 112,771,209 8,567,236 236,177,764 1,149,673,446

Premiums Ceded 6,258,142 141,412,449 1039699 38,110,485 10,716,134 48,292,000 934,463 - 19,665,039 107,222,674 3,428,768 62,840,769 439,920,622

Net Premiums Written 9,976,275 113,231,931 45,343,888 72,657,865 212,283 85,805,000 1,599,600 27,223,128 169,678,856 5,548,535 5,138,468 173,336,995 709,752,824

Change in UPR - -19,352,569 4,074,792 1,265,147 255,102 4,743,000 1,153,376 6,334,209 -4,576,454 -1,073,362 - 1,611,523 -5,565,236

Net Premiums Earned 9,976,275 132,584,500 41,269,096 71,392,718 -42,819 81,062,000 446,224 20,888,919 174,255,310 6,621,897 5,138,468 171,725,472 715,318,060

Incurred Claims 6,069,285 75,906,220 15,434,275 43,647,137 451,294 57,993,000 230,443 8,379,178 90,835,774 - 2,834,596 134,206,771 435,987,973

Net Acquisition Costs 2,392,660 5,996,886 2,281,609 9,505,370 -295,047 10,047,000 - 5,444,626 32,802,424 5,019,173 1,397,049 27,250,244 101,841,994

Operating Expenses 7,021,875 40,860,308 28,460,841 18,310,386 7,522,837 12,902,000 1,482,277 6,453,231 25,066,913 701,766 3,853,096 11,489,756 164,125,286

Underwriting Expenses 15,483,820 122,763,414 46,176,725 71,462,893 7,679,084 80,942,000 1,712,720 20,277,035 148,705,111 5,720,939 8,084,741 172,946,771 701,955,253

Total Underwriting Income -5,507,545 9,821,086 -4,907,629 -70,175 -7,721,903 120,000 -1,266,496 611,884 25,550,199 900,958 -2,946,273 -1,221,299 13,362,807

Investments Income 1,364,674 8,625,544 526,580 3,894,368 85,978 15,073,000 315,614 6,354,702 13,076,421 959,671 94,838 9,262,551 59,633,941

Other Income 4,433,090 14,777,347 1,579,846 1,193,010 129,715 40,000 39,791 - 5,843,397 234,857 2,315,281 - 30,586,334

Reinsurance Recoveries 1,223,083 12,915,635 - 10,337,186 -322,390 13,959,000 - - 8,329,245 - - 14,174,526 60,616,285

Net Profit Before Taxes 1,513,302 46,139,612 -2,801,203 15,354,389 -7,828,600 29,192,000 -911,091 6,966,586 52,799,262 2,095,486 -536,154 22,215,778 164,199,367

Tax 1,098,397 7,271,074 442,989 3,020,850 - 4,615,000 - 1,376,601 9,371,595 578,152 - 4,405,894 32,180,552

Net Income After Tax 414,905 38,868,538 -3,244,192 12,333,539 -7,828,600 24,577,000 -911,091 5,589,985 43,427,667 1,517,334 -536,154 17,809,884 132,018,815


32

The gross written premium for the non-life insurance market was P1.15 billion during the reporting period. This represents a growth rate of 13% from the prior period (2011: P1.02 billion). The market ceded a total premium of P440 million through reinsurance and coinsurance placements which represents 38% (2011: 34%) of gross written premium by primary insurers. During the reporting period 2011 - 2012 underwriting expenses increased by 17% from P598 million in 2011 to P702 million in 2012. Incurred claims for the market also increased by 17% from P373 million in 2011 to P436 million in 2012.

The total underwriting income for the market sharply dropped by 78% to P13 million (2011: P60 million) with a number of general insurers recording underwriting losses. These losses are mainly attributable to the increase in total expenses due to incurred claims and increased competition in the market which in turn exerts significant pressure on the underwriting premium of insurance products.

During the reporting period general insurers realized an investment income of P60 million which is an increase of 30% from the prior period (2011: P46 million). The non-life insurance market paid P32 million (2011: P22 million) to the Government in the form of income tax, resulting in a total net income of P132 million compared to P135 million in the previous year (2010 - 2011).

REINSURERS

During the reporting period 2011 - 2012, the two licensed reinsurers (as Per Table I.9 & Appendix A) generated a combined gross written premium of P22.5 million which is an increase of 37% from the prior period (2011: P16.4 million). Although this represents only 2.4% of the total premium ceded (P440 million) by local primary insurers it must be noted that this is inclusive of reinsurance business written in regional markets. Of the P22.5 million gross written premiums, only 47% (2011: 46%) was from the local insurers while 53% (2011: 54%) was from the regional market. The reinsurers retroceded a total premium of P3.5 million which is a decrease of 12% from the prior period (2011: P4 million) and this could be attributable to growth in capacity by local reinsurers.


33

Table I.9: The Income Statement of reinsurers for the review period

Source: Audited annual financial statements of re-insurers. Some adjustments were made to ensure consistent presentation of information

During the period under review, both reinsurers recorded their first profits in their three years of operation despite increased acquisition and operating expenses experienced over the years. Tax paid to Government was P113,381 being an increase of over P100,000 from the prior period.

First Re FM Re Total

Period 31st Dec 2012 31st Dec 2012

Income Statement (Pula’s) (Pula’s) (Pula’s)

Gross Written Premium 11,054,145 11,496,817 22,550,962

Premium Ceded 2,206,638 1,300,754 3,507,392

Net Written Premium 8,847,507 10,196,063 19,043,570

Change in UPR - -695,346 -695,346

Net Premium Earned 8,847,507 10,891,409 19,738,916

Incurred Claims 1,486,997 2,302,498 3,789,495

Net Acquisition Costs 3,494,979 3,160,054 6,655,033

Operating Expenses 4,050,192 6,269,341 10,319,533

Underwriting Expenses 9,032,168 11,731,893 20,764,061

Total Underwriting Income -184,661 -840,484 -1,025,145

Investments Income -8,022 380,079 372,057

Other Income 1,003,999 527,474 1,531,473

Reinsurance Recoveries - - -

Net Profit Before Tax 811,316 67,069 878,385

Tax 183,064 -69,683 113,381

Net Profit After Tax 628,252 136,752 765,004


34

Table I.10: Condensed balance sheet for reinsurers for the reporting period 2011 - 2012

Source: Audited annual financial statements of re-insurers. Some adjustments were made to ensure consistent presentation of information

The table I.10 indicates that total assets for reinsurers increased threefold to P38.8 million during the reporting period while total liabilities only increased by 32% from P12 million (2011) to P15.8 million in the same period.

The total capital for reinsurers reported a sharp growth of P23 million and this was attributable to additional capital injections and a growth in the local reinsurance capacity.

INSURANCE BROKERS

At the close of the reporting period, the total number of licensed insurance brokers was forty (40), (see Appendix B). During the period NBFIRA approved a merger and acquisition transaction, where Marsh (Pty) Ltd acquired Alexander Forbes Risk Services (Pty) Ltd. This transaction resulted in the introduction of Marsh and McLennan Risk Services Botswana (Pty) Ltd in the market.

The reporting on the financial performance of insurance brokers is based on thirty four (34) out of forty (40) licensed insurance brokers. Two (2) insurance brokers have not yet completed their twelve (12) months reporting cycle, while four (4) insurance brokers failed to submit their statutory returns for 2012. The combined total revenue for insurance brokers during the period under review was P259 million, comprising of P177 million earned through commission on gross written premium and P82 million earned from other revenue sources, mostly consultancy fees. The total assets of insurance brokers were P321 million compared to P290 million in the prior period, reflecting a growth of 11%. The total liabilities of insurance brokers were P179 million with a significant amount being premium held in trust by insurance brokers on behalf of insurers as prescribed in the insurance regulations. However, there is a trend in the market where some insurance brokers tend to hold these premiums beyond prescribed time-frame and this has in turn affected the cash flow of insurers and in some instances posing risk of policy lapses. NBFIRA is closely monitoring this trend and non-compliance by some insurance brokers.

First Re FM Re Total

Period 31st Dec 2012 31st Dec 2012

Balance Sheet (Pula’s) (Pula’s) (Pula’s)

Cash & Cash Equivalents 1,544,493 24,474,010 26,018,503

Fixed Assets 373,969 610,029 983,998

Other Current Assets 7,416,206 4,374,482 11,790,688

Total Assets 9,334,668 29,458,521 38,793,189

Insurance Liabilities 1,564,828 6,670,118 8,234,946

Long-term Liabilities 5,014 - 5,014

Other Current Liabilities 3,445,591 4,053,602 7,499,193

Total Liabilities 5,015,433 10,723,720 15,739,153

Share Capital 5,000,001 21,413,226 26,413,227

Reserves 739,864 903,813 1,643,677

Retained Earnings -1,420,630 -3,582,238 -5,002,868

Total Capital 4,319,235 18,734,801 23,054,036

Total Liabilities& Equity 9,334,668 29,458,521 38,793,189


35

PENSION/RETIREMENT FUNDS INDUSTRY

The Pension Funds section like other regulatory department is tasked with the following:

• Licensing• Financial Analysis • Complaints Handling• Mergers and Amalgamations• Inspections and Investigations• Enforcement


The governance of private pension plans and funds is key to ensuring that there is accountability, compliance with the rules and transparency in decisions that are taken on behalf of members. The basic goal of pension fund governance regulation is to protect the investments of the members so that those retiring from the pension fund can do so with dignity and this can be achieved if there is security of pension savings.

Most of the pension funds have a governing body of trustees who are responsible for the operation and oversight of the pension fund. The Board of Trustees is the ultimate decision-maker, having fiduciary responsibility for strategic decisions such as setting the investment policy, choosing the investment manager(s), and other service providers and reviewing the fund‘s performance.

NBFIRA as pension fund supervisor, has adopted a risk-based supervision approach, therefore pension fund governance has become central to deciding whether or not an institution should be closely monitored. The stronger the governance of the fund, the better the risk control environment and consequently, the lesser the stringent supervisory approach by NBFIRA as the supervisory approach is increasingly dictated by the assessment of a pension fund‘s risk profile.

MARKET COMPOSITION

As at 31st March 2013 there were ninety-five (95) active standalone pension funds licensed compared to previous year’s figure of ninety-seven (97) following the transfer of two (2) to the Umbrella Funds in accordance to Section 71 of the Non-Bank Financial Institution Regulatory Authority Act (see Appendix C). The ninety-five (95) active stand alone funds include the five (5) Umbrella Funds which have (205) sub-funds. The umbrella funds consist of several small sized funds which are pooled for administrative purposes.

The total membership of all pension funds was 166,500 compared to 153,766 in 2011. The current membership of 166,500 was made up of 152,348 active members, 11,897 deferred members and 2,255 pensioners. The largest fund is the Botswana Public Officers Pension Fund with a membership of 111,542. The total members’ fund for the year was P38.9 billion.

Pension Funds Section

36

Chart 1: Membership Pension Funds as at 31st December 2012

FINANCIAL OVERVIEW

Table P1: Condensed Income/Expenditure statements for the period ended 31st March 2013

Income Pula’s (Millions) 2013 Pula’s (Millions) 2012

Members Contributions 715.235 713.122

Employer Contributions 1,620.131 1,203.167

Amounts received on life insurances 5.264 6.544

Investment Income 3,582.678 2,677.693

Other Income 507.985 277.488

Total 6,431.293 4,878.014

Expenditure Pula’s (Millions) 2013 Pula’s (Millions) 2012

Benefit Payments 2,470.559 1,722.089

Administration, Management Expenses and Fees 340.286 312.593

Insurance Premiums 12.439 30.619

Total 2,823.284 2,065.301

The member contributions increased by 0.3% while employer contributions increased by 35% in the year 2012 while the income from investments increased by 34%. Benefit payments by retirement funds increased by 43% in 2012 compared to the previous year. Administration, Management Expenses and Fees increased by 9% in 2012 as compared to 2011.

The figures are based on returns received in the year 2012.

The Retirement Industry continues to grow and contributes significantly to the economy. Table P.2 outlines the investment assets held by retirement funds as at 31st December 2012. Investment assets of retirement funds totalled P47.4 billion being an increase of 17% from the previous year (P40.3 billion). The growth is attributed to improvement in the investment market.

Pension Funds [CONTINUED]

Active Members

Deferred Members

Pensioners

92%1% 7%

37

Pension Funds in Botswana are allowed to invest up to 70% of their assets offshore. As at 31st December, 2012 offshore investments of Botswana pension funds was P23.9 billion or 50% of total pension assets.

Total equities accounted for 66.9% of the investment assets of retirement funds comprising of Botswana listed equities of P12.5 billion and offshore equities of P19.1 billion. Total bonds accounted for 21% of funds made up of Botswana Bonds of P6.5 billion and offshore bonds of P3.6 billion. Cash and near cash accounted for 10% of the funds comprising of P4.0 billion in Botswana Investments and P1.2 billion in offshore investments. The reason why retirement plans have substantial investments in equities is that equities are considered to match the investors’ long term horizon as they generate a stable growth/return over a long term. Equities usually out perform the bonds in the long run, therefore, retirement funds are predominantly placed on equities.

Table P.2: Pension Plan Investment Assets (Pula Millions)

Investment Asset As at December, 2012 (Million Pula’s) % of Total 2012

Botswana Equities 12,506 26.4

Exchange Traded Funds 96 0.2

Pula Bonds* 6,531 13.8

Pula Cash/Near Cash 4,038 8.5

Botswana Property 362 0.8

Offshore Equities 19,110 40.3

Offshore Bonds 3,605 7.6

Offshore Cash/Near Cash 1,160 2.4

Total Investments 47,408 100

*Includes Commercial Paper

Chart 2: Pension Fund Assets as at 31st December 2012

Offshore Equities

Offshore Bonds

Offshore Cash/Near Cash

Botswana Equities

40% 8% 2% 26%

Exchange Traded Funds

Pula Bonds/Commercial Paper

Pula Cash/Near Cash

Botswana Property

1%9%14%0%


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Chart 3: Pension Fund Asset Split-Local/Offshore 2002 to 2012

The Pension Fund Investment Managers main objective is to achieve capital growth for the fund members by investing in both local and offshore portfolios within acceptable risks. These investments are exposed to market risk, credit risk, liquidity risk, foreign currency risk and inflation.

Retirement funds are also expected to maintain satisfactory levels of liquidity to enable them to settle their obligations when they fall due.

• Foreign Currency Risk Pension Fund investments are exposed to currency risk which is driven by foreign currency

fluctuations. The investments denominated in foreign currencies amounted to P23.9 billion as at 31st December 2012 compared to P22.6 billion as at 31st December 2011.


50 000.00

45 000.00

40 000.00

35 000.00

30 000.00

25 000.00

20 000.00

15 000.00

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5 000.00

0.00

PENSION FUND ASSETS

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

(Miilio

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Local Investments

Offshore Investments

YEARS

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• Interest Rate Risk Retirement Fund investments are exposed to interest rate fluctuations due to changes in market

interest rates. Financial instruments likely to be affected are interest bearing securities, fixed/variable term deposits and cash balances. The total exposure to interest rate risk was P15.3 billion as at 31st December 2012 compared to P15.5 billion as at 31st December 2011.

• Credit Risk Retirement Fund investments are exposed to the risk that counterparties will default on their

contractual obligations which may result in losses to the fund. Credit risk is mainly concentrated around debt and equities. The total credit risk exposure is P41.9 billion or 88% of all retirement fund assets.

• Inflation Risk Rising inflation poses problems for cash, fixed income investments and government bonds because

achieving positive real returns becomes difficult.

REGULATORY CHALLENGES

Despite increased understanding of the importance of good governance by retirement funds, there are some Regulatory challenges that continue to be experienced in the retirement industry due to: • Limited knowledge of the requirements of the NBFIRA Act, Pension & Provident Funds Act and its

Regulations which leads to issues of non-compliance.• Late submission of annual returns. • Late notification and submission of Rule Amendments; Section 8 of the Pension & Provident Funds

Act stipulates that no rule changes will be valid unless approved by NBFIRA. Despite the fact that the Regulatory Authority issued a circular on the new fit and proper requirements for Controllers to the industry, there have been incidents of failure or late notification of changes that have taken place such as changes of Controllers being received by the Authority.


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OVERVIEW

The Capital Markets Department is responsible for the licensing and supervision of prudentially regulated Non-Bank Financial Institutions (NBFIs) which includes the following:

1. The Botswana Stock Exchange (BSE)2. The Central Securities Depository Company of Botswana Limited (CSDB)3. The Commodities Exchange (Bourse Africa Limited)4. Securities Dealers5. Individually licensed Securities Dealers6. International Financial Services Centre - (IFSC) (Accredited entities) 7. Collective Investment Undertakings (CIUs) including Management Companies of the CIUs8. Trustees 9. Custodians10. Investment advisors11. Asset Managers 12. Micro Lenders13. Finance and Leasing companies

Capital Markets Department

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INVESTMENTS

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EXCHANGES AND BITC ACCREDITED ENTITIES SECTION

INTRODUCTION

The Section is responsible for the regulation and supervision of the following Non-Bank Financial Institutions:

SECURITIES INFRASTRUCTURE BUSINESS (SIB) Securities Infrastructure Business as defined in Section 2 of the SIB Rule 2012 means:

a. an Exchange;b. a Central Securities Depository;c. a Clearance and Settlement System other than a Central Securities Depository; andd. a Clearance and Settlement System encompassing a Central Counterparty.

