Connect with us
Advertisement

BoB frustrated by cyber-based illegal operations

Bank of Botswana (BoB) admitted in its latest Banking Supervision Report that it is failing to crack down illicit cyber-based banking business operations in the form of pyramid schemes and illegal deposit-takings because “the Bank is constrained in taking any action against operations based outside its jurisdiction.”

According to the Banking Supervision Report 2017, “the current challenge relates to cyber-based operations, with no local or cross-border physical location, as the Bank is constrained in taking any action against operations based outside its jurisdiction.” The Central Bank says during 2017, BoB investigated two illegal banking business operations and one originated from Botswana while the other was web-based and originated from  South Africa. According to the Report, the schemes were Botswana Index Rating (Pty) Limited and Pipcoin owned by Refiloe Nkele who is popularly known as Ref Wayne.

Information gathered by this publication is that Nkele and other web-based illegal operators have proved to be handful to the central bank and continue to operate illegally. According to the Banking Supervision Report 2017 these operators make sure they amass enough capital through cyber transactions and collapse the scheme along the way leaving their clientele in limbo without any trace.

“…The unsustainability of such ventures is revealed when the schemes collapse and investors lose their money and seek the intervention of the Bank,” says the BoB report. Last year Nkele came to Botswana and was thronged by multitudes at the Gaborone International Convention Centre who wanted to “learn about forex trade.” This event raised public debate emanating from mixed reactions about the self-proclaimed millionaire’s credentials and claim to fame and fortune.

However Nkele’s reputation took a knock in Botswana borders just after the Gaborone event following the self-proclaimed billionaire’s post of Botswana Stock Exchange (BSE) logo on social media without consent. The BSE complained and stated that “we did not consent to the use of the BSE logo.”  The BSE embarrassing statement against Nkele was followed by BoB exposing Nkele as an agent of illegal online pyramid scheme.

While the Bank shut down Banking Index Rating, ordering it to “cease and desist” from all activities involving the acceptance of money from the public, Nkele or Pipcoin was referred by BoB to the South African central bank. “In relation to Pipcoin, the Bank consulted the South African Reserve Bank (SARB), which confirmed that the company had contravened the South African Banks Act 94 of 1990 by taking deposits illegally from members of the public.

The SARB indicated that the matter had been referred to the National Prosecuting Authority of South Africa for appropriate action. This notwithstanding, the Bank also concluded that Pipcoin’s activities constituted illegal deposit-taking and contravened Section 3(1) of the Banking Act, which restricts transacting banking business and/or soliciting deposits of money to licensed banks. The Bank issued a press release warning the public about illegal deposit-taking activities and advised them to desist from participating in such unlicensed schemes,” said the Banking Supervision Report 2017.

Parliament of Botswana has promulgated the Consumer Protection Act which prescribes the multiplication, pyramid, chain letter schemes and other related activities as illegal ventures. The Bank of Botswana Act stipulates that the business of taking deposits of money from members of the public is the preserve of licensed banks since this part constitutes banking business.

When launching the BoB’s Monetary Policy Report at the just ended National Business Conference, Governor Moses Pelaelo emphasized the Bank’s role in protecting the country’s financial system and the consumers. He said this will help Botswana move well-oiled economically in the journey towards high income status. The theme of the conference was “Breaking through to a High-Income Botswana – The Role of the Private Sector in Charting the Path” and Pelaelo said its intent is “to project the relevance and role of the Bank of Botswana in contributing to the journey towards high income status for Botswana.”

When explaining the supervisory, regulatory or overview role of the Bank Pelaelo, “to give perspective, you will be aware, Distinguished Ladies and Gentlemen, that the Bank exists to protect the value of the local currency, the Pula and thebe, through currency management operations, monetary policy, exchange rate management, regulation and supervision of relevant financial institutions and facilitating sound payments and settlement frameworks.

Essentially, the Bank promotes the desire and willingness to hold the local currency, as well as to transact and save locally in Pula premised on the quality and durability of the banknotes and coin; stable, predictable domestic price changes; safety and soundness of the financial system and reliable payment infrastructure. Inevitably, where central banks fail to achieve these outcomes, or are constrained by political interference, economic performance and development suffer 4 considerably; recent examples include Venezuela and Zimbabwe.”

By fostering appropriate conditions, Pelaelo said, the central bank has throughout its 43 years of existence contributed to stability of the macroeconomic environment and financial system, as well as integrity and reliability of payments and settlement platforms. He said this enables economic activity, as manifested in the ability to transact and access financial service.

BoB launches Monetary Policy Report

Last week during the National Business Conference the central bank kicked off its first ever Monetary Policy Report. BoB also explained its relevance in influencing expectations and economic activity. The Bank will publish four Monetary Policy Reports each calendar year in April, August and October will be preceded by the Monetary Policy Statement in February each year.

“The Monetary Policy Report will be the main medium through which the Bank will inform the public about the formulation and implementation of monetary policy. It serves to meet the public’s expectation of a transparent and accountable central bank in fulfilling the monetary policy mandate,” said Governor Pelaelo.

Pelaelo also said the Monetory Policy Report was made in an effort to further improve on communication and transparency on economic and policy analysis and implementation. The Monetary Policy Report also provides a comprehensive, forward-looking framework for policy formulation by the MPC and serves as a basis for policy decisions.

