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Fraud threatens non-banking financial sector


The non-banking financial services sector is an important contributor to the Botswana economy not only in terms of the Gross Domestic Product (GDP) and employment but also in terms of its linkages to other sectors, including investment facilitation.

It is reported that the insurance sector recorded a phenomenal growth rate of 97 percent in Gross Written Premiums from P1.9 million in the financial year ended 31 March 2010 to P3.74 million as at 31st March 2014, with the total assets being P17.8 billion as at 31st March 2014.

The sector also promotes entrepreneurship – through available business and funding opportunities – which helps to grow the economy. It considers that entrepreneurs and businesses need funding to harness their human and material resources, for financial expansion, modernisation and new projects.

However, Non-Bank Financial Institutions Regulatory Authority’s  (NBFIRA) Board Chairperson Mmatlala Dube, however, complains that in parallel with the development of the non-banking financial services, there remain “predators of ill-intent that prey on investors”.

Dube explains that the criminals are looking for ways to benefit from the growth in non-banking financial services sector.

She fears that investment frauds can plague financial markets, regardless of the development level of the said markets, such including all types of actions aimed at obtaining financial gain from investors based on deception.

Reports are that cross-border financial crimes, which are complex in nature, remain difficult to detect. In Botswana alone, such crimes include fraudulent transactions, ponzi schemes, advanced fee or payment in advance, charities fund scams, debt elimination claims, investment fraud and pyramids schemes of which ponzi and pyramid schemes are said to top the charts.

Dube stated that working together as member states will enhance the capacity to improve the regulatory framework through sharing of information and exchange of experiences to combat cross-border crimes.

She said given the various developments in the non-banking financial markets sector, it is important for an effective NBFIRA to understand the market comprehensively, identify trends in it and reconstruct its movement and identify malpractices.

Dube explained that in Botswana they believe that investment in training is important to keep personnel abreast of how to detect malpractices and how to conduct a thorough investigation.

“We admit that a strong legal enforcement is necessary, but not sufficient to ensure adequate handling of the likes of ponzi schemes as well as protection of investors,” she stated.

Non-Banking Financial Institutions Regulatory Authority hosted the 33rd Bi-Annual Committee for Insurance, Securities and Non-Banking Financial Authorities (CISNA) conference held in Maun on Thursday.
 
CISNA was established in June 1998 pursuant to Article 2 of Annexure 10 of the Financial Investment Protocol of SADC as a committee of authorities responsible for supervision of insurance, securities, and non-banking financial sector industries in SADAC member states.

 Its principal objectives, among other, are to promote harmonisation of regulatory regimes, enhance communication and exchange of information, promote compliance with international standards, enhance cooperation with regards to anti-money laundering issues amongst authorities and promote sound corporate governance of non-bank financial institutions.

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China’s GDP expands 3% in 2022 despite various pressures

2nd February 2023
China’s Gross Domestic Product (GDP) expanded by 3% year-on-year to 121.02 trillion yuan ($17.93 trillion) in 2022 despite being mired in various growth pressures, according to data from the National Bureau Statistics.

The annual growth rate beat a median economist forecast of 2.8% as polled by Reuters. The country’s fourth-quarter GDP growth of 2.9% also surpassed expectations for a 1.8% increase.

In 2022, the Chinese economy encountered more difficulties and challenges than was expected amid a complex domestic and international situation. However, NBS said economic growth stabilized after various measures were taken to shore up growth.

Industrial output rose 3.6% in 2022 over the previous year, while retail sales slightly shrank by 0.2% data show that fixed-asset investment increased 5.1% over 2021, with a 9.1% hike in manufacturing investment but a 10% fall in property investment.

China created 12.06 million new jobs in urban regions throughout the year, surpassing its annual target of 11 million, and officials have stressed the importance of continuing an employment-first policy in 2023.

Meanwhile, China tourism market is a step closer to robust recovery. Tourism operators are in high spirits because the market saw a good chance of a robust recovery during the Spring Festival holiday amid relaxed COVID-19 travel policies.

On January 27, the last day of the seven-day break, the Ministry of Culture and Tourism published an encouraging performance report of the tourism market. It said that domestic destinations and attractions received 308 million visits, up 23.1% year-on-year. The number is roughly 88.6% of that in 2019, they year before the pandemic hit.

According to the report, tourism-related revenue generated during the seven-day period was about 375.8 billion yuan ($55.41 billion), a year-on-year rise of 30%. The revenue was about 73% of that in 2019, the Ministry said.

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Jewellery manufacturing plant to create over 100 jobs

30th January 2023

The state of the art jewellery manufacturing plant that has been set up by international diamond and cutting company, KGK Diamonds Botswana will create over 100 jobs, of which 89 percent will be localized.

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Investors inject capital into Tsodilo Resources Company

25th January 2023

Local diamond and metal exploration company Tsodilo Resources Limited has negotiated a non-brokered private placement of 2,200, 914 units of the company at a price per unit of 0.20 US Dollars, which will provide gross proceeds to the company in the amount of C$440, 188. 20.

According to a statement from the group, proceeds from the private placement will be used for the betterment of the Xaudum iron formation project in Botswana and general corporate purposes.

The statement says every unit of the company will consist of a common share in the capital of the company and one Common Share purchase warrant of the company.

Each warrant will enable a holder to make a single purchase for the period of 24 months at an amount of $0.20. As per regularity requirements, the group indicates that the common shares and warrants will be subject to a four month plus a day hold period from date of closure.

Tsodilo is exempt from the formal valuation and minority shareholder approval requirements. This is for the reason that the fair market value of the private placement, insofar as it involves the director, is not more than 25% of the company’s market capitalization.

Tsodilo Resources Limited is an international diamond and metals exploration company engaged in the search for economic diamond and metal deposits at its Bosoto Limited and Gcwihaba Resources projects in Botswana.  The company has a 100% stake in Bosoto which holds the BK16 kimberlite project in the Orapa Kimberlite Field (OKF) in Botswana.

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