There are currently three (3) Securities Infrastructure Businesses supervised by the section and these are:

a. The Botswana Stock Exchange (BSE) which operates as a securities exchange; b. Bourse Africa Limited (BAL) which is licensed as a commodities exchange BAL will operate through a Central Counterparty (CCP) which will allow for transactions to be cleared

by a centralized counterparty; and c. The Central Securities Depository Company of Botswana Limited (CSDB) which is a 100% subsidiary

of the Botswana Stock Exchange. The CSDB was established for efficient settlement of securities and allows for holding of securities in electronic form.

SECURITIES DEALERS

Securities Dealers as defined in Section 2 of the NBFIRA Act means:

a. a stockbroker as defined in the Botswana Stock Exchange Act;b. a person who buys and sells securities on behalf of other persons; andc. a person who regularly buys and sells securities on his own behalf other than through a licensed

securities dealer.

INTERNATIONAL FINANCIAL SERVICES CENTRE (IFSC) ACCREDITATION

These are non-bank financial institutions that have been certified as international financial services centre companies by the Botswana Investment and Trade Centre (BITC). The Authority is responsible for monitoring these entities by ensuring that they are financially sound and comply with all the relevant legal frameworks in existence.

IFSC and Exchange Section

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SECTION UPDATES

SECURITIES DEALERS

The Botswana Stock Exchange has been delegated with the supervision of four (4) securities dealers namely:

a. African Alliance Botswana Securities Ltd;b. Imara Capital Securities (Pty) Ltd; c. Motswedi Securities (Pty) Ltd; andd. Stockbrokers Botswana Limited.

The BSE reports matters of misconduct and non-compliance to NBFIRA who then take action which may include conducting an inspection and/or investigation. The BSE conducts annual inspections on the securities dealers and issues the reports to NBFIRA. The securities dealers are required to comply with the BSE Member Rules. The BSE also monitors the securities dealer’s financial position through submission of quarterly returns and audited annual financial statements. Details on the securities dealers are included in Appendix A.

ON-SITE INSPECTIONS

The Authority conducted on-site inspections on all securities dealers to assess compliance with the newly approved NBFIRA Market Intermediary Licensing Rules 2012, Market Intermediary Conduct of Business Rules 2012 and Securities Business Corporate Governance Rules 2012.

The assessments were mainly focused on examining compliance in the following areas:


Corporate governance refers broadly to the rules, processes, or laws by which businesses are operated, regulated, and controlled. This can refer to internal factors defined by the employees, shareholders or constitution of a corporation, as well as to external forces such as consumer groups, clients, government and other stakeholders. Good governance enhances trust and confidence among investors in capital markets. The Authority takes notice of this fact and tries to facilitate good corporate governance among all the entities regulated.

IFSC and Exchange Section [CONTINUED]

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SEGREGATION OF CLIENT’S ASSETS

In accordance with Market Intermediary Conducts of Business Rules 2012, client funds shall be separated from the company funds. A market intermediary who receives and holds clients’ money shall open one or more client accounts in a commercial bank. A client account is a bank account controlled by a securities dealer and into which client money is paid. Client accounts may be general accounts, containing funds for a number of clients or a separate client accounts containing money from just one client. A client account shall have the words “client account” in the name of the account and shall be separate from any other accounts controlled by the securities dealer.

One (1) securities dealer was found to be in breach of this rule and the necessary regulatory remedial action was accordingly taken against the security dealer.

FIT AND PROPER TEST

All proposed Controllers (as defined in Section 4 of the NBFIRA Act) of the entities licensed by the Authority are in accordance with the NBFIRA Market Intermediary Licensing Rules 2012 required to complete a fit and proper test.

All the securities dealers have been requested to submit the fit and proper vetting documents for their Controllers.

The vetting is ongoing and as it stands the Authority has not received any adverse results.

BOTSWANA STOCK EXCHANGE

As at 31st March 2013 there were thirty-six (36) listed companies on the BSE, twenty-four (24) companies on the BSE, of which were on the domestic equity board while twelve (12) were on the foreign equity board. Of the thirty-six (36) companies, thirteen (13) are on the venture capital board that i.e companies seeking capital for exploring new projects. During the year, one mining and exploration company was listed on the foreign main board.

The NewGold ETF and the BettaBeta Equally Weighted Top 40 ETF remain the only two exchange traded funds on the BSE.


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The BSE’s Domestic Companies Index (DCI) is the main index used to track performance of the domestic companies while the Foreign Companies Index (FCI) is used to track performance of the foreign companies. The BSE has six (6) other equity indices representing the local asset sector, domestic financial sector, foreign resource centre and the free float indices.

MARKET PERFORMANCE FOR THE PERIOD APRIL 2012 TO MARCH 2013 (DATA SOURCE BSE)

DOMESTIC COMPANIES INDEX (DCI) AND FOREIGN COMPANIES INDEX (FCI)

As shown in Graph 1 the DCI has been on a gradual uptrend from year to year since 2010. During 2012, the DCI appreciated by 7.7% to close at 7510.3 compared to an appreciation of 8.7% in 2011. The FCI on the other hand declined by 6.1% in 2012 to close at 1599.53 compared to an appreciation of 1.8% in 2011.

Graph 1: FCI & DCI

Note: 2008 - 2012 figures as at 31st December

Data source: BSE

9000

8000

7000

6000

5000

4000

3000

2000

1000

0

FCI & DCI 2008 - 2012

2008 2009 2010 2011 2012

DCI

FCI


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MARKET CAPITALIZATION

Market capitalization estimates the value of all securities listed on the exchange and is made up of domestic and foreign market capitalization (see graph 2 below). The domestic market capitalization has been growing steadily since 2011 when the domestic market started recovering from the global financial crisis. Growth in market capitalization is attributed to a combination of an increase in securities issued and a general increase in prices. However the BSE stated in 2011 that the price effect has been the dominant role in contributing to the growth in market capitalization over the past years. The domestic market capitalization increased by 11% from P35.5 billion as at 31st March 2012 to P39.7 billion as at 31st March 2013 while the foreign market capitalization slightly decreased by 2.4% to close at P373.0 billion during the same period. The overall effect on the total market capitalization was a marginal appreciation to close at P412.7 billion.

Graph 2: Market Capitalization

Data source: BSE


600,000

500,000

400,000

300,000

200,000

100,000

0

MARKET CAPITALIZATION

2007 2008 2009 2010 2011 2012 2013

Foreign Market Capitalisation 535,324.9 286,260.2 346,001.1 408,380.3 380,909.5 376,818.2 373,045.8

Domestic Market Capitalisation 32,706.6 27,706.1 28,536.2 26,245.7 30,694.3 35,530.8 39,740.2

Total Market Capitalisation 568,031.5 313,966.3 374,537.30 434,726.00 411,603.80 412,349.00 412,786.00

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BOND PROFILE

A bond is a fixed interest bearing security sold by an issuer promising to pay the holder interest at future dates and the nominal value of the security at maturity. Bonds are traded on the BSE. As at 31st March 2013 the BSE had listed six (6) Government bonds, five (5) Quasi-Government bonds and twenty-three (23) corporate bonds. The corporate bonds are spread between nine (9) issuers. The nominal-value of the issued bonds was P5.53 billion for Government bonds, P2.45 billion for corporate bonds and P0.64 billion for quasi Government bonds. As depicted in Graph 3 below, the Botswana Government remains the largest issuer in the bond market.

Graph 3: Nominal Value of Bonds Issued Relative to Each Sector

Data source: BSE

BSE MARKET DEVELOPMENTS

AUTOMATED TRADING SYSTEM

The BSE implemented the ATS in August 2012 following approval of the BSE Trading Rules for Equity Securities by NBFIRA. The Automated Trading System (ATS) is a computer system that allows for orders to be entered for matching of trades as opposed to the manual trading system where brokers meet at the exchange and manually match trades. The ATS ensures that orders are processed in accordance with the criteria and conditions set for the system.

BOND MARKET DEVELOPMENT

The bond market is a financial market in which the debt instrument (bond) is traded. By purchasing a bond, the investor loans funds to the issuer for a fixed period of time. The BSE has shown great progress with regards the development of a bond pricing computation. The bond indices were developed to track the performance of the Botswana Bond Index. The three indices that have been developed are the Government Bond Index (GovI), the Corporate Bond Index (CorpI) and the composite of the GovI and CorpI known as the Botswana Bond Index (BBI). The BSE have commenced sending out the bond indices to stakeholders on a daily basis.

Government Bonds

Quasi-Government Bonds

Corporate Bonds

7.4% 28.4% 64.2%


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BOURSE AFRICA LIMITED (BAL)

In July 2012, BAL hosted a 3 day Pan African workshop for regulators of derivatives and commodities exchanges in Gaborone. The aim of the workshop was to provide strategic and technical information to assist African regulators to map out an action plan for developing regulatory frameworks for derivatives and commodities exchanges.

INTERNATIONAL FINANCIAL SERVICES CENTRE (IFSC) ACCREDITED ENTITIES

LICENSING

IFSC NBFI licensing must follow the same licensing procedures as the domestic NBFI’s. However, before the application for licensing is assessed, it must have passed through the BITC for accreditation purposes. The application is then forwarded to NBFIRA as a recommendation for licensing, and this may be approved or rejected.

Pending the promulgation of the Market Intermediary Licensing Regulations, most of the entities are given exemptions from licensing. The exemption is given after assessment of among others; the financial soundness of the entity, the expertise and qualifications of controllers, the benefits that the entity is bringing to the country and the physical presence of the entity in Botswana, i.e. the business operations must be undertaken locally even though they are not allowed to solicit business with local investors. As at 31st March 2013, there were fourteen (14) IFSC accredited entities on NBFIRA’s register (see Appendix D).

FINANCIAL REPORTING

IFSC accredited companies are required to submit quarterly returns within fifteen (15) days after the end of every quarter and audited annual financial statements within three (3) months after the end of their financial periods. The Authority is experiencing some challenges regarding submission of the financial returns by these entities.

FAMILIARIZATION VISITS

Familiarization visits are undertaken to enable the Authority to better understand the business operations of the entities. During the period under review, four (4) on-site familiarization visits were undertaken and three (3) companies were found to be in compliance to NBFIRA requirements.

RE-CLASSIFICATION

During the period under review, BITC was notified of one (1) entity reclassified as a non-bank financial institution which did not fall under the preview of the Authority.


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Investment Institutions

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OVERVIEW

The Investment Institutions Section’s main responsibility is the supervision and regulation of Collective Investment Undertakings (CIUs); the CIUs management companies and trustee banks; asset managers; custodians; as well as investment advisors.

As at reporting date, there were no changes in the number of licensed management companies of CIU’s, asset managers, trustees and custodians as their numbers remained at six (6), twelve (12), two (2) and three (3), respectively. There was however, an increase in the number of registered investment advisors which rose by four (4), closing the year at twenty-two (22) from the eighteen (18) that were registered as at March 2012.

The Section is also responsible for the approval of externally licensed funds so that they can market their products in Botswana (Appendix F). No new externally licensed funds were approved to be marketed in Botswana during the period under review.

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REGULATORY DEVELOPMENTS

During the year ended 31st March 2012, NBFIRA submitted the first draft of the CIU Bill and the Capital Markets Intermediaries’ (CMIs) Regulations for review, to the Ministry of Finance and Development Planning.

As at 31st March 2013, the CIU Bill and the CMIs Regulations had not been finalised as discussions were still on-going. The CMI Regulations are as follows:

i. The NBFIRA (Market Intermediary Licensing) Regulations; and ii. The NBFIRA (Persons Operating a Securities Infrastructure Business) Regulations.

In March 2012, the NBFIRA Board of Directors approved the CMI Prudential Rules for adoption in the market. These include corporate governance and business conduct rules issued in accordance with Section 50 of the NBFIRA Act. A Guidance Note was published thereafter and circulated in September 2012, to inform all CMIs that the Prudential Rules had been approved as follows:

i. The NBFIRA (Securities Business Corporate Governance) Rules 2012;ii. The NBFIRA (Market Intermediaries’ Conduct of Business) Rules 2012;iii. The NBFIRA (Market Intermediary Licensing) Rules 2012; andiv. The NBFIRA (Persons Operating a Securities Infrastructure Business) Rules 2012.

The guidance note also advised all CMIs to submit requisite information for eligibility for exemption from licensing; pending the promulgation of the CMI Regulations, wherein the exemption letters issued would be replaced by licences.

As at 31st March 2013, NBFIRA was still in the early stages of implementing the Risk Based Supervisory (RBS) model which involves developing and implementing the necessary Regulations and Rules and reporting tools. During the financial year 2011 - 2012, NBFIRA developed a Risk Profiling Questionnaire and the Financial Resources Requirements (FRR), tools aimed at aiding the implementation of the RBS model. The schedules were shared with the CMIs during the year and as at year end, risk profiling questionnaires were received from asset managers, whilst comments on the FRR calculations were to be forwarded to NBFIRA in April 2013.

LICENSING

STRUCTURE OF THE INVESTMENT INSTITUTIONS SECTOR

The NBFIRA Act requires that all Non-Bank Financial Institutions (NBFIs) who carry out the business of financial services or purport to be carrying out the business of financial services should be licensed. The purpose of licensing the NBFIs is to lay out pre-operation conditions and to monitor the operations of the licensed entities.

As at 31st March 2013, there were six (6) licenced management companies for CIUs, and these were managing twenty-five (25) funds. Consisting of eight (8) money market funds, five (5) equity funds, four (4) fixed income (bonds) and eight (8) balanced funds. During the period under review, no new licenses were issued for management companies for CIUs (see Appendix E) and no additional funds were approved.

Investment Institutions [CONTINUED]

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NBFIRA received twenty-one (21) applications for licensing during the period under review. These included twelve (12) asset management companies; two (2) of which were new applications, while the other ten (10) were of operating asset managers required to apply following the introduction of the Guidance Note (Appendix H). The applications were at various stages of processing as at the end of the year.

NBFIRA also received eight (8) applications for investment advisory services of which six (6) were new applications while the other two (2) were in response to the introduction of the Guidance Note. As at 31st March 2013, NBFIRA had exempted four (4) applications and issued them with exemption letters bringing the total number of investment advisors to twenty-two (22) in 2013 from eighteen (18) in 2012.

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REQUEST TO GRANT LOCAL ASSET STATUS

In December 2000, the Registrar’s Office prescribed pension funds offshore investment limits, classification of local and offshore investment assets, and the reporting requirements thereof. It was then established that externally licensed funds that would otherwise be classified as foreign investments could apply to NBFIRA for Local Asset Status. Being granted Local Asset Status meant that pension funds could invest in these ventures and qualify them as “local assets”.

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During the period under review, NBFIRA received requests from a local asset manager to grant Local Asset Status for two (2) international funds. NBFIRA approved one (1) of the requests while the other was still being processed as at 31st March 2013.

SURVEILLANCE

Surveillance is a key aspect in monitoring the business conduct of NBFIs once they have been licensed and approved to operate. The purpose of surveillance is to ensure adherence to the relevant laws, rules and regulations as prescribed by NBFIRA. NBFIRA two methods of surveillance are used, being on-site and off-site supervision.

OFF-SITE SUPERVISION

Off-site monitoring involves statistical data reviews, approvals of Controllers and Key Personnel; review of products, and prospectus for CIUs as provided by the NBFIs. Aspects that assist in off-site surveillance include the analysis of the monthly statutory returns, the interim and audited annual financial statements which are used to assess compliance with statutory requirements and to ascertain the deterioration in financial institutions’ position. Based on the review of the returns, the management companies satisfied the minimum capital adequacy requirements of the greater of either P0.5 million or three (3) months expenditure.

The Authority also uses the familiarization visits and to document the company’s operational processes which aids the Authority to gain extensive knowledge on the operations of the regulated entities. During the period under review, four (4) visits were conducted.

ON-SITE SUPERVISION

On-site supervision involves carrying out inspections on the premises of the NBFIs. They are generally used to assess the extent to which the financial institutions are compliant to the legislation, governance and conduct rules laid down by the Authority. During the year ended 31st March 2013, three (3) on-site inspections were carried out on different CMIs. The inspections conducted were, a pre-operational inspection, a routine inspection, and a special inspection.


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Table 1 depicts the types of inspections that NBFIRA may carry out under the RBS model.

Table 1: Types of On-Site Inspections

Type of Inspection Definition

Pre-Operational This inspection is carried out before an entity commences its operations. The scope covers assessing adequacy of human resources, information systems, internal procedures and controls and validates information submitted as at application.

Thematic This is an inspection conducted to assess the scale and nature of a particular market sector risk and its mitigation initiative. The inspection may be triggered by the Regulator identifying trends and emerging risks and compliance lapses that require a prompt regulatory response. This type of inspection may be carried out on a specific sector or a sample reflective of the sector.

Routine This type of inspection entails general checks on the entities systems and controls, as well as their compliance with relevant rules and regulations in all areas of the business. As the Authority moves towards a RBS model, reviews will become focused on specific issues identified as high risk areas during off-site monitoring.

Special This inspection is performed on regulated entities which are suspected to pose imminent risks to the market or their customers. In this case, the inspection’s scope is formulated around the details of the case i.e. a high level reduction of client base.

CONSULTATIVE/PRUDENTIAL MEETINGS

During the period under review, six (6) bi-lateral meetings were held with various entities. The meetings covered a review of the entities financial statements, the strategic plans, developments in the supervised entities and an update of regulatory issues raised by NBFIRA. In addition, NBFIRA held sectoral meetings to discuss regulatory developments and issues.

During the year, NBFIRA hosted a one day industry workshop to introduce regulated entities to the RBS model and the supporting policies. The workshop was attended by various CMIs and discussions were mainly centred on the conduct of business and the corporate governance rules. NBFIRA conducted one-on-one meetings to discuss the impact of the RBS and the supporting legislation on their business. This was conducted on four (4) asset managers and five (5) management companies.