Continue Reading

Business

Botswana on high red alert as AML joins Covid-19 to plague mankind

21st September 2020
Botswana-on-high-alert-as-AML-joins-Covid-19-to-plague-mankind-

This century is always looking at improving new super high speed technology to make life easier. On the other hand, beckoning as an emerging fierce reversal force to equally match or dominate this life enhancing super new tech, comes swift human adversaries which seem to have come to make living on earth even more difficult.

The recent discovery of a pandemic, Covid-19, which moves at a pace of unimaginable and unpredictable proportions; locking people inside homes and barring human interactions with its dreaded death threat, is currently being felt.

This content is locked

Login To Unlock The Content!

Continue Reading

Business

Finance Committee cautions Gov’t against imprudent raising of debt levels

21st September 2020
Finance Committe Chairman: Thapelo Letsholo

Member of Parliament for Kanye North, Thapelo Letsholo has cautioned Government against excessive borrowing and poorly managed debt levels.

He was speaking in  Parliament on Tuesday delivering  Parliament’s Finance Committee report after assessing a  motion that sought to raise Government Bond program ceiling to P30 billion, a big jump from the initial P15 Billion.

This content is locked

Login To Unlock The Content!

Continue Reading

Business

Gov’t Investment Account drying up fast!  

21st September 2020
Dr Matsheka

Government Investment Account (GIA) which forms part of the Pula fund has been significantly drawn down to finance Botswana’s budget deficits since 2008/09 Global financial crises.

The 2009 global economic recession triggered the collapse of financial markets in the United States, sending waves of shock across world economies, eroding business sentiment, and causing financiers of trade to excise heightened caution and hold onto their cash.

The ripple effects of this economic catastrophe were mostly felt by low to middle income resource based economies, amplifying their vulnerability to external shocks. The diamond industry which forms the gist of Botswana’s economic make up collapsed to zero trade levels across the entire value chain.

The Upstream, where Botswana gathers much of its diamond revenue was adversely impacted by muted demand in the Midstream. The situation was exacerbated by zero appetite of polished goods by jewelry manufacturers and retail outlets due to lowered tail end consumer demand.

This resulted in sharp decline of Government revenue, ballooned budget deficits and suspension of some developmental projects. To finance the deficit and some prioritized national development projects, government had to dip into cash balances, foreign reserves and borrow both externally and locally.

Much of drawing was from Government Investment Account as opposed to drawing from foreign reserve component of the Pula Fund; the latter was spared as a fiscal buffer for the worst rainy days.

Consequently this resulted in significant decline in funds held in the Government Investment Account (GIA). The account serves as Government’s main savings depository and fund for national policy objectives.

However as the world emerged from the 2009 recession government revenue graph picked up to pre recession levels before going down again around 2016/17 owing to challenges in the diamond industry.

Due to a number of budget surpluses from 2012/13 financial year the Government Investment Account started expanding back to P30 billion levels before a series of budget deficits in the National Development Plan 11 pushed it back to decline a decline wave.

When the National Development Plan 11 commenced three (3) financial years ago, government announced that the first half of the NDP would run at budget deficits.

This  as explained by Minister of Finance in 2017 would be occasioned by decline in diamond revenue mainly due to government forfeiting some of its dividend from Debswana to fund mine expansion projects.

Cumulatively since 2017/18 to 2019/20 financial year the budget deficit totaled to over P16 billion, of which was financed by both external and domestic borrowing and drawing down from government cash balances. Drawing down from government cash balances meant significant withdrawals from the Government Investment Account.

The Government Investment Account (GIA) was established in accordance with Section 35 of the Bank of Botswana Act Cap. 55:01. The Account represents Government’s share of the Botswana‘s foreign exchange reserves, its investment and management strategies are aligned to the Bank of Botswana’s foreign exchange reserves management and investment guidelines.

Government Investment Account, comprises of Pula denominated deposits at the Bank of Botswana and held in the Pula Fund, which is the long-term investment tranche of the foreign exchange reserves.

In June 2017 while answering a question from Bogolo Kenewendo, the then Minister of Finance & Economic Development Kenneth Mathambo told parliament that as of June 30, 2017, the total assets in the Pula Fund was P56.818 billion, of which the balance in the GIA was P30.832 billion.

Kenewendo was still a back bench specially elected Member of Parliament before ascending to cabinet post in 2018. Last week Minister of Finance & Economic Development, Dr Thapelo Matsheka, when presenting a motion to raise government local borrowing ceiling from P15 billion to P30 Billion told parliament that as of December 2019 Government Investment Account amounted to P18.3 billion.

Dr Matsheka further told parliament that prior to financial crisis of 2008/9 the account amounted to P30.5 billion (41 % of GDP) in December of 2008 while as at December 2019 it stood at P18.3 billion (only 9 % of GDP) mirroring a total decline by P11 billion in the entire 11 years.

Back in 2017 Parliament was also told that the Government Investment Account may be drawn-down or added to, in line with actuations in the Government’s expenditure and revenue outturns. “This is intended to provide the Government with appropriate funds to execute its functions and responsibilities effectively and efficiently” said Mathambo, then Minister of Finance.

Acknowledging the need to draw down from GIA no more, current Minister of Finance   Dr Matsheka said “It is under this background that it would be advisable to avoid excessive draw down from this account to preserve it as a financial buffer”

He further cautioned “The danger with substantially reduced financial buffers is that when an economic shock occurs or a disaster descends upon us and adversely affects our economy it becomes very difficult for the country to manage such a shock”

Continue Reading
Do NOT follow this link or you will be banned from the site!