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ENFORCEMENT

Investigations are one of the enforcement tools that NBFIRA can undertake as part of its regulatory requirements. An investigation is a systematic examination conducted to establish the facts in an impartial and objective manner and is normally carried out before enforcement. The investigation can be conducted by staff or a person appointed by the Authority e.g. a lawyer or forensic accountant depending on the level of skill required. The Authority has the discretion to inform the NBFI entity which is being investigated the reasons for undertaking the investigation if it deems it prudent to do so. No investigations were conducted during the year under review.

The Authority may impose a condition, issue a direction or publish a statement (or any combination of these acts, if it chooses) in any one instance following an investigation. The procedures relating to specific enforcement action include: written notice, penalties, suspension of license, revocation of licence and appointments of a statutory manager.

NBFIRA did not cancel, suspend or impose further conditions on any CMI licenses or exemptions during the period under review.

PERFORMANCE OF THE MARKET

The Assets Under Management (AUM) held by the asset managers and management companies grew by 25% to record a total AUM of P55.9 billion as at 31st March 2013, compared to P44.7 billion in 2012. The increase was due to a 28% growth in non-CIU assets which constitutes, institutional pension funds, other institutional funds, and retail clients who have assigned their funds for investment by the asset managers.

Graph 1 shows AUM by classification.

Graph 1: Industry Assets by Classification


60

40

20

0

INDUSTRY ASSETS BY CLASSIFICATION

2010 2011 2012 2013

Non-CIU Assets 34,168,979,927 36,324,899,725 39,711,306,192 51,145,031,437

CIU Total Assets 4,243,230,333 4,972,906,973 4,997,172,409 4,760,558,401

Industry Total AUM 38,412,210,259 41,297,806,697 44,708,478,601 55,905,589,839

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CIU assets decreased by 4.72% from P4.99 billion in 2012 to record AUM of P4.76 billion in 2013. The decline reflects a change in the direction of the upward trend that was prevalent over the prior three (3) years. Stanlib Investment Management Services (Pty) Limited (SIMS) continued to record the highest CIU assets for 2013, while Coronations Fund Managers (Pty) Limited (Coronations) reported the lowest CIU assets. The other three management companies remained in the middle, although Investec Asset Management Botswana (Pty) Limited’s (Investec) assets grew to exceed those of African Alliance Botswana (Pty) Limited, for the first time over the three (3) year time series. Graph 2 depicts the allocation of CIU assets held over a five (5) year period. The decline in AUM for CIUs was a result of the high level of redemptions, reporting net outflows over the past three (3) years.

Graph 2: Sales, Redemption & Net Flows for Local CIUs

700

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-100

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SALES, REDEMPTION & NET FLOWS FOR LOCAL CIUS

2009 2010 2011 2012 2013

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Sales Redemption Net Inflows / Outflows

23.13 6.97 65.27

Graph 3: Portfolio Holdings as at 31st March 2013 Graph 4: Portfolio Holdings as at 31st March 2012

Money Market Instruments

Listed Securities: Equities

Listed Securities: Debt

Unlisted Securities: Equities

Unlisted Securities: Debt

Money Market Instruments

Listed Securities: Equities

Listed Securities: Debt

Unlisted Securities: Equities

Unlisted Securities: Debt

0.41 4.21 16.85 11.26 65.910.29 5.43


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The majority of the portfolio holdings during the period for CIUs were money market instruments, although these declined from 65.91% in the previous year to 65.27% in the current year. The portfolio’s share of listed equities increased from 16.85% in the previous year to 23.13% in the current year while listed debt instruments decreased from 11.26% in 2012 to 6.97% in 2013.

While there were shifts in the overall portfolio holding segments, the graphs below (Graph 3 - 4), reflect that the public is still very risk averse and holding on to liquid short term investments as opposed to growth and income securities which perhaps take a longer period to mature or to realise gains.

As at 31st March 2013, pension funds accounted for 78% of total AUM holdings of P55.9 billion compared to 82% of total AUM Holdings of P44.7 billion in 2012. Other institutions accounted for 12% in 2013 compared to 16% in 2012. Both holdings for pension funds and other institutions decreased as insurance institutions’ holdings increased to 8% in 2013 from less than 1% recorded in 2012. Retail investors on the other hand, reported the lowest investment contribution towards AUM at only 2%, which was the same holdings as in 2012.

As at 31st March 2013, four (4) local entities were authorised to operate as facilities agents for 60 unit portfolios which have been licensed in other jurisdictions. In order to conduct inward marketing1 of externally licensed funds, the Authority assesses home countries for the management companies to ensure that they have a comparable regulatory environment to that of Botswana and that products offered are of a similar structure and risk profile to those offered in the local market. There were no new approvals granted in 2013.


Graph 6: Total Assets Management Holdings 2012

Retail

Other Institutional

Pension Funds

Insurance Institutions

0% 82%2% 16%

Graph 5: Total Assets Management Holdings 2013

Retail

Other Institutional

Pension Funds

Insurance Institutions

8% 2% 12% 78%

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RISKS FACED BY INVESTMENT INSTITUTIONS IN THE DOMESTIC MARKET

NBFIRA identified the following key risks faced by the CMIs:

• Major asset managers are subsidiaries of international corporations and most of their processes are done outside the country. These arrangements limits skills transfers to locals as key operations are being conducted externally.

• Investment Risk: The funds/portfolios may fail to meet investor’s expectations due to limited products in the market which offers little diversification opportunities resulting in investors’ buying and holding to securities and thus pushing prices up.

• Concentration Risk asset managers are largely dependant on one major client which is managed by six (6) asset managers.

• The market faces limited skilled resources and this poses a threat in that some key roles are non-existent in the company structures such as Compliance Officers.

• Lack of independence on the Boards. The tendency in most asset managers and management companies is such that the board usually consists of either employees from the group and/or its shareholders.


The key challenges for the Investment Institutions Department were, the inability to issue licenses to CMIs as the Regulations have not been promulgated, and the absence of prior regulatory and industry experience.


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OVERVIEW

The Micro Lending section is responsible for the supervision and monitoring of micro lenders as per the NBFIRA Act, 2006, Section 49. In terms of Sub-section (1), “The non-bank financial institutions referred to in Sub-section (2) are declared to be prudentially regulated non-bank financial institutions, and accordingly the provisions of Section 50 and prudential rules made thereunder shall have effect in relation to such prudentially regulated financial institutions”, and the “micro lender” is listed “r” on the list referred to in Sub-section (2). The section undertakes licensing, inspections, investigation and enforcements amongst other activities that are carried out by a regulator.

APPLICATIONS FOR LICENSE

In terms of Section 3(1) of the Micro Lending Regulations 2012, “no person shall carry out a business as a micro lender without a license issued by the Regulatory Authority” and in terms of Regulation 3(4) of same, “Any person who contravenes the Sub regulation (1) commits an offence and is liable to a fine specified in Section 42 of the NBFIRA Act, 2006”. The purpose of licensing is to protect consumers against dealing with unscrupulous micro lenders since the licensed will be under constant regulation and supervision by the Authority. The Authority is currently working with the Botswana Police Service in carrying out investigations and ensures the shutdown of those entities operating illegally.

As at 31st March 2013 the section had received one hundred and eighty-four (184) applications since the promulgation of the Micro Lending Regulations. One hundred and twenty-one (121) applications are from citizen owned entities whilst sixty-three (63) are from non-citizen owned entities.

The table 1 below are summary of the status of applications for the period under review.

Table 1: Summary of the status of applications

Status No. of ML

Awaiting Pre-licensing Inspection 92

Management Letters 34

Reports not yet finalised 9

Licensed 13

Applications with outstanding documents/information 36

Total 184

A total of thirteen (13) micro lenders were licensed during the year under review. Appendix E1 is the list of the licensed micro lenders.

Micro Lending

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STATUS OF THE APPLICATIONS

In order for a micro lender to be an approved and licensed entity an application package must be submitted to NBFIRA fulfilling the following requirements;

• Covering letter on business letterhead;• Duly completed Form 1 by applicant;• Vetting documentation for all controllers (biographical/personal questionnaire, work and residence

permit, Directorate of Intelligence and Security (DIS) Forms, certified copies of identity cards, police clearance and curriculum vitae;

• Proof of financial liquidity - certified to be in a bank by the Micro Lender’s Accountants - P20,000 to be maintained at all the times by the micro lender

• Proof of payment of license fees - P5,000 to be deposited into NBFIRA’s account. Bank: Stanbic Bank Branch: Fairground Branch code: 064967 Account number: 9060001296510 Swift code: SBICBWGX

• Statutory documentation - (Proof of incorporation) (Form 2 or 13)• Detailed 3 - 5 year business plan• Latest financial statements, for existing businesses• Resume for Manager and or Principal Officer, (if different individuals)• Resolution of Board if company• Proof of established office or letter of intent for that purpose• Standard proposed loan application form for customers• Proposed dispute resolution and guidance on complaints process• Service Level Agreements (if any)• Proposed organisational structure• Proof of BURS registration• Form 3 if you have more than 1 office• Consent of spouse

After the Authority has reviewed the above and satisfied itself that the application is in order, a pre-licensing inspection is then conducted at the micro lender’s proposed office. During the period under review, the micro lending unit has conducted pre-licensing inspections of some micro lenders in Maun, Francistown, Selibe-Phikwe, Jwaneng, Lobatse and Moshupa. The purpose of pre-licensing inspection is to ensure that the micro lenders’ operations are aligned to the requirements of the Micro Lending Regulations 2012, as well as encouraging professionalism in the industry. However, the findings of the inspections carried out revealed that the majority of the micro lenders are still not conversant with the Micro Lending Regulations, resulting in many deficiencies noted in their operations. Management letters were sent to those micro lenders who during the pre-licensing inspections were found to be lacking in their operations as required by the Micro Lending Regulations, 2012. A license is only issued after such deficiencies have been corrected.

Micro Lending [CONTINUED]

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The Micro Lenders are spread across the country in different regions as shown on Table 2 below:

Table 2: Spread of micro lender by region

Southern Region No. of ML Northern Region No. of ML

Gaborone 69 Francistown 32

Manyana 1 Maun 10

Moshupa 2 Letlhakane 4

Ntlhantlhe 1 Bobonong 1

Jwaneng 10 Mmadinare 1

Molepolole 1 Kasane 2

Kanye 3 Serowe 1

Lobatse 2 Palapye 7

Mochudi 1 Selibe-Phikwe 14

Ghanzi 2 Orapa 11

Ramotswa 1 Masunga 2

Tutume 1

Maunatlala 1

Lerala 1

Rakops 1

Mahalapye 2

Totals 93 91

PAWNSHOPS

The draft Pawnshop Regulations are currently under review internally and these are intended to ensure the existence of different legislative frameworks for both Pawnshops operations and micro lenders. It was discovered that some micro lenders were applying for licenses as Pawnshop operators to take advantage of the current exemption status accorded to pawnshop operators due to lack of the required regulatory framework. As at 31st March 2013 eleven (11) exemptions were issued to Pawnshop operators pending the promulgation of the Pawnshop Regulations.

COMPLAINTS

One of the procedures used to monitor and supervise the micro lenders is through complaints monitoring. The unit continues to receive complaints against micro lenders and pawnshops from the general public. These complaints are varied and they include the following; interest calculations, penalty interest, copies of contracts not given to the borrower, unexplainable repayment amounts amongst others. Most of the complaints against pawnshops are with regards to the pawned items being sold without the owners’ consent A total of 35 complaints were received during the year. NBFIRA endeavours to resolve every complaint in a fair manner and in the shortest time possible. In terms of Regulation 21 of the Micro Lending Regulations 2012, the micro lender must endeavour to resolve the complaint before its submission to NBFIRA. Where a complaint is not satisfactorily resolved, the complainant confirms this in writing, and shall notify the Authority within 30 days of the unresolved complaint.


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The table 3 below shows the number and types of complaints received during the year:

Table 3: Number and types of complaints received

Types of Complaints Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Total

Retention of ATM cards 1 1 2 2 1 7

Continuous interest/instalment without ceasing

3 1 1 2 1 8

Terms and Conditions not explained 1 1

Copy of contract not given 1 1 2 4

Unexplained repayment Amount 1 3 1 1 1 7

Inability to pay loan due to dismissal/salary adjustments

1 5 2 1 1 10

Undiminishing loan amount 1 2 1 1 5

Continuous instalment deduction after loan settlement

1 1 1 1 1 5

Total 1 1 1 2 3 11 5 2 5 3 9 4 47

INVESTIGATION AND ENFORCEMENT

Following complaints from customers and some whistle blowing reports from the general public, several entities and individuals were investigated for illegal operation of micro lending business including retaining customers ATM cards. A total of twenty-two (22) entities/individuals were investigated and seven (7) were found to be unlawfully retaining ATM cards. Three (3) entities/individuals were fined during the period under review for the breach of regulations 8 and 14 of the Micro Lending Regulations 2012. In terms of Regulation 8 a micro lender must with each advertisement or marketing material, display with reasonable prominence the statement, “Caution! Borrowing more than you can afford to repay could lead to severe financial difficulties”. Furthermore Regulation 14 prohibits a micro lender from taking possession of clients ATM cards and identification documents.


The past year was a transition period for the micro lending sector as it was its first year of regulation. The Authority is facing challenges of non-compliance due to lack of understanding of the regulations by the industry players. The Authority intends to conduct industry meetings to enhance stakeholder awareness in the regulation of micro lenders.


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64 General Information 65 Board’s Responsibility 66 Independent Auditors’ Report67 Statement of Comprehensive Income 68 Statement of Financial Position69 Statement of Changes in Equity70 Statement of Cash Flows71 Notes to the Annual Financial Statements

CO

NTEN

TS

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General Information

DIRECTORS Mrs. M. Dube (Chairperson) Hon. N. C. Greenland (Deputy Chairperson and Chairperson of Human Resources Committee) Dr. T. T. K. Matome (Chairperson - Finance & Audit Committee) Mr. M. Mbaakanyi Mrs. L. K. Mohohlo Mr. S. M. Sekwakwa CHIEF EXECUTIVE OFFICER Mr. O. M. Ramasedi NATURE OF BUSINESS The Non-Bank Financial Institutions Regulatory Authority (NBFIRA) is constituted in terms of the Non-Bank Financial Institutions Regulatory Authority Act, 2006 and is domiciled in the Republic of Botswana. The main purpose of the Authority is to safeguard the stability, fairness and efficiency of the non-bank financial sector through its regulatory role on Non-Bank Financial Institutions that includes: insurance companies, pension funds, collective investments undertakings and the stock exchange.

REGISTERED OFFICE BANKERS 3rd Floor Stanbic Bank Exponential Building Fairgrounds Branch Plot 54351 Fairgrounds Office Park New Central Business District Block D Off PG Matante Unit 10 Gaborone Gaborone AUDITORS Ernst & Young Firm of Chartered Accountants 2nd Floor Plot 22 Khama Crescent Gaborone REPORTING DATE 31st March 2013

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The Authority’s directors are responsible for the preparation of annual financial statements and all other information presented therewith. Their responsibility includes maintenance of financial records and the preparation of annual financial statements in accordance with International Financial Reporting Standards and in the manner required by the Non-Bank Financial Institutions Regulatory Authority Act, 2006. The Authority maintains systems of internal control, which are designed to provide reasonable assurance that the records accurately reflect its transactions and to provide protection against serious misuse of the Authority’s assets. The directors are also responsible for the design, implementation, maintenance and monitoring of these systems of internal control. The independent auditors are responsible for giving an independent opinion on the annual financial statements based on their audit of the affairs of the Authority. After making enquiries the directors have no reason to believe that the Authority will not be a going concern in the foreseeable future. For this reason they continue to adopt the going concern basis in preparing these annual financial statements based on forecasts, available cash resources and continued support of the Government of the Republic of Botswana.

The directors are satisfied that management introduced and maintained adequate internal controls to ensure that dependable records exist for the preparation of the annual financial statements, to safeguard the assets of the Authority and to ensure that all transactions are duly authorised. Against this background, the directors accept responsibility for the annual financial statements on pages 65 to 98, which were signed on its behalf by:

-------------------------Mrs. M. DubeDate: 05 September 2013

-------------------------Dr. T. T. K. MatomeDate: 05 September 2013

Board’s Responsibility and Approval of Annual Financial Statements

66

REPORT ON THE FINANCIAL STATEMENTS

We have audited the accompanying financial statements of Non-Bank Financial Institutions Regulatory Authority (NBFIRA), which comprise the statement of financial position as at 31st March 2013, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 67 to 98.

DIRECTORS’ RESPONSIBILITY FOR THE FINANCIAL STATEMENTS The Authority’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and in the manner required by the Non-Bank Financial Institutions Regulatory Authority Act, 2006 and for such internal controls as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatements, whether due to fraud or error.

AUDITORS’ RESPONSIBILITY

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standard on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OPINION

In our opinion, the financial statements give a true and fair view of the financial position of Non-Bank Financial Institutions Regulatory Authority (NBFIRA) as at 31st March, 2013, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards, and in the manner required by the Non-Bank Financial Institutions Regulatory Authority Act, 2006.

Practising Member: Thomas Chitambo (20030022) Certified Auditor Date: 05 September 2013

Independent Auditors’ Report To the Members of Non-Bank Financial Institutions Regulatory Authority

2nd Floor, Plot 22, Khama Crescent, P.O Box 41015, Gaborone, Botswana

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March March

2013 2012

Notes P P

REVENUE

Government grants 2 - 21,009,544

Amortisation of government grants relating to capital assets 18.1 498,454 473,279

Total grants revenue 498,454 21,482,823

Supervisory Levies 3 43,168,408 4,544,135

Other revenue 4 2,481,724 1,607,603

Total revenue 46,148,586 27,634,561

EXPENDITURE

Staff costs 5 17,068,341 14,811,351

Consultancy costs 6 1,200,710 615,898

Administration expenses 7 6,850,546 2,757,694

Operating lease expenses 9 1,786,992 1,212,893

Other expenses 8 3,632,036 1,932,249

Total Expenditure 30,538,625 21,330,085

Operating Surplus 15,609,961 6,304,476

Finance income 10 360,424 60,322

Surplus for the year 15,970,385 6,364,798

Other comprehensive income for the year - -

Total Comprehensive Income 15,970,385 6,364,798

Statement of Comprehensive Income For the Year Ended 31st March 2013

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March March

2013 2012

Notes P P

ASSETS

Non-current assets

Property, plant and equipment 11 3,118,275 2,344,620

Work-in-progress 18.3 2,726,994 627,271

5,845,269 2,971,891

Current assets

Trade and other receivables 12 9,531,914 4,236,138

Cash and cash equivalents 13 12,597,463 6,574,932

Short term investments 13.1 5,781,605 -

27,910,982 10,811,070

Total assets 33,756,251 13,782,961

FUNDS, RESERVES AND LIABILITIES

Funds and reserves

Accumulated funds 24,208,336 8,237,951

Non-current liabilities

Government grants 18.1 3,919,466 2,344,620

Other grants 18.2 1,840,514 627,271

5,759,980 2,971,891

Current liabilities

Trade and other payables 14 2,789,658 1,976,936

Provisions 15 959,429 596,183

Deferred operating lease liability 17.1 38,848 -

3,787,935 2,573,119

Total funds, reserves and liabilities 33,756,251 13,782,961

Statement of Financial Position

As at 31st March 2013

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Accumulated Funds

Statutory Reserve

Total

P P P

Balance as at 1 April 2011 1,873,153 - 1,873,153

Surplus for the year 6,364,798 - 6,364,798

Balance as at 1 April 2012 8,237,951 - 8,237,951


Transfer from the Accumulated Fund for the Statutory Reserve

(5,765,793) 5,765,793 -

Balance as at 31 March 2013 18,442,543 5,765,793 24,208,336

STATUTORY RESERVE

Section 22 (2) of the Non-Bank Financial Institutions Regulatory Act, 2006, requires that an annual estimate not exceeding 10% of the total expenditure provided for in the estimates, be provided for as a reserve. The Authority has provided for a Statutory Reserve at 10% of the estimates for the year. The purpose of the reserve is to be utilised for unforeseen regulatory expenditure.

Statement of Changes in Equity For the Year Ended 31st March 2013

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March March

2013 2012

Notes P P

CASH FLOWS FROM OPERATING ACTIVITIES:


Adjustments for:

Amortisation of government grants (498,454) (473,279)

Depreciation 7 498,454 450,874

Finance income 10 (360,424) (60,322)

Deferred operating lease 17.1 38,848 (207,122)

Gain on disposal of assets 4 - (3,349)

Movement in provision for leave pay for the year 15 363,246 192,888

Cash generated by operations before working capital changes 16,012,055 6,264,488

Increase in trade and other payables 812,722 1,319,557

(Increase) in trade and other receivables (5,295,776) (4,080,542)

(4,483,054) (2,760,985)

Net cash flows from operating activities 11,529,001 3,503,503

CASH FLOWS USED IN INVESTING ACTIVITIES:

Purchase of plant and equipment for expansion (2,158,589) (140,976)

Finance income 10 360,424 60,322

Proceeds from disposal of assets - 25,754

Net cash used in investment activities (1,798,165) (54,900)

CASH FLOWS FROM FINANCING ACTIVITIES

Government Grants 18.1 2,073,300 140,976

Net cash flows from financing activities 2,073,300 140,976

NET CASH INCREASE IN CASH AND CASH EQUIVALENTS 11,804,136 3,589,579 CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 6,574,932 2,985,353 CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 13 18,379,068 6,574,932

Statement of Cash Flows For the Year Ended 31st March 2013

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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PREPARATION

The financial statements have been prepared on a historical cost basis. All values are rounded to the nearest Pula (P1) except when otherwise indicated. STATEMENT OF COMPLIANCE

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and the Non-Bank Financial Institutions Regulatory Authority Act, 2006. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES The preparation of financial statements in conformity with International Financial Reporting Standards requires the use of certain critical accounting estimates and judgements concerning the future. Estimates and judgements are continually evaluated and are based on historical factors coupled with expectations about future events that are considered reasonable. In the process of applying the Authority’s accounting policies, management has made the following estimates that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next year. Key areas of Estimation and Judgement The key assumptions concerning the future and other key sources of estimation uncertainty and judgements at the reporting date, that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year as the involve assessments or decisions that are particularly complex or subjective, are discussed below: Depreciation charges and Residual Values For depreciation purposes, a significant component is defined as equal to or greater than 20% of total cost of the asset and each significant component with different useful lives is depreciated separately. The useful life of assets is determined with reference to its design life as prescribed by internal experts. The depreciation methods reflects the pattern in which economic benefits attributable to the assets flow to the entity. The useful lives of these assets can vary depending on a variety of factors, including but not limited to technological obsolescence, maintenance programs, refurbishments, product life cycles and the intention of management. Residential values of assets are determined by estimating the amount that the entity would currently obtain from the disposal of the asset were already of age and in the condition expected at the end of its useful life. The estimation of the useful life and residual values of an asset is a matter of judgement based on the past experience of the Authority with similar assets and the intention of management.

Assessment of the asset condition and usefulness are key assumptions used to determine the assets’ useful lives and residual values. Also refer to Note 11. Supervisory Levies Where supervisory levies are calculated on information that has not been audited, the Authority assumes that estimates have been used and will place reliance on the information submitted by the regulated entities as a basis for calculation.

Notes to the Annual Financial Statements [CONTINUED]

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PROPERTY, PLANT AND EQUIPMENT

Property, Plant and Equipment is stated at cost, net of accumulated depreciation and/or accumulated impairment losses, if any. All plant and equipment are measured at historical cost less depreciation and impairment losses. Historical costs includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs such as replacement parts and major inspections are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Authority and the cost of the item can be measured reliably. All day-to-day repairs and maintenance are charged to the surplus or deficit during the financial period in which they are incurred.

Depreciation is charged so as to write off the cost of the assets over their estimated useful lives on a straight-line basis, to estimated residual values. Where significant parts of an item have different useful lives to the item itself, these parts are depreciated separately over their useful lives. The methods of depreciation, useful lives and residual values are reviewed annually, with the effect of any change in estimates accounted for prospectively.

The following methods and rates were used during the period to depreciate plant and equipment to estimated residual values: Motor vehicles 20% Furniture and Fittings 10% Office Equipment 15% Computer Equipment 14% - 33% An item of plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the surplus or deficit in the year the asset is derecognised.

IMPAIRMENT OF NON-FINANCIAL ASSETS

At each financial reporting date, the Authority reviews the carrying amount of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indications exist, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Authority estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, its carrying amount is reduced to its recoverable amount. Impairment losses are recognised in the surplus or deficit in those categories consistent with the function of the impaired asset.


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Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating-unit) is increased to the revised estimate of its recoverable amount. This is done so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised in the prior years. A reversal of an impairment loss is recognised in the surplus or deficit.

REVENUE RECOGNITION Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Authority and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received, excluding discounts and rebates. The Authority assesses its revenue arrangements against specific criteria in order to determine if it is acting as principal or agent. The Authority has concluded that it is acting as a principal in all of its revenue arrangements. The following specific revenue recognition criteria must also be met before revenue is recognised:

Supervisory Levies The supervisory levies and license fees were promulgated into law through Statutory Instrument No.11 of 2012 of the Republic of Botswana, which was subsequently published in the Government Gazette of the 17th February 2012.

Supervisory levies are charged and are payable in two equal portions, on or before the 30th April and 31st October of each financial year. Registered non-bank financial institutions are required to pay levies on an annual basis in terms of the Non-Bank Financial Institutions Regulatory Authority Act, 2006. Supervisory levies are recognised on an accrual basis. The Regulatory Authority may, on application, waive payment of some or all of a supervisory levy, penalty levy or a fee. License Fees License fees are recognised on licensing of the relevant supervised entities. Some classes of regulated entities are charged annual license fees, such fees are recognised by the Authority as revenue.

Penalties Penalties are recognised in the surplus or deficit on penalizing the relevant supervised entities. Finance Income

Revenue is recognised as interest accrues (using the effective interest method). Finance income is recognised in the surplus or deficit.

Government Grants Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognised as income over the period necessary to match the grant on a systematic basis to the costs that it is intended to compensate. Where the grant relates to the purchase of an asset, it is recognised as capital grant in the statement of financial position and released to the statement of comprehensive income in equal amounts over the expected useful life of the related asset.


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Where the Authority receives a non-monetary grant, the asset and the grant are recorded at nominal amounts and released to the total surplus or deficit over the expected useful life of the relevant asset by equal annual instalments.

FOREIGN CURRENCY TRANSLATION Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the reporting date. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions.

Foreign exchange translation gains or losses arising on the settlement of monetary items or on translating monetary items or on translating monetary items at rates different from those used when translating at initial recognition during the period or in the financial statements are taken to the statements of comprehensive income in the period they arise.

EMPLOYMENT BENEFITS

Pension

The Authority operates a defined contribution scheme for the employees. Payments to the scheme are charged as an expense to the statement of comprehensive income as they fall due. Gratuity

The Authority provides for gratuity benefits for employees on fixed term contracts in line with the Employment Act Chapter 47:01 and the relevant employment contracts. Gratuity expenses are recognised immediately, to the extent that the benefits are amortised on a straight-line basis over the period of service, until the benefits become payable. The charge is made to expenses in the statement of comprehensive income and a separate provision in the statement of financial position. Previously gratuity was paid on a monthly basis, for employees on fixed term contract who joined on or before August 2009. With effect from the 1st January 2012, the Authority has ceased the monthly payment of gratuity, gratuity entitlements for the employees will be effected upon successful completion of the employment contract.

Leave Pay Provision

The Authority recognises, in full, employee’s right to annual leave entitlement in respect of past service. The recognition is made each year and is calculated based on accrued leave days not taken during the year. The charge is made to expenses in the statement of comprehensive income and a separate provision in the statement of financial position. BORROWING COSTS

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. The Authority had no eligible assets or borrowing costs for the period reported.


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FINANCIAL INSTRUMENTS

Cash and Cash Equivalents

For the purpose of the cash flow statement, cash and cash equivalents consist of cash, cash deposits on call and short-term fixed deposit accounts in banks, net of bank overdrafts. Cash and cash equivalents are subsequently carried at amortised cost. Due to the short-term nature of these, the amortised cost approximates its fair value.

Initial Recognition

Financial assets within the scope of IAS 39 are classified as loans and receivables. When financial assets are recognised initially, they are measured at fair value, including transactions costs except for instruments at fair value through surplus or deficit.

All regular way purchases and sales of financial assets are recognised on the trade date, which is the date that the Authority commits to purchase the assets. Regular way purchases and sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace.

The Authority’s financial assets include cash and cash equivalents and trade and other receivables. Financial Assets

Subsequent Measurement

The subsequent measurement of financial assets depends on their classification as follows:

Loans and Receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement loans and receivables are carried at amortised cost using the effective interest method less any allowance for impairment. Gains and losses are recognised in the surplus or deficit when the loans and receivables are derecognised or impaired, as well as through the amortisation process.

Loans and receivables consist of trade and other receivables and cash and cash equivalents. Impairment of Financial Assets

The Authority assesses at each reporting date whether a financial asset or group of financial assets is impaired. If there is objective evidence that an impairment loss on assets carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced through use of a separate allowance account, namely provision for doubtful debts accounts. The amount of the loss is recognised in surplus or deficit.


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In relation to financial assets, a provision for impairment is made when there is objective evidence (such as the probability of insolvency or significant financial difficulties of the debtor) that the Authority will not be able to collect all of the amounts due under the original terms of the invoice. The carrying amount of receivables is reduced through use of an allowance account. Impaired debts are derecognised when they are assessed as uncollectable.

Financial Liabilities

Initial Recognition

Financial liabilities within the scope of IAS 39 are classified as loans and borrowings. The Authority determines the classification of its financial liabilities on initial recognition. Loans and borrowings are carried subsequent to initial measurement at amortised cost using the effective interest method. Gains and losses are recognised in surplus or deficit when the loans and borrowings are derecognised as well as through the amortisation process. The Authority’s financial liabilities include trade and other payables.

Financial Guarantee Contracts Financial guarantee contracts issued by the Authority are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the amount recognised less cumulative amortisation.

Amortised Cost

Amortised cost is computed using the effective interest method less any allowance for impairment and principal repayment or reduction. The calculation takes into account any premium or discount on acquisition and includes transaction costs and fees that are an integral part of the effective interest rate. Offsetting

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a currently legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.


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Derecognition of Financial Instruments Financial Assets

A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised when:

The rights to receive cash flows from the asset have expired. The Authority has transferred its right to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either

a. the Authority has transferred substantially all the risks and rewards of the asset, or b. the Authority has neither transferred nor retained substantially all the risks and rewards of the asset,

but has transferred control of the asset.

When the Authority has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Authority’s continuing involvement in the asset.

In that case, the Authority also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Authority has retained. Continuing involvement that takes the form of a guaranteed over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Authority could be required to repay.

Financial Liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the existing liability is substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the statement of comprehensive income. PROVISIONS

Provisions are recognised when the Authority has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation; and a reliable estimate of the amount can be made. Provisions are measured at the directors’ best estimate of expenditure required to settle the obligation at the reporting date, and are discounted to present value where the effect of the time value of money is material.


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LEASES

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at inception date: whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset. Minimum operating lease payments of an operating lease are recognised as an expense in the surplus or deficit on a straight line basis over the lease term.

CHANGE IN ACCOUNTING POLICIES New and Amended Standards and Interpretations

The accounting policies adopted are consistent with those of the previous financial year, except for the following amendments to IFRS effective as of 1 January 2012:

The adoption of the standards or interpretations is described below: IAS 12 Income Taxes (Amendment) - Deferred Taxes: Recovery of Underlying Assets The amendment clarified the determination of deffered tax on investment property measured at fair value and introduces a rebutable presumption that deferred tax on investment property measured using the fair value model in IAS 40 should be determined on the basis that its carrying amount will be recovered through sale. It includes the requirement that deferred tax on non-depreciable assets that are measured using the revaluation model in IAS 16 should always be measured on a sale basis. The amendment is effective for annual periods beginning on or after 1 January 2012 and has been no effect on the Authorities financial position, performance or its disclosures.

IFRS 1 First-Time Adoption of International Financial Reporting Standards (Amendment) - Severe Hyperinflation and Removal of Fixed Dates for First-Time Adopters IFRS 7 Financial Instruments: Disclosures (Amendments).

The IASB provided guidance on how an entity should resume presenting IFRS financial statements when its functional currency ceases to be subject to hyperinflation. The amendment is effective for annual periods beginning on or after 1 July 2011. The amendment had no impact in the Authority. IFRS 7 Financial Instruments: Disclosures - Enhanced Derecognition Disclosure Requirements The amendment requires additional disclosure about financial assets that have been transferred but not derecognised to enable the user of the Authority’s financial statements to understand the relationship with those assets that have not been derecognised and their associated liabilities. In addition, the amendment requires disclosures about the Authority’s continuing involvement in derecognised assets to enable the users to evaluate the nature of, and risks associated with, such involvement. The amendment is effective for annual periods beginning on or after 1 July 2011. The Authority has presented the financial statements in line with the requirements.


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Standards issued but not yet effective. The standard and interpretations and interpretations that are issued, but not effective, up to the date of issuance of the Authority’s financial statements are disclosed below. The Authority intends to adopt these standards, if applicable, when they become effective.

Standard number Standard name Effective Date

IAS 28 Investments in Associates and Joint Ventures (as revised in 2011)

As a consequence of the new IFRS 11 Joint Arrangements, and IFRS 12 Disclosure on Interests in Other Entities, IAS 28 Investments in Associates, has been renamed IAS 28 Investments in Associates and Joint Ventures, and describes the application of the equity method to investments in joint ventures in addition to associates. The revised standard becomes effective for annual periods beginning on or after 1 January 2013. The standard will not have an impact on the financial statements of the Authority.

1 January 2013

IAS 32 Financial Instruments: Presentation (Amendment) - Offsetting of Financial Assets and Financial Liabilities

These amendments clarity the meaning of ”currently has a legally enforceable right to set-off”. The amendments also clarify the application of the IAS 32 offsetting criteria to settlement systems (such as cental clearing house systems) which apply gross settlement mechanisms that are not simultaneous. These amendments are not expected to impact the Authority’s financial position or performance and become effective and become for annual periods beginning on or after 1 January 2014.

1 January 2014

IFRS 1 Government Loans (Amendment)

These amendments require first-time adopters to apply the requirements of IAS 20 Accounting for Government Grants and Disclosure of Government Assistance, prospectively to government loans existing at the date of transition to IFRS. Entities may choose to apply the requirements of IFRS 9 (or IAS 39, as applicable) and IAS 20 to government loans retrospectively if the information needed to do so had been obtained at the time of initially accounting for that loan. The exception would give first-time adopters relief from retrospective measurement of government loans with a below-market rate of interest. The amendment is effective for annual periods on or after 1 January 2013. The amendment has no impact on the Authority.

1 January 2013


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Standard Number Standard Name Effective Date

IFRS 7 Disclosures - Offsetting Financial Assets and Financial Liabilities (Amendment)

These amendments require an entity to disclose information about rights to set-off related arrangements (e.g. collateral arrangements). The disclosures would provide users with information that is useful in evaluating the effect of netting arrangements on an entity’s financial position. The new disclosures are required all recognised financial instruments that are set off in accordance with IAS 32 Financial Instruments: Presentation. The disclosures also apply to recognised financial instruments that are subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are set off in accordance with IAS 32. These amendments will not impact the Authority’s financial position or performance and become effective for annual periods beginning on or after 1 January 2013.

1 January 2013

IFRS 9 Financial Instruments Classification and Measurement

IFRS 9, as issued, reflects the first phase of the IASB’s work on the replacement of IAS 39 and applies to classification and measurement of financial assets and financial liabilities as defined in IAS 39. The standard was initially effective for annual periods beginning on or after 1 January 2013, but Amendments to IFRS 9 Mandatory Effective Date of IFRS 9 and Transition Disclosures, issued in December 2011, moved the mandatory effective date to 1 January 2015. In subsequent phases, the IASB will address hedge accounting and impairment of financial assets. The adoption of the first phase of IFRS 9 will have an effect on the classification and measurement of the Authority’s financial assets, but will not have an impact on classification and measurements of financial liabilities. The Group will quantify the effect in conjunction with other phases, when the final standard including all phases issued.

1 January 2015


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Standard Number Standard Name Effective Date

IFRS 10 Consolidated Financial Statements

IFRS 10 replaces the portion of IAS 27 Consolidated and Separate Financial Statements that addresses the accounting for consolidated financial statements. It also addresses the issues raised in SIC-12 Consolidation - Special Purpose Entities.

IFRS 10 establishes a single control model that applies to all entities including special purpose entities. The changes introduced by IFRS 10 will require management to exercise significant judgement to determine which entities are controlled and therefore are required to be consolidated by a parent compared with the requirements that were in IAS 27. Based on the preliminary analyses performed, IFRS 10 is not expected to have any impact on the position of the Authority.

1 January 2013

IFRS 11 Joint Arrangements

IFRS 11 replaces IAS 31 Interests in Joint Ventures and SIC-13 Jointly-controlled Entities - Non-monetary Contributions by Venturers. IFRS 11 removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation. Instead, JCEs that meet the definition of a joint venture must be accounted for using the equity method. The application of the new standard will not impact the Authority’s position.

1 January 2013

IFRS 12 Disclosure of Involvement with Other Entities

IFRS 12 includes all of the disclosures that were previously in IAS 27 related to consolidated financial statements, as well as all of the disclosures that were previously included in IAS 31 and IAS 28. These disclosures relate to an entity’s interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are also required, but has not impact on the Authority’s financial position or performance. This standard becomes effective for annual periods beginning on or after 1 January 2013.

1 January 2013


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Standard number* Standard name Effective date**

IFRS 13 Fair Value Measurement

IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS when fair value is required or permitted. The Authority is currently assessing the impact that this standard will have on the financial position and performance, but based on the preliminary analyses, no material impact is expected. This standard becomes effective for annual periods beginning on or after 1 January 2013.

1 January 2013

IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine

This interpretation applies to waste removal (stripping) costs incurred in surface mining activity, during the production phase of the mine. The interpretation addresses the accounting for the benefit from the stripping activity. The interpretation is effective for annual periods beginning on or after 1 January 2013. The new interpretation will not have an impact on the Authority.

1 January 2013

Improvements to IFRS (issued in May 2012)

These improvements will not have an impact on the Authority, but include:

IFRS 1 First-time adoption Adoption of International Financial Reporting Standards.IAS 1 Presentation of Financial Statements.IAS 16 Property Plan and Equipment.IAS 31 Financial Instruments, Presentation.IAS 34 Interim Financial Reporting.

1 January 2013


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March March

2013 2012

Notes P P

2. GOVERNMENT GRANTS

Revenue grants - 21,009,544

Capital grants 18.1 2,100,500 140,976

Total Government grants received 2,100,500 21,150,520

There are no unfulfilled conditions or contingencies attached to those income and capital grants. Government grants received have been applied against capital expenditure acquired during the year, the excess funds are then applied against revenue grants. For further disclosure of capital expenditure, refer to Note 11.

3. SUPERVISORY LEVIES

Capital Markets 24,313,035 2,470,161

Insurance & Pensions 18,855,373 2,073,974

Total Supervisory Levies 43,168,408 4,544,135

4. OTHER REVENUE

Licenses and penalties 2,318,205 1,088,392

Guaranteed income - 508,141

Sundry income 163,519 7,721

Profit on disposal of assets - 3,349

Total other revenue 2,481,724 1,607,603

5. STAFF COSTS

Basic salaries 9,349,065 8,102,250

Allowances 6,423,305 5,649,615

Defined contribution plan expense 1,295,971 1,059,486

Total staff costs 17,068,341 14,811,351

6. CONSULTANCY COSTS

Insurance consultancies 314,441 450,331

Human resources consultancies 697,726 68,173

Other consultancies 188,543 97,394

1,200,710 615,898


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March March

2013 2012

P P

7. ADMINISTRATION EXPENSES

Advertising 341,527 122,858

Audit Fees 83,440 82,734

Bad Debts 1,880,295 118,765

Bank Charges 74,666 27,076

Depreciation 498,454 450,874

Entertainment 167,285 93,047

Insurance 110,700 38,443

Office Expenses 88,237 17,672

Postage 12,338 8,945

Printing and Stationery 437,982 311,372

Recruitment 1,315,373 687,809

Telephone & Fax 376,443 247,448

Travel 1,145,398 296,975

Uniform 60,991 -

Utilities - Electricity 212,840 217,896

Utilities - Water 28,307 19,346

Vehicle Expenses 16,270 16,434

Total Administration Costs 6,850,546 2,757,694


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March March

2013 2012

P P

8. OTHER EXPENSES

Board Fees 75,600 64,470

Branding & Communication 212,156 -

Cleaning 129,736 130,078

Computer Expenses 69,866 29,915

Garden Maintenance 4,977 5,475

Guarantee Expense - 508,141

Internet 220,425 206,417

Legal Fees 150,275 47,455

Licences 194,929 176,221

Public Relations 96,362 97,182

Repairs & Maintenance 26,222 26,453

Security 79,236 43,747

Strategy 455,426 119,749

Subscriptions 208,257 288,450

Training 1,708,569 188,496

Total Other Expenses 3,632,036 1,932,249

9. OPERATING LEASE EXPENSES

Office rental (Contractual lease obligation) 1,748,144 1,212,893

IAS 17 Straight-line Adjustment 38,848 -

Operating Lease Expense 1,786,992 1,212,893

10. FINANCE INCOME

Finance income on cash balances 360,424 60,322


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Furniture and

Fittings

Motor Vehicle

Computer Equipment

Office Equipment

Total

P P P P P

11. PROPERTY, PLANT & EQUIPMENT

2013

COST

At 1 April 2012 1,639,694 142,194 1,715,640 115,108 3,612,636

Additions for the year 288,674 507,502 462,103 13,830 1,272,109

At 31 March 2013 1,928,368 649,696 2,177,743 128,938 4,884,745

ACCUMULATED DEPRECIATION

At 1 April 2012 401,631 82,115 737,318 46,952 1,268,016

Depreciation 171,352 24,523 288,187 14,392 498,454

At 31 March 2013 572,983 106,638 1,025,505 61,344 1,766,470

Carrying amount at 31 March 2013 1,355,385 543,058 1,152,238 67,594 3,118,275

2012

COST

At 1 April 2011 1,626,694 142,194 1,732,155 - 3,501,043

Reclassification - - (99,637) 99,637 -

Additions for the year 13,000 - 112,505 15,471 140,976

Disposals for the year - - (29,383) - (29,383)

At 31 March 2012 1,639,694 142,194 1,715,640 115,108 3,612,636

ACCUMULATED DEPRECIATION

At 1 April 2011 238,962 56,480 528,678 - 824,120

Reclassification - - (31,137) 31,137 -

Depreciation 162,669 25,635 246,755 15,815 450,874

Disposals - - (6,978) - (6,978)

At 31 March 2012 401,631 82,115 737,318 46,952 1,268,016

Carrying amount at 31 March 2012 1,238,063 60,079 978,322 68,156 2,344,620


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March March

2013 2012

P P

12. TRADE AND OTHER RECEIVABLES

Trade receivables 11,384,136 3,673,174

Staff advances - 735,241

Withholding tax receivable 28,073 20,556

Provision for bad debts (1,880,295) (192,833)

9,531,914 4,236,138

9,531,914 4,236,138

Other receivables are non-interest bearing and are generally on 30 - 90 days terms, and comprise outstanding Supervisory Levies, rental deposits and tax credits resulting from withholding tax on interest earned on call account.

Trade receivables relate to Supervisory Levies outstanding from regulated entities. Receivables are measured at amortised cost using the effective interest method, less any impairments.

As at 31st March 2013, the ageing analysis of trade receivable is as follows:

Impaired (1,880,295) (192,833)

Neither past due nor impaired - 3,673,174

Past due but not impaired: - -

Less than 30 days - 735,241

Between 30 days and 60 days - -

Between 60 days and 90 days - -

More than 90 days 11,412,209 20,556

9,531,914 4,236,138


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March March

2013 2012

P P

12. TRADE AND OTHER RECEIVABLES (CONTINUED)

As at 31st March 2013, accounts receivable at nominal value of P1,880,295 were impaired and fully provided for. Amounts that are neither past due nor impaired relate to rental deposit for the premises occupied. The receivables that are neither past due nor impaired are considered fully receivable.

Movement on the provision for credit losses

Opening balance (192,833) (74,068)

Utilised -

Reversal of prior year provision 192,833 (74,068)

Charged to the Statement of Comprehensive Income (1,880,295) (118,815)

Closing balance (1,880,295) (192,883)

The financial year 2012/13 was the first year of full application of the Supervisory Levies. Some regulated entities initially challenged the Supervisory Levies Rate, subsequent to the reporting date, such entities have complied with the Supervisory Levies regulations.

13. CASH AND CASH EQUIVALENTS 11,295,914 6,606,637

Call

Current (381,970) (363,681)

Cash on hand 649 2,547

Projects 334,488 329,429

Government Grant 27,660 -

Gratuity 1,320,722 -

12,597,463 6,574,932

A sweeping arrangement is in place for the call and current accounts held with the bank. The funds in the call account therefore clear the overdraft reflected in the current account. The cash and cash equivalents are earning interest at a floating rate based on a daily bank deposit rates. The Authority has enhanced its cash management by opening a gratuity account, to ring-fence the post employment benefits relating to gratuity. Furthermore a separate Supervisory Levies Account is maintained from that of the Government Subvention Account.


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March March

2013 2012

P P

13.1 SHORT TERM INVESTMENTS

Short term investments comprise highly liquid investments with original maturities of three months or less.

Short term investments 5,781,605 -

Total cash, cash equivalents and short term investments 18,379,068 6,574,932

14. TRADE AND OTHER PAYABLES

Accruals 1,469,290 1,314,389

Gratuity provision 1,320,368 662,547

2,789,658 1,976,936

Trade and Other payables are non-interest bearing and have an average term of three months.

15. PROVISIONS

Opening balance 596,183 403,295

Additional provision during the year 875,416 806,564

Provision used during the period (512,170) (613,676)

Closing balance 959,429 596,183

This provision relates to leave pay provision as at the reporting date. There is uncertainty on the timing of employment contracts and the number of employees who may choose to terminate their employment contracts, the provision has assumed full value as per the staff in place as at 31st March 2013.


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16. FINANCIAL INSTRUMENTS

The accounting classification of each category of financial instruments and their carrying amounts are as follows:

Loans and Receivables

Financial Liabilities at

Amortised Cost

Total Carrying Amount

2013

Trade and Other receivables 9,531,914 - 9,531,914

Cash and cash equivalents 18,379,068 - 18,379,068

Trade and Other payables - (2,789,658) (2,789,658)

27,910,982 (2,789,658) 25,121,324

2012

Trade and Other receivables 4,236,138 - 4,236,138

Cash and cash equivalents 6,574,932 - 6,574,932

Trade and Other payables - (1,976,936) (1,976,936)

10,811,070 (1,976,936) 8,834,134

Financial Risk Management Objectives and Policies

The main risks arising from the Authority’s financial instruments are financial currency risk, interest rate risk, credit risk and liquidity risk. The Authority does not hold any derivative financial instruments.

Credit Risk

The Authority has exposure to credit risk, which is the risk that a counterparty will be unable to pay amounts in full when due. Credit risk is the risk that the regulated and supervised Non-Bank Financial Institutions and other counter parties will not be able or willing to pay or fulfil their obligations in accordance with the Non-Bank Financial Institutions Regulatory Authority Act. The Authority is not exposed to credit risk through its cash balances that are placed with local banks. Reputable financial institutions are used for investing purposes.

All cash and cash equivalents are placed with financial institutions registered in Botswana.


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16. FINANCIAL INSTRUMENTS (CONTINUED)

The Authority has guaranteed scheme loans for employees with a reputable financial institution, of which 85% of the loan balance is guaranteed by the Authority. Such loans are both secured and unsecured.

As at year end, the financial guarantees were valued at P141,351 (2012: P3,694,517).

The maximum exposure to credit risk is represented by the carrying amount of accounts receivable and cash and cash equivalents, as shown in the statement of financial position in addition to the financial guarantee contract as indicated in the “Liquidity” section of this note. The financial guarantees relating to secured loans are secured by underlying asset. The exposure to the Authority is under the unsecured loans, settlements of impaired loans are paid out of accumulated surpluses, whilst means of recovery are pursued. Significant Concentration of Credit Risk The Authority is currently funded by the Government of Botswana and the regulated entities through Supervisory Levies and License Fees. The Authority’s credit risk is primarily attributable to its cash and cash equivalents, and levies receivable from regulated entities. Financial assets that potentially subject the Board to concentration of credit risk consist primarily of cash and cash equivalents as well as accounts receivable. Cash and cash equivalents are placed with reputable financial institutions in the normal trading course. Expertise and controls have been put in place to manage credit risk. The Authority has no significant concentration of credit risk as its exposure is spread over a number of counterparties.

The Authority does not have any significant credit risk exposure to any single counterparty. As at year end there was no significant credit risk, the cash position as at year end was P18,379,068 (2012: P6,574,933). Foreign Currency Risk The Authority is not exposed to foreign currency risk, as the Authority sources commodities from local suppliers. The Authority does not use foreign forward contracts or purchased currency options for trading purposes.

Interest Rate Risk Financial instruments that are sensitive to interest rate risk are bank balances and cash (refer to note 13). Interest rates applicable to these financial instruments compare favourably with those currently available in the market. The following table demonstrates the sensitivity to a reasonable possible change in interest rates at reporting date, with all other variables held constant, of the Authority’s (deficit)/surplus for the year (through the impact on floating rate financial instruments) and funds and reserves at reporting date. The reasonable possible change is based on past trends of interest and expected future changes. The impact was calculated by applying the reasonable to the exposures at reporting date, and with reference to the next 12 months. There is no other direct impact on the Authority’s funds and reserves.


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March March

2013 2012

P P

Effect on surplus for the year

Increase of 0.5% in interest rate 91,895 (2,890)

Decrease of 2% in interest rate (178,619) 10,958

Liquidity Risk

The Authority’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, without incurring losses or risking damage to the Authority’s reputation. The ultimate responsibility for liquidity risk management rests with the Board of Directors, which has established an appropriate liquidity risk management procedures for the management of the Authority’s funding and liquidity management requirements.

The Authority manages liquidity risk by maintaining adequate cash and cash equivalents to settle liabilities when they become due, by continuously monitoring forecasts and actual cash flows, and by matching the Government Subvention to the maturity profile of the financial liabilities.

The following table summarises the maturity profile of the Authority’s financial liabilities as at 31st March 2013 based on contractual undiscounted payments:

Less than 1 month

1 to 3 months

4 to 12 months

1 to 5 years Total

2013

Trade and Other payables 474,439 619,973 24,768 - 1,119,180

Financial guarantee contracts 141,351 141,351

615,790 619,973 24,768 - 1,260,531


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March March

2013 2012

P P

Movement in the allowance for doubtful debts

Balance at the beginning of the year 192,833 74,068

Impairment loss recognised on receivables 1,880,295 118,765

Amounts recovered during the year (118,765) -

Amounts written off during the year as uncollectable (74,068) -

Balance at the end of the year 1,880,295 192,833

In determining the recoverability of the receivable, the Authority considers any change in the credit quality of the receivables from the effective date of the debt up to the end of the reporting period. The allowance for doubtful debts relate to the outstanding supervisory levies and the financial guarantees for the scheme loans guaranteed by the Authority for the staff. Movements in the provision is in relation to the outstanding supervisory levies and loans from former employees.


Less than 1 month

1 to 3 months

4 to 12 months

1 to 5 years Total

2012

Trade and Other payables 703,665 94,419 8,165 - 806,249

Financial guarantee contracts 3,694,517 - - - 3,694,517

4,398,182 94,419 8,165 - 4,500,766

Fair Values

The carrying amounts of all financial assets and financial liabilities approximate to their fair value.


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Capital Management

Capital includes all funds and reserves as per the face of the statement of financial position. The Authority’s objectives when managing capital are to safeguard its ability to continue as a going concern in order to perform the mandate for which it was created for. Management is of the view that these objectives are being met. During 2013, the Authority did not have borrowings. The Authority is supported by the licensed Non-Bank Financial Institutions and the Government of the Republic of Botswana, currently the necessary support is provided to sustain the operations of the Authority. The NBFIRA Act stipulates that an annual estimate of the Regulatory Authority’s expenditure for a financial year shall include provision for a Statutory Reserve of not more than 10% of the total expenditure provided in the estimate. The introduction of the Supervisory Levies has improved the funding for the Authority, A Statutory Reserve has thus been established during the year. Refer to the Statement of Changes in Equity.

RELATED PARTY TRANSACTIONS

The Authority was set up by the Non-Bank Financial Institutions Regulatory Authority Act, 2006 and is therefore related to the Government of the Republic of Botswana. Transactions with related parties are in the normal course of business. The following transactions were carried out with related parties;

Grants Received

March March

2013 2012

P P

Government of the Republic of Botswana 2,100,500 21,150,520

Compensation paid to key personnel of the Authority. The amounts presented comprise 7 executive staff members (2012: 5 staff members). Four of the seven members were on acting appointments.

Short term employment benefits 2,251,786 3,682,770

Long term employment benefits 2,231,923 111,644

Gratuity & Pension benefits 503,306 532,090

Other Benefits 112,697 188,033

Total 5,099,712 4,514,537

Non-executive directors’ fees (board fees) are not included in compensation paid to key management above.


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March March

2013 2012

P P

Transactions with other Parastatals

Motor Vehicle Accident Fund - operating lease rentals 1,562,016 1,420,015

Botswana Telecommunications Corporation- internet, telephone & fax 347,300 318,733

1,909,316 1,738,748

Related party balances outstanding as at year-end

Motor Vehicle Accident Fund - operating lease rentals and utility recoveries 84,426 75,240

Botswana Telecommunications Corporation - internet, telephone & fax 27,595 27,378

112,021 102,618

The purchase from related parties are made at nominal market prices. Outstanding balances at the year-end are unsecured, interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the period ended 31st March 2013, the Authority has not recorded any impairment of receivables relating to amounts owed to related parties P84,426 (2012: P102,618). This assessment is undertaken each financial year the examining the financial position of the related party and the market in which related party operates.

Directors’ Fees

Directors’ fees for the year amounted to P75,600 (2012: P64,470).


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17. COMMITMENTS AND CONTINGENCIES

17.1 Operating Lease Commitments

The Authority has entered into a commercial property lease with Motor Vehicle Accident Fund for a period of two years to 31st December 2013, with no lease escalations over the two year period. As at 1 March 2013, the Authority issued a three (3) months notice of termination of the rental lease to Motor Vehicle Accident Fund. Non-Bank Financial Institutions Regulatory Authority has entered into a five (5) year lease agreement with Exponential Building effective February 2013. There are no contingent rentals. The future aggregate minimum lease rentals under non-cancellable operating leases as at 31st March 2013 are as follows:

Operating lease commitments

Within one year 761,959 1,523,918

After one year but not more than five years 1,676,310 1,142,939

2,438,269 2,666,857

Deferred operating lease liability

Non-current - -

Current (38,848) -

(38,848) -


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17.2 Capital Commitments and Contingencies

At 31st March 2013, the Authority did not have any capital commitments.

As at 31st March 2013, there were no pending lawsuits against the Authority.

Guarantees

The Authority has provided guarantees of a certain portion of the employees’ loans with Botswana Savings Bank. There was no liability incurred on the guaranteed loans during the year, while P118,765 was incurred in 2012.

Guarantee Invoked

The Authority guarantees 85% of the group scheme loans with Botswana Savings Bank. As at 31st March 2012, an amount of P508,141 payable to Botswana Savings Botswana relating to a residential loan for a former employee. The mortgage bond had been registered in favour of Non-Bank Financial Institutions Regulatory Authority. An asset was realised at a value equivalent to the value of the guarantee, which was less than the valuation of the residential property, which was held as collateral. The value of the residential property as at 31st March 2012 was estimated at P1,090,000. Funds due have since been recovered from the former employee and the liability has been settled with Botswana Savings Bank.

18. GRANTS

18.1 Government Grants

March March

2013 2012

P P

Opening balance 2,344,620 2,676,923

Received during the year 2,073,300 140,976

Disposals during the year - (22,405)

Amortisation of government grants (498,454) (450,874)

Total amortisation for the year (498,454) (473,279)

Closing balance 3,919,466 2,344,620


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18.2 Other Grants

March March

2013 2012

P P

Opening balance 627,271 -

Received during the year 1,213,243 627,271

Closing balance 1,840,514 627,271

African Development Bank is providing assistance to the Authority in developing a Risk Based Regulatory Model. As at 31st March 2013, the expenditure amounted to P1,840,514. The total project cost is estimated at P6,100,000. The Authority recoginises the assistance received from the African Development Bank as a grant, and upon completion of the model, the grant will be capitalised and amortised over the useful lives not exceeding three years.

18.3 Work-In-Progress

Two management information systems are under development, being the Risk Based Regulatory Model and the Integrated Management Information System. As at 31st March 2013, both the systems were under development, thus presented under work-in-progress. The Risk Based Regulatory Model is funded through the African Development Bank Grant while the Integrated Management Information System is funded by the Authority. Details of the projects are disclosed below:

Risk Based Regulatory Model System 1,840,514 627,271

Integrated Management Information System 886,480 -

Total 2,726,994 627,271

TAXATION

No provision for taxation is required as the Authority is exempt from taxation in terms of the Second Schedule of the Income Tax Act (Chapter 52:01).

EVENTS AFTER THE REPORTING PERIOD

There have been no events, facts or circumstances of a material nature that have occurred subsequent to the reporting date which necessitate an adjustment to the disclosure in these annual financial statements or the notes thereto.


99

Insurance Section

Appendix A: INSURERS AND REINSURERS

List of Licensed Insurers & Reinsurers

Company Names Addresses Tel/Fax Contact Person

LIFE INSURERS

1 Absa Life Botswana (Pty) Ltd P.O Box 11

Gaborone

Tel: 3625900

Fax: 3909827

Bilkiss Moorad

2 Botswana Insurance Fund Management Ltd P/Bag BR 185

Gaborone

Tel: 3951564

Fax: 3900358

Tiny Kgatlwane

3 Botswana Life Insurance Ltd P/Bag 00296

Gaborone

Tel: 3645100

Fax: 3905884

Catherine Lesetedi-Letegele

4 Momentum Life Botswana (Pty) Ltd P/Bag 003

Suite 361

Mogoditshane

Tel: 3500462

Fax: 3500533

Mavis Rakhudu

5 Liberty Botswana (Pty) Ltd t/a Liberty Life Botswana P/Bag 00128

Gaborone

Tel: 3910310

Tel: 3910311

Leungo Rasebotsa-Tibone

6 Metropolitan Life of Botswana Ltd P/Bag BO235

Gaborone

Tel: 3624400

Fax: 3624423

Fax: 3907353

Large Charumbira

7 Regent Life Botswana Ltd P/Bag BR203

Gaborone

Tel: 3188133

Fax: 31588063

Ratanang Tsayang

8 Hollard Life Insurance Company P.O Box 45029

Gaborone

Tel: 3958023

Fax: 3958024

Tebogo Martin Ramsden

100

Appendix A: INSURERS AND REINSURERS (CONTINUED)

List of Licensed Insurers & Reinsurers

Company Names Addresses Tel/Fax Contact Person

GENERAL INSURERS

1 Botswana Insurance Company Ltd P.O Box 715

Gaborone

Tel: 3600500

Fax: 3972867

Johann Claasen

2 Export Credit Ins. & Guarantee Company (Botswana) Pty Ltd P/Bag BO 279

Gaborone

Tel: 3188015

Fax: 3188017

Pauline Sebina

3 Hollard Insurance Company of Botswana (Pty) Ltd P.O Box 45029

Gaborone

Tel: 3958023

Fax: 3958024

Paul Beka

4 BIHL Insurance Company Ltd P.O Box 381

Gaborone

Tel: 3634754

Fax: 3643337

William Mujuru

5 Mutual & Federal Insurance Company of Botswana Ltd P/Bag 00347

Gaborone

Tel: 3903333

Fax: 3903400

John Heldsinger

6 Phoenix of Botswana Assurance Company (Pty) Ltd P.O Box 1874

Gaborone

Tel: 3161322

Fax: 3161319

Abhijit Ghose

7 Prefsure (Botswana) Ltd P.O Box 601661

Gaborone

Tel: 3936748

Fax: 3918319

Era Stix Maseko

8 Regent Insurance (Botswana) (Pty) Ltd P/Bag BR203

Gaborone

Tel: 3188153

Fax: 3188063

Douglas Heldsinger

9 Sesiro Insurance Company (Pty) Ltd P.O Box 329

Gaborone

Tel: 3614200

Fax: 3956110

Paul Ramokgalo

10 Sunshine Insurance Company Botswana

(Pty) Ltd

P/Bag BR 15

Gaborone

Tel: 3105137

Fax: 3105139

Richard Inambao

11 Zurich Insurance Co. Botswana Ltd P.O Box 1221

Gaborone

Tel: 3188888

Fax: 3188911

Giannini Paphani

12 Maemo Cell Insurance Company (Pty) Ltd P/Bag BO 324

Gaborone

Tel: 3105994

Fax: 3934375

Fagose Sedange

REINSURERS

1 First Reinsurance Company (Pty) Ltd P.O Box 404271

Gaborone

Tel: 3121041/2

Fax: 3121043

Patience Marwiro

2 FMRE Property & Casualty (Pty) Ltd P.O Box 47202

Gaborone

Tel: 3934287

Fax: 3934310

Samuel Rimai


101


APPENDIX B: LICENSED INSURANCE BROKERS

List of Licensed Insurance Brokers 2013

Company Names Contact Details Tel/Fax Contact Person

1 Alexander Forbes Financial Services Botswana

(Pty) Ltd

P/Bag 00410

Gaborone

Tel: 3651948

Fax: 3957552

Mr. Paul Masie

2 Alto Assurance Company (Pty) Ltd P.O Box AD 30 ACG

Gaborone

Tel: 3933889 Mr. Elliot Moshoke

3 Afrisure (Pty) Ltd P.O Box 30403

Tlokweng

Tel: 3971606/09

Fax: 3971607

Ms. Lydia Mphahlane

4 AON Botswana (Pty) Ltd P.O Box 624

Gaborone

Tel: 3617300

Fax: 3914608

Mr. Barnabas Mavuma

5 Atlantis Insurance Brokers (Pty) Ltd P.O Box AD564

Postnet Kgale View

Gaborone

Tel: 3500821

Fax: 3500818

Mr. Derrick Vermaak

6 BOC Consulting (Pty) Ltd t/a BOC

Insurance Brokers

P.O Box AB64

ABC

Gaborone

Tel: 3959505

Fax: 3959507

Mr. Barry John O’Connell

7 Bombshell Investments (Pty) Ltd t/a

Flexi-Link Insurance Brokers

P.O Box AE 62

AEH

Tel: 3165262 Mr. Cosmas Nechiturike

8 Capricorn Business Solutions (Pty) Ltd t/a

Capricon Insurance Services

P.O Box 502489

Gaborone

Tel: 3191286

Fax: 3191286

Mr. Absolam Ashihundu

9 CBAE (Pty) Ltd t/a Spectrum Insurance

Brokers

P/Bag BR 351

Suite 189

Gaborone

Tel: 3500266

Fax: 3974892

Mr. Charles Tapiwa Kadenge

10 Coversure Insurance Brokers (Pty) Ltd P.O Box 11813

Francistown

Tel: 2415986

Fax: 2415827

Mr. Aaron Tembo

11 Dynamic Insurance Brokers (Pty) Ltd P.O Box 128

Gaborone

Tel: 3906490

Fax: 3957594

Mr. Alfred Tembo

12 Dokata Investments (Pty) Ltd t/a Coverlink

Insurance Brokers

P.O Box 26264

Gaborone

Tel: 3182471

Fax: 3182467

Mr. Abel Munhande

13 Ellwood Insurance Brokers (Pty) Ltd

t/a Penrich Insurance Brokers

P.O Box 47144

Gaborone

Tel: 3973692

Fax: 3973021

Mr. Robert Holgate

14 First Sun Alliance (Pty) Ltd P.O Box 404349

Gaborone

Tel: 3913666

Fax: 3930025

Mr. Paul Chitate

15 Glenrand M.I.B (Botswana) (Pty) Ltd P/Bag BR 284

Gaborone

Tel: 3181870

Fax: 3180316

Mr. Lemogelang Ebineng

16 Himalaya Investment (Pty) Ltd t/a

Falcon Insurance Brokers

P.O Box 121

Gaborone

Tel: 3952859

Fax: 3190951

Mr. Nathan Mpundu

17 Hirsch Vic Insurance Brokers (Pty) Ltd P.O Box 201491

Bontleng Gabs

Tel: 3951520

Fax: 3951520

Mr. Victor Hirschfeldt

18 Huraya Holdings (Pty) Ltd

t/a Apex Insurance Brokers

P.O Box 1751

Gaborone

Tel: 3102369

Fax: 3102368

Mr. Muyamwa Muyamwa

19 Kalahari Insurance Brokers (Pty) Ltd P.O Box 24

Francistown

Tel: 2413838

Fax: 2413836

Mr. Rick Huppelschoten

20 Kebonang Holdings (Pty) Ltd t/a Lebone

Insurance Brokers (Pty) Ltd

P.O Box 30549

Francistown

Tel: 2410475

Fax: 2410479

Ms. Sithabile Mpofu

102

APPENDIX B: LICENSED INSURANCE BROKERS (CONTINUED)

List of Licensed Insurance Brokers 2013

Company Names Contact Details Tel/Fax Contact Person

21 Legal Expenses Insurance Southern Africa (Pty) Ltd

t/a Leza Legal Wise Botswana

P/Bag 00489

Gaborone

Tel: 3951560

Fax: 3951627

Mr. Fazel Ameen

22 Letsema Insurance Brokers (Pty) Ltd P.O Box 80045

Gaborone

Tel: 3181551

Fax: 3181552

Mr. Gobona Tobedza

23 Marsh (Pty) Ltd P/Bag 103

Gaborone

Tel: 3188000

Fax: 3188064

Mr. Fritzgerald Dube

24 Marsh & McLennan Risk Services Botswana (Pty) Ltd P/Bag BO 292

Gaborone

Tel: 3908562

Fax: 3908563

Mr. Aiden Rose

25 Matrix Risk Management Services (Pty) Ltd P.O Box 3447

Gaborone

Tel: 3919586

Fax: 3919584

Mr. Vincent Miyoba

26 Mercantile & General Insurance Services (Pty) Ltd

t/a Mercantile Legal & General Insurance Brokers

P.O Box 401297

Gaborone

Tel: 3919429

Fax: 3919423

Mr. Maxwell Chiyangwa

27 Medvest Brokers (Botswana) (Pty) Ltd P.O Box 403205

Gaborone

Tel: 3184622

Fax: 3184624

Mr. Mark Ulrich Wilhelmi

28 Mopani Insurance Brokers (Pty) Ltd P.O Box 26392

Gaborone

Tel: 3924363

Fax: 3180985

Mr. Fackson Ngulube

29 Peoboswa Insurance Brokers (Pty) Ltd P.O Box 20332

Gaborone

Tel: 3930137

Fax: 3158140

Mr. Sexton Kowa

30 Quality Services (Pty) Ltd t/a Chartered

Insurance Brokers

P.O Box 499

Francistown

Tel: 2412800

Fax: 2419715

Mr. Letlhogonolo Mohutsiwa

31 Saley’s Agencies Botswana (Pty) Ltd

t/a Saley’s Insurance Brokers

P.O Box 1317

Gaborone

Tel: 3913804

Fax: 3956 172

Mr. Yunus Mayet

32 SATIB Africa Botswana (Pty) Ltd

t/a Safari & Tourism Insurance Brokers Botswana

P/Bag 00346

Suite 229

Phakalane

Gaborone

Tel: 3170574

Fax: 3170576

Mr. Seamus O’Neill

33 Shangor Insurance Brokers (Pty) Ltd P.O Box 402716

Gaborone

Tel: 3971244/3185882

Fax: 3912018

Mr. Humphrey Makununika

34 Strategic Wealth (Pty) Ltd P/Bag 149

Suite 552

Postnet Kgaleview

Gaborone

Tel: 3952639

Fax: 3952639

Mr. Grant Young

35 Streamline Investments (Pty) Ltd

t/a Federated Insurance Brokers

P.O Box AD 874 ADD

Gaborone

Tel: 3903982

Fax: 3903908

Mr. Rodney Butau

36 Super Insurance Brokers (Pty) Ltd P.O Box 201095

Gaborone

Tel: 3161452

Fax: 3161452

Mr. Alfred Freddy Otukile

37 Sureway (Pty) Ltd P.O Box 80033

Gaborone

Tel: 3909562/63

Fax: 3909560

Mr. Kabelo Khupe

38 Trilogy Investments (Pty) Ltd P.O Box 47605

Gaborone

Tel: 3161859

Fax: 3903321

Mr. Stanley J. Dalziel

39 U & Me Insurance Brokers (Pty) Ltd P/Bag BR 165

Gaborone

Tel: 3909546

Fax: 3909544

Mr. Danwell Kapitolo

40 VFS (Botswana) (Pty) Ltd P.O Box 251

Maun

Tel: 6860891

Fax: 6860891

Mr. Noel Strugnell


103

APPENDIX C: LICENSED PENSION FUNDS

Table C.1: Stand Alone Pension Funds (as at fiscal year-end 2012)

Name of Fund Fiscal Year Members as at 31st Dec 2012

Members as at 31st Dec 2011

Assets as at 31st Dec 2012 (Million Pula)

1 Africa 53 Provident Fund 30th Sept. 1161 101 115.254

2 Air Botswana Pension Fund 31st Mar. 314 275 131.836

3 Akani Botswana Retirement Fund** 30th June - - -

4 Alexander Forbes Retirement Fund 30th June 10865 8909 267.356

5 Alexander Forbes Individual Member Retirement Fund 30th Sept. 176 166 17.294

6 AON Botswana Staff Pension Fund 31st Dec. 170 170 34.254

7 AON Preservation Pension Fund 31st Dec. 582 383 34.001

8 Apostolic Faith Mission 31st Mar. 48 47 2.689

9 Apex Pension Fund 30th June 38 38 18.982

10 Bank of Botswana Defined Contribution Fund 30th Sept. 671 661 323.249

11 Barclays Bank of Botswana Ltd. Staff Pension Fund 31st Dec. 1873 1895 496.486

12 Barloworld Botswana Retirement Fund 30th Sept. 802 660 65.968

13 BCL Staff Pension Fund 31st Mar. 3743 3752 35.802

14 BDO Spencer Staff Pension Fund 30th June 65 62 4.500

15 BOCODOL Staff Pension Fund 31st Mar. 142 131 33.740

16 Boswe Construction Pension Fund 31st Mar. 3 3 0.058

17 Lenmed Bokamoso Private Hospital Staff Pension Fund 31st Dec. * * *

18 Botswana Agricultural Marketing Board Pension Fund 31st Mar. 79 75 12.173

19 Botswana Ash Staff Pension Fund 31st Mar. 430 430 115.254

20 Botswana Building Society Defined Contribution Pension Fund 31st Mar. 198 198 42.708

21 Botswana Bureau of Standards Staff Pension Fund 31st Mar. 139 275 162.329

22 Botswana College of Agriculture Pension Fund 31st Mar. 275 270 157.940

23 Botswana Development Corporation Pension Fund 30th June 54 49 46.008

24 Botswana Examinations Council Pension Fund 31st Mar. 142 142 10.425

Pension Funds

104





25 Botswana Housing Corporation Pension Fund 31st Mar. 400 400 52.751

26 Botswana Insurance Company limited Pension Fund [St. Paul] 31st Mar. 66 71 14.412

27 Botswana Insurance Holding Ltd Pension Fund 31st Dec. 71 326 18.639

28 Botswana Meat Commission Pension Fund 30th Sept. 648 535 122.805

29 Botswana Medical Aid Society Pension Fund 31st Dec. 92 93 18.552

30 Botswana Postal Services Pension Fund 31st Mar. 944 853 46.317

31 Botswana Power Corporation Staff Pension Fund 31st Mar. 1787 1,787 394.003

32 Botswana Public Officers Pension Fund 31st Mar. 111542 107170 35,429,040

33 Botswana Public Officers Welfare Provident Fund 31st Mar. ** 6244 4.821

34 Botswana Railways Staff Pension Fund 31st Mar. 1018 812 254.428

35 Botswana Savings Bank Pension Fund 31st Mar. 173 186 21.550

36 Botswana Technology Centre Pension Fund 31st Mar. 64 74 20.950

37 Botswana Telecommunication Authority Pension Fund 31st Mar. 53 60 21.382

38 Botswana Telecommunications Corporation Staff Pension Fund 31st Mar. 1479 1579 275.451

39 Botswana Unified Revenue Service Employees Pension Fund 31st Mar. 1278 1733 186.124

40 Botswana Vaccine Institute Pension Fund 31st Mar. 100 90 28.326

41 BP Botswana Pension Fund 31st Dec. 76 71 34.304

42 Breweries Pension Fund 30th Sept. 1251 1301 81.103

43 Caltex Botswana Pension Fund 31st Dec. 21 24 4.473

44 CEDA Pension Fund 31st Mar. 221 173 17.445

45 CCB Benefit 31st Dec. 20 17 1.930

46 Civil Aviation of Botswana Pension Fund 31st Mar. 675 - 9.438

47 Compass Botswana Pension Fund 31st Mar. 41 41 0.576

48 Coopers and Lybrand Pension 31st Mar. 8 4 1.561

49 Debswana Pension Fund 31st Dec. 10608 9424 3,547.735

50 Deferred Pensioners Pension Fund 31st Mar. 2903 2903 280.987

51 Deloitte and Touché Staff Pension Fund 31st Dec. 97 58 9.283

52 Engen Botswana Retirement Fund 30th Oct. 47 46 8.106

53 Ernst & Young Pension Fund 30th June 38 44 3.068

54 Fincraft Retirement Fund 31st Mar. 94 22 0.233

55 Fedics Botswana Pension Fund 31st Oct. 41 17 0.401

56 First National Bank of Botswana Pension Fund 31st Dec. 1343 1364 150.558

57 Free Standing Additional Voluntary Contributions Retirement Fund 30th June 89 78 18.953

58 FSN Retirement Plan 31st Mar. 130 130 15.777

59 G4S Staff Pension Fund 30th June 1468 1507 9.074

60 Glenrand MIB Botswana Pension Fund 30th June 26 25 1.946


105





61 Glenrand MIB Orphans Fund 30th June 221 214 7.273

62 Hollard Insurance Botswana Pension Fund 30th June 31 27 3.550

63 Institute of Development Management Pension Fund 30th Sept. 100 53 2.671

64 J. Haskins & Sons Pension Fund 30th June 36 34 16.037

65 Local Enterprise Authority Pension Fund 31st Dec. 52 336 25.766

66 Macmillan (Botswana) Pension Fund 31st Dec. 17 18 5.300

67 Majwana Umbrella Fund 31st Mar. 420 402 3.881

68 Majwe Mining Pension Fund 31st Dec. 116 113 6.055

69 Marsh Pension Fund 31st Dec. 5 16 2.531

70 Maru-a-pula School Staff Provident Fund 31st Dec. 68 68 2.631

71 Mascom Wireless Staff Pension Fund 31st Aug. 337 318 47.123

72 Metropolitan Staff Pension Fund 31st Mar. 180 180 25.000

73 Metropolitan Staff Provident Fund 31st Mar. 180 180 32.000

74 Millennium Retirement Fund 30th Aug. 2335 2946 186.941

75 NBL Botswana Staff Pension Fund 30th June 127 125 7.923

76 Motor Vehicle Accident Pension Fund 31st Aug. 64 76 16.042

77 National Development Bank Staff Pension Fund 31st Mar. 212 223 51.374

78 National Food & Technology Research Centre 31st Oct. 45 56 11.903

79 Ntlo Pension Fund 31st Mar. 580 580 48.000

80 Orange Botswana Pension Fund 31st Dec. 301 276 120.970

81 Peermont Global Botswana Pension Fund 30th June 812 756 30.188

82 Prefhold (Botswana) Pension Fund 31st Dec. 190 198 19.785

83 RIPCO Pension Fund 30th June 192 193 56.757

84 Scales and Associates Pension Fund 31st Mar. 18 16 1.011

85 Sentlhaga Pension Fund 30th June 1033 1033 48.635

86 Sefalana Group Staff Pension Fund 30th Sept. 2249 1994 171.576

87 Shell Oil Botswana Pension Fund 31st Dec. 81 48 32.656

88 Stanbic Bank Botswana Pension Fund 30th June 696 696 61.418

89 Standard Chartered Bank Botswana Pension Fund 31st Dec. 1124 1120 181.950

90 Tosas Botswana Staff Pension Fund 30th June 12 12 0.8

91 Total Botswana Pension Fund 31st Dec. 13 13 3.011

92 Tyre Services Retirement Fund 31st Dec. 324 327 12.931

93 University of Botswana Staff Pension Fund 31st Mar. 1489 308 295.238

94 University of Botswana Defined Contribution Staff Pension Fund 31st Mar. 243 1866 805.939

95 Water Utilities Corporation Staff Pension Fund 31st Mar. 2757 1866 324.551

* New Funds

** Deregistered Funds


106


Table C.2: Sub funds under Umbrella Funds

Name of Sub fund Umbrella Fund

1 ABM University Millennium Umbrella Fund

2 ABSA Life Botswana Alexander Forbes Retirement Fund

3 Accenture Botswana (Pty) Ltd Sentlhaga Pension Fund

4 Ackermans Botswana Alexander Forbes Retirement Fund

5 AEL Mining Millennium Umbrella Fund

6 African Alliance Botswana (Pty) Ltd Sentlhaga Pension Fund

7 African Banking Corporation Millennium Umbrella Fund

8 African Distribution Centers Sentlhaga Pension Fund

9 Air Liquide Alexander Forbes Retirement Fund

10 Alexander Forbes Financial Service Botswana Alexander Forbes Retirement Fund

11 Alexander Forbes Risk Service Botswana Alexander Forbes Retirement Fund

12 Allan Gray Alexander Forbes Retirement Fund

13 Alrededor Enterprises Millennium Umbrella Fund

14 Amp Control Millennium Umbrella Fund

15 Antalis Botswana Millennium Umbrella Fund

16 Apostolic Faith Mission Church/New Apostolic Church Millennium Umbrella Fund

17 Arup Botswana (Pty) Ltd Sentlhaga Pension Fund

18 Atlas Copco Alexander Forbes Retirement Fund

19 Atlas Copco Botswana (Pty) Ltd Africa 53 Provident Fund

20 Bakgatla Ba Kgafela Royal Sentlhaga Pension Fund

21 Bamalete Lutheran Church Alexander Forbes Retirement Fund

22 Bank of Baroda Millennium Umbrella Fund

23 Bayport Staff Pension Fund Millennium Umbrella Fund

24 BCSA Alexander Forbes Retirement Fund

25 BEDIA Alexander Forbes Retirement Fund

26 BH Group Africa 53 Provident Fund

27 Blake and Associates Millennium Umbrella Fund

28 BOCCIM Alexander Forbes Retirement Fund

29 BOCODOL Pension Fund Millennium Umbrella Fund

30 Bokomo Botswana Sentlhaga Pension Fund

31 Botho College Millennium Umbrella Fund

32 Botsalo Books Pension Fund Millennium Umbrella Fund

33 Botswana Accountancy College Alexander Forbes Retirement Fund

34 Botswana Clay Works Millennium Umbrella Fund

35 Botswana Couriers Millennium Umbrella Fund

36 Botswana Eagle Insurance Company (Pty) Ltd Sentlhaga Pension Fund

37 Botswana Examination Council Alexander Forbes Retirement Fund

38 Botswana Institute of Bankers Millennium Umbrella Fund

39 Botswana National Olympic Committee Alexander Forbes Retirement Fund

The external fund are funds licensed under the Pension and Provident Funds but have a head Office outside Botswana and have Botswana members and the bulk of the members are outside Botswana. The new Funds have not yet submitted the annual returns.

107




40 Botswana National Productivity Centre Alexander Forbes Retirement Fund

41 Botswana National Sports Council Millennium Umbrella Fund

42 Botswana Public Employees Union Alexander Forbes Retirement Fund

43 Botswana Railways Sacco Sentlhaga Pension Fund

44 Botswana Stock Exchange Millennium Umbrella Fund

45 Botswana Tourism Board Alexander Forbes Retirement Fund

46 BOTUSAFE Millennium Umbrella Fund

47 BPOPF Secretariat Alexander Forbes Retirement Fund

48 Broadhurst Primary School Sentlhaga Pension Fund

49 Bulk Trans (Pty) Ltd Sentlhaga Pension Fund

50 Cadbury Alexander Forbes Retirement Fund

51 Capital Bank Sentlhaga Pension Fund

52 Capricorn Investment Holdings Alexander Forbes Retirement Fund

53 Cashbuild Botswana Millennium Umbrella Fund

54 CCB (Pty) Ltd Millennium Umbrella Fund

55 Center for Development Enterprise Sentlhaga Pension Fund

56 Channel Technologies Millennium Umbrella Fund

57 Chemspec Botswana (Pty) Ltd Sentlhaga Pension Fund

58 Cheshire Foundation Alexander Forbes Retirement Fund

59 Chobe Holdings Alexander Forbes Retirement Fund

60 Choppies Distribution Stores Alexander Forbes Retirement Fund

61 Clicks Group Sentlhaga Pension Fund

62 Clover Botswana (Pty) Ltd Alexander Forbes Retirement Fund

63 Collins Newman And Co Alexander Forbes Retirement Fund

64 Competition Authority Staff Pension Fund Sentlhaga Pension Fund

65 Construction Industry Trust Fund Millennium Umbrella Fund

66 Cowburn Isherwood Millennium Umbrella Fund

67 Cresta Marakanelo Sentlhaga Pension Fund

68 Cummins Botswana Alexander Forbes Retirement Fund

69 Delloitte and Touche Botswana Alexander Forbes Retirement Fund

70 Delta Diaries Sentlhaga Pension Fund

71 Diamonex Sentlhaga Pension Fund

72 Discovery Metals Limited Botswana and Subsidiaries Alexander Forbes Retirement Fund

73 Distilers (prev SFW) Sentlhaga Pension Fund

74 Draught Dispense Services (Pty) Ltd Sentlhaga Pension Fund

75 Dulux Botswana Sentlhaga Pension Fund

76 Dunns Store Alexander Forbes Retirement Fund

77 Dynamic Insurance Brokers Millennium Umbrella Fund

78 E-Africa (Pty) Ltd Sentlhaga Pension Fund

79 Easigas Alexander Forbes Retirement Fund

80 Edcon Holdings (Proprietary) Limited Alexander Forbes Retirement Fund

81 Edgars Consolidated Stores Millennium Umbrella Fund

108




82 Ellerine Furnishers Botswana Millennium Umbrella Fund

83 Embassy of the Republic of Zimbabwe Alexander Forbes Retirement Fund

84 Eqstra Botswana Alexander Forbes Retirement Fund

85 Euro Star Holdings Alexander Forbes Retirement Fund

86 Exclusive Insurance Sentlhaga Pension Fund

87 Fairground Holdings (Pty) Ltd Alexander Forbes Retirement Fund

88 Fixtures (Pty) Ltd Alexander Forbes Retirement Fund

89 Flemming Asset Management Botswana Alexander Forbes Retirement Fund

90 Foschini Botswana Alexander Forbes Retirement Fund

91 Gaborone Container Terminal (GABCON) Alexander Forbes Retirement Fund

92 Gaborone Private Hospital Alexander Forbes Retirement Fund

93 Gaborone Sun Alexander Forbes Retirement Fund

94 Game Discount World Alexander Forbes Retirement Fund

95 Garrick Operations Alexander Forbes Retirement Fund

96 Global Holdings Botswana (Pty) Ltd Alexander Forbes Retirement Fund

97 Golder and Associates Millennium Umbrella Fund

98 Grant Thornton Sentlhaga Pension Fund

99 Group 4 Securicor Botswana (Pty) Ltd Sentlhaga Pension Fund

100 H & A Cutting Works Alexander Forbes Retirement Fund

101 Hair Solutions Millennium Umbrella Fund

102 Heinamann Alexander Forbes Retirement Fund

103 Homec Investments Alexander Forbes Retirement Fund

104 Horn of Africa Millennium Umbrella Fund

105 Hydrocomp Sentlhaga Pension Fund

106 ICL Botswana (Pty) Ltd Alexander Forbes Retirement Fund

107 I-Com (Pty) Ltd Sentlhaga Pension Fund

108 Imperial Car Rentals (Pty) Ltd Millennium Umbrella Fund

109 Information Trust Company Pension Fund Alexander Forbes Retirement Fund

110 Investec Asset Management Botswana Alexander Forbes Retirement Fund

111 Italitswana Construction Alexander Forbes Retirement Fund

112 JD Group Alexander Forbes Retirement Fund

113 Johnson Crane Hire Alexander Forbes Retirement Fund

114 Kanye Brigades Millennium Umbrella Fund

115 Khumo Property Millennium Umbrella Fund

116 Khupe Group Millennium Umbrella Fund

117 Kingdom Bank Africa Alexander Forbes Retirement Fund

118 Komatsu Alexander Forbes Retirement Fund

119 Kudu Communications Alexander Forbes Retirement Fund

120 Kwena Rocla (Pty) Ltd Sentlhaga Pension Fund

121 LAS Holdings Alexander Forbes Retirement Fund

122 Laurelton Diamonds Alexander Forbes Retirement Fund

109




123 Leo Schachter Botswana Alexander Forbes Retirement Fund

124 Letshego Holdings Limited Alexander Forbes Retirement Fund

125 Liquid Beverages Alexander Forbes Retirement Fund

126 Lobatse Clayworks Alexander Forbes Retirement Fund

127 Lobatse Tile Sentlhaga Pension Fund

128 Longman Botswana (Pty) Ltd Millennium Umbrella Fund

129 LSC Botswana Alexander Forbes Retirement Fund

130 Macsteel Trading Botswana Alexander Forbes Retirement Fund

131 Magnum Freight Millennium Umbrella Fund

132 Manica Freight Botswana Alexander Forbes Retirement Fund

133 Marsh Pty Alexander Forbes Retirement Fund

134 Masa Casino Alexander Forbes Retirement Fund

135 Massmart Holdings Millennium Umbrella Fund

136 Master Farmer Botswana Millennium Umbrella Fund

137 Material Investigation Centre Millennium Umbrella Fund

138 MedRescue International (Pty) Ltd Alexander Forbes Retirement Fund

139 MG Properties Alexander Forbes Retirement Fund

140 Micro Provident Alexander Forbes Retirement Fund

141 Mochudi Resources Centre Alexander Forbes Retirement Fund

142 Modern Refrigeration Alexander Forbes Retirement Fund

143 Mr. Price Alexander Forbes Retirement Fund

144 MTN Alexander Forbes Retirement Fund

145 Multi Choice Botswana Alexander Forbes Retirement Fund

146 Multi Waste (Proprietary) Limited Millennium Umbrella Fund

147 Murray and Roberts Millennium Umbrella Fund

148 Mutual and Federal Insurance Botswana (Pty) Ltd Alexander Forbes Retirement Fund

149 Nampak Liquid Alexander Forbes Retirement Fund

150 NBFIRA Sentlhaga Pension Fund

151 New Apostolic Church Alexander Forbes Retirement Fund

152 NTS Holdings t/s Pick n Pay Alexander Forbes Retirement Fund

153 Oclin (Propriety) Limited t/a Style clothing Alexander Forbes Retirement Fund

154 Orthosurge Botswana Millennium Umbrella Fund

155 Otis Elevators Botswana Alexander Forbes Retirement Fund

156 Otraco Botswana Alexander Forbes Retirement Fund

157 Parmalat Alexander Forbes Retirement Fund

158 PE Steel Engineering Alexander Forbes Retirement Fund

159 PEP Botswana Holdings Alexander Forbes Retirement Fund

160 PG Timbers Alexander Forbes Retirement Fund

161 Phumaphi Botswana Millennium Umbrella Fund

162 Pluczenik Botswana Alexander Forbes Retirement Fund

163 Pracbuild Botswana Millennium Umbrella Fund

110




164 Prefhold Botswana Millennium Umbrella Fund

165 Pricewaterhouse Coopers Alexander Forbes Retirement Fund

166 Primedia Outdoor Advertising Alexander Forbes Retirement Fund

167 Project Concern International Alexander Forbes Retirement Fund

168 Public Procurement and Asset Disposal Board Alexander Forbes Retirement Fund

169 Pump Services Alexander Forbes Retirement Fund

170 Regent Insurance Botswana (Pty) Ltd Alexander Forbes Retirement Fund

171 Retail Holdings Alexander Forbes Retirement Fund

172 Rio Tinto and Exploration Ltd Botswana Millennium Umbrella Fund

173 SAARC Alexander Forbes Retirement Fund

174 SAFDICO Botswana Alexander Forbes Retirement Fund

175 Sandvic Mining and Construction Alexander Forbes Retirement Fund

176 Scania Botswana Alexander Forbes Retirement Fund

177 Seabelo Express Sentlhaga Pension Fund

178 Securicor Botswana (Pty) Ltd Alexander Forbes Retirement Fund

179 Sekolo Sa Anne-Stine Staff Pension Fund Alexander Forbes Retirement Fund

180 Skip Hire Alexander Forbes Retirement Fund

181 SMC Brands Alexander Forbes Retirement Fund

182 SP Saccos Alexander Forbes Retirement Fund

183 St Josephs College Millennium Umbrella Fund

184 Stefannuti Botswana Staff Pension Fund Millennium Umbrella Fund

185 Stellenbosch Farmers Winery Alexander Forbes Retirement Fund

186 Stobech Facilities Management Sentlhaga Pension Fund

187 Tak Investments (Pty) Ltd Sentlhaga Pension Fund

188 Tebelopele Voluntary Councelling Centre Alexander Forbes Retirement Fund

189 Teemane Pension Fund Majwana Pension Fund

190 Time Projects Alexander Forbes Retirement Fund

191 TransUnion ITC (Pty) Ltd Millennium Umbrella Fund

192 Trident Holdings Alexander Forbes Retirement Fund

193 Tswana Technical Consultancy Services (Pty) Ltd Ntlo Pension Fund

194 Tswelelopele Bridgades Alexander Forbes Retirement Fund

195 Turnstar Holdings Alexander Forbes Retirement Fund

196 Tyre Services Alexander Forbes Retirement Fund

197 UCCSA Alexander Forbes Retirement Fund

198 Union Provident Alexander Forbes Retirement Fund

199 Unitrans Botswana Alexander Forbes Retirement Fund

200 UUNET Sentlhaga Pension Fund

201 Vivant Enterprise Botswana Ntlo Pension Fund

202 William Lee Associates Millennium Umbrella Fund

203 Winkel (Pty) Ltd (t/a Incredible Connection) Alexander Forbes Retirement Fund

204 Yarona FM Alexander Forbes Retirement Fund

205 Zebra Diamonds Sentlhaga Pension Fund

111

A. BITC Accredited Entities Entity Category Sector Contact Person Contact Number

Runway Asset Management Holdings

Limited

Holding Company Financial Leasing & Asset

Management of Aircraft

Dale Mcclean (+27) 11 5490900

Emeritus International Reinsurance

Pty Ltd

Reinsurance Services Insurance Companies Leo Huvaya 3121041/2

SDG Africa Fund Private Equity Fund Asset Managers Peter Hinton (+44) (0) 207 6369571

Genesis Global Finance Micro Finance Microlending Felix Kumirai 3121041/3

Enterprise Fedha Finance Company

Pty Ltd (EEFCO)

Finance Company Finance And Leasing George Miseda 3188542

Summit Development Group Pty Ltd Fund Management

Company

Asset Managers Peter Hinton (+44) (0) 207 6369571

Pivot Administration Services Limited

(Former African Alliance International

Limited)

Fund Management

Company

Asset Managers Don Gaetsaloe 3643978

Imara Holdings Limited Holding Company IFSC Companies David Stone 3188710/3188009

Letshego Holdings Limited Holding Company IFSC Companies Dumisane Ndebele 3643008/3643000

Windward Capital Pty Ltd Finance And Leasing Finance And Leasing Steph Reynolds 3617384

Aon Risk Management Pty Ltd Risk Management IFSC Companies Roy Davies 3617300

Norsad Finance Limited Finance Company Finance Company Jonathan Davies 3160860/3992051

AEV Services Pty Ltd Fund Management

Company

Asset Managers Alex Letts 3975846/75263644

Bourse Africa Limited Commodities And

Derivatives Exchange

IFSC Companies Chris Goromonzi 3160605

B. Exchanges

Entity Category Contact Person Contact Number

Botswana Stock Exchange Stock Exchange Hiran Mendis 3180201

Bourse Africa Limited Commodities And Derivatives Exchange Chris Goromonzi 3160605

C. Brokers

Entity Category Contact Person Contact Number

African Alliance Botswana Securities Limited Stock Broker Kabelo Mohohlo 3643900/72879172

Imara Capital Securities (Pty) Ltd Stock Broker Gregory Matsake 3188886 Ext 103/71321421

Motswedi Securities (Pty) Ltd Stock Broker Martin Makgatlhe 3188627/72305582

Stockbrokers Botswana Limited Stock Broker Titose Tibone 3957900

Appendix D

112

Management Companies and Funds Licensed in Botswana

Company Name Fund Name Contact Person Contact Details

African Alliance Botswana

Management Company (Pty) Ltd

* Botswana Global Allocation Fund

* Botswana Global Income Fund

* Botswana Value Fund

* Botswana Liquidity Fund

* Lobaka Equity Fund

Don Gaetsaloe Plot 50361/A

Fairgrounds Office Park

P.O Box 2770

Gaborone

Tel: 3188958

Fax: 3188956

BIFM Unit Trusts (Pty) Ltd * BIFM Balanced Prudential Fund

* BIFM Global Growth Fund

* BIFM Global Balanced Fund

* BIFM Pula Money Market Fund

* BIFM Pound Sterling Money Market Fund

* BIFM US Dollar Money Market Fund

Tiny Kgatlhwane Plot 50676


P/Bag BR185

Gaborone

Tel: 3951564

Fax: 3900358

Coronation Fund Managers

(Botswana) (Pty) Ltd

* Coronation Global Investment Fund

* Coronation Balanced Fund

* Coronation Equity Fund

* Coronation Income Fund

Sean Rasebotsa Plot 64511

Exchange House Fairgrounds

P/Bag 149

Gaborone

Tel: 3900152

Fax: 3900257

Investec Fund Managers Botswana

(Pty) Ltd

* Investec Botswana Managed Fund Martinus Seboni Plot 64511

Unit 5

Fairgrounds

P.O Box 49

Gaborone

Tel: 3180112

Fax: 3180114

Pivot Administration Services Limited * Global Managed Fund

* African Alliance Euro Fund

* African Alliance Dollar Fund

* Global Fixed Income Fund

* Global Equity Fund

Don Gaetsaloe Plot 50361/A


P.O Box 2770

Gaborone

Tel: 3188959

Fax: 3188956

Stanlib Investment Management

Services (Pty) Ltd

* Stanlib Money Market Fund

* Stanlib Equity Fund

* Stanlib Managed Prudential Fund

* Stanlib Cash Plus Fund

Moipone Lopang Plot 50676


Block D

Ground Floor

P/Bag 00168

Gaborone

Tel: 3910310

Fax: 3910311

Appendix E

113

Externally Licensed Funds Approved for Marketing in Botswana (CONTINUED)

Company Name Fund Name Contact Person Contact Details Facilities Agent

Orbis Investment

Management Limited

(Bermuda)

* Orbis Global Equity Funds (U S Dollar, Euro)

* Allan Gray Africa Equity Fund

(formerly Orbis Africa Equity Fund)

* Orbis Japan Equity (US Dollar, Yen, Euro) Funds

* Orbis Optimal (EUR) Fund

* Orbis Optimal (US Dollar) Fund

* Orbis Leveraged (EUR) Fund

* Orbis Leveraged (Yen) Fund

* Orbis Optimal (YEN) Fund

* Orbis Asia ex-Japan Equity Fund

* Orbis Leveraged (US Dollar) Fund

James Dorr P.O Box HM 571

Hamilton HM CX Bermuda

Tel: +1 (44) 2963001

Allan Gray

Botswana (Pty) Ltd

Allan Gray Unit Trust

Management Limited

(South Africa)

* Allan Gray Stable Fund

* Allan Gray Equity Fund

* Allan Gray Balanced Fund

* Allan Gray Bond Fund

* Allan Gray Optimal Fund

* Allan Gray Money Market Fund

* Allan Gray Orbis Global Fund of Funds

* Allan Gray Orbis Global Equity Feeder Fund

* Allan Gray Orbis Global Optimal Fund of Funds

Tapologo Motshubi Plot 115

Unit 19

Kgale Mews

Millenium Office Park

P/Bag 149

Suite 107

Gaborone

Tel: 3188944

Fax: 3188924

Allan Gray

Botswana (Pty) Ltd

Investec Asset

Management Limited

* Africa & Middle East Fund

* Africa High Income Fund

* Africa Opportunities Fund

* American Equity Fund

* Asia Pacific Equity Fund

* Asian Equity Fund

* Dynamic Commodities Fund

* EAFE Fund

* Emerging Markets Blended Debt Fund

* Emerging Markets Corporate Debt Fund

* Emerging Markets Currency Alpha Fund

* Emerging Markets Currency Fund

Grant Cameron Woolgate Exchange

25 Basinghall Street

London

EC2V5HA

Tel: +44 (0) 1481709826

Investec Asset

Management

Botswana (Pty) Ltd

Appendix F

114

Appendix F


* Emerging Markets Equity Fund

* Emerging Markets Hard Currency Debt Fund

* Emerging Markets Investment Grade Debt Fund

* Emerging Markets Local Currency Debt Fund

* Emerging Markets Local Currency Dynamic Debt Fund

* Emerging Markets Multi-Asset Fund

* Enhanced Global Energy Fund

* Enhanced Natural Resources Fund

* Euro Money Fund

* European Equity Fund

* Global Bond Fund

* Global Contrarian Equity Fund

* Global Defensive Bond Fund

* Global Dynamic Fund

* Global Endurance Equity Fund

* Global Energy Fund

* Global Energy Long Short Fund

* Global Equity Fund

* Global Franchise Fund

* Global Gold Fund

* Global Natural Resources Fund

* Global Opportunity Equity Fund

* Global Strategic Income Fund

* Global Strategic Managed Fund

* High Income Bond Fund

* Investment Grade Corporate Bond Fund

* Latin American Corporate Debt Fund

* Latin American Equity Fund

* Latin American Smaller Companies Fund

* Managed Currency Fund

* Middle East& North Africa Fund

* Multi Asset Protector Fund

* Sterling Money Fund

* UK Equity Fund

* US Dollar Money Fund


115



Ashburton Replica

Portfolio Limited

* Ashburton Sub Funds

* Sterling Asset Management Fund

* Dollar Asset Management Fund

* Euro Asset Management Fund

* Sterling Cash and Fixed Income Fund

* Dollar Cash and Fixed Income Fund

* Sterling Advanced Portfolio - Lower Risk Fund

* Sterling Advanced Portfolio - Moderate Risk Fund

* Sterling Advanced Portfolio - Higher Risk Fund

* Dollar Advanced Portfolio - Lower Risk Fund

* Dollar Advanced Portfolio - Moderate Risk Fund

* Dollar Advanced Portfolio - Higher Risk Fund

* Euro Advanced Portfolio - Lower Risk Fund

* Euro Advanced Portfolio - Moderate Risk Fund

* Euro Advanced Portfolio - Higher Risk Fund

Nicholas

James Taylor

P.O Box 239

17 Hillary Street

St. Helier Jersey

Channel Island

Tel: + 44 (0) 1534513377

First National Bank

Botswana Limited

Appendix F


116

List of Licensed Trustees for Collective Investment Undertakings and Custodians Company Name Fund Name Contact Person Contact Details

First National Bank of Botswana

Limited

No CIU Clients Dintle Samboma Plot 8843

Finance House

Khama Crescent

P.O Box 1552

Gaborone

Stanbic Bank Botswana Limited * African Alliance Botswana

* Management Company (Pty) Ltd

* Pivot Administration Services Limited

* Investec Fund Managers Botswana (Pty) Ltd

* BIFM Unit Trusts (Pty) Ltd

Otlasala A. Khan Plot 50672

Stanbic House

Off Machel Drive

Fairgrounds

P/Bag 00168

Gaborone

Standard Chartered Bank

Botswana Limited

* Stanlib Investment Management Services (Pty) Ltd Peggy Tsiane Standard Chartered Bank of

Botswana Ltd

Head Office - Standard House

The Mall

P.O Box 496

Gaborone

Appendix G

117

Registered Asset Managers

Company Name Contact Person Contact Details

Afena Capital Botswana (Pty) Ltd Bakang Seretse P.O Box 1253

ABG

Sebele

Gaborone

African Alliance Botswana Limited Don Gaetsaloe P.O Box 2770

Gaborone

Allan Gray Botswana (Pty) Ltd Tapologo Motshubi P/Bag 149

Suite No. 107

Kgale View

Gaborone

BIFM Botswana Limited Tiny Kgatlwane P/Bag BR185

Gaborone

BlackThread Capital (Pty) Ltd Kalyan Gogoi P.O Box 20534

Gaborone

Capital Management Botswana (Pty) Ltd Tim Marsland P.O Box 202548

Bontleng

Gaborone

Coronation Fund Managers Botswana (Pty) Ltd Sean Rasebotsa P/Bag 149

Gaborone

FinCraft (Pty) Ltd Gao Seleka-Sekonopo P.O Box 201336

Gaborone

Fleming Asset Management Botswana (Pty) Ltd Peter van Riet-Lowe P.O Box 2111

Gaborone

Investec Fund Managers Botswana (Pty)Ltd Martinus Seboni P.O Box 49

Gaborone

Ipro (Botswana) (Pty) Ltd Amit Bakhirta P/Bag 351

Suite No. 472

Gaborone

Stanlib Investment Management Services (Pty) Ltd Moipone Lopang P/Bag 00168

Gaborone

Appendix H

118

List of Licensed Micro Lenders Name Contact Details Contact Person Ownership

AT & T Monnakgotla t/a Macheng

Cash Loan

P.O Box 60474

Gaborone

Tel: 3938788

Fax: 3500419

e-mail: [email protected]

Abel Monnakgotla Citizens

Thito Holdings (Pty) Ltd P.O Box 404519

Gaborone

Tel: 3909319

Fax: Not Available


Nathan Kgabi Citizens

Mogano and Sons (Pty) Ltd P.O Box 404565

Gaborone

Tel: 3927226

Fax: 3927226


Boagisanyo V. Mogano Citizens

Letshego Financial Services P.O Box 381

Gaborone

Tel: 3643300

Fax: 3190416

email: [email protected]

Frederick Mmelesi Listed on the Botswana Stock

Exchange

Bayport Financial Services P.O Box 2748

Gaborone

Tel: 3180888

Fax: 3180831


Father Maphongo Non-Citizens

Mossmai (Pty) Ltd P.O Box 4026

Gaborone

Tel: 72444913

Fax: Not Available

e-mail: Not Available

Moses Matomela Citizens

Appendix I

119

Appendix I

List of Licensed Micro Lenders (CONTINUED) Name Contact Details Contact Person Ownership

Silver Dollar Investments (Pty) Ltd P/Bag 00467

Gaborone

Tel: 3906581

Fax: 3906561


Benjamin R. Coetzer Non-Citizens

Re TlaGotlhokomela (Pty) Ltd Francistown Ms. Catherina G. van Deventer Non-Citizens

Adima Morokotso O Monnye (Pty)

Ltd

P.O Box 40127

Francistown

Tel: 2419708/72601809


Mr. Francis Jacobs Non-Citizens

Nkadime Quick Cash (Pty) Ltd P.O Box 40162

Francistown

Tel: 2419690

Fax: 2419175


Mr. Phillipus Carl Portgieter Non-Citizens

Catbok Investments (Pty) Ltd P.O Box 244

Francistown

Tel: 71625256

email: Not Available

Ms. Catharine Mokgopo Citizens

Onma Investments (Pty) Ltd P.O Box 2001

Francistown

Tel: 2418992

email: Not Available

Mr. Mabina Peo Citizens

Sentle Investments (Pty) Ltd P.O Box 839

Maun

Tel: 6862758

Fax: 6861656


Mr. Dawid Nicolaas Janse Van

Rensburg

Non-Citizens

Third Floor, Exponential Building, Plot 54351, New CBD, Off PG Matante RoadPrivate Bag 00314, Gaborone, BotswanaTel: (+267) 310 2595, (+267) 310 2376

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