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50% Batswana say corruption has gone UP

80% want politicians, senior civil servants barred from tenders

According to the latest Afrobarometer report, Batswana are opposed to the idea of allowing politicians and senior civil servants participate in public tenders. The Afrobarometer report coincides with the lockdown and State of Public Emergency imposed as tools to help contain the corona virus pandemic.

Concerned about corruption, Batswana overwhelmingly say that politicians and senior civil servants should be barred from participating in public tenders, according to the latest Afrobarometer survey. Recent scandals around the Covid-19 relief efforts have linked senior politicians and civil servants to corruption in government procurement processes, leading some projects to be halted.

The survey findings also show that while half of Batswana say the level of corruption in the country has increased over the past 12 months, most believe that people risk negative consequences if they report corruption to the authorities.

Key findings of the survey demonstrate that an overwhelming majority (80%) of Batswana say that politicians and senior public servants should be barred from participating in public tenders in order to reduce corruption in government procurement.

Furthermore, half (50%) of Batswana think that the level of corruption in the country has increased over the past 12 months. The findings also show that seven in 10 citizens (70%) say that people risk retaliation or other negative consequences if they report corruption to the authorities. Fewer than three in 10 (27%) say they can report corruption without fear (Figure 3).

Afrobarometer is a pan-African, nonpartisan survey research network that provides reliable data on African experiences and evaluations of democracy, governance, and quality of life. Seven rounds of surveys were completed in up to 38 countries between 1999 and 2018, and Round 8 surveys are currently underway. Afrobarometer conducts face-to-face interviews in the language of the respondent’s choice.

The Afrobarometer national partner in Botswana, Star Awards Ltd., interviewed a nationally representative, random, stratified probability sample of 1,200 adult Batswana in July-August 2019. A sample of this size yields country-level results with a margin of error of +/-3 percentage points at a 95% confidence level. Previous surveys were conducted in Botswana in 1999, 2003, 2005, 2008, 2012, 2014, and 2017.

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UDC declares war on Skelemani

3rd August 2020
Skelemani

Leader of Opposition’s (LOO) Dumelang Saleshando has said the Speaker of the National Assembly, Phandu Skelemani risks losing the moral authority to preside over the house due to the manner in which he handles parliament proceedings.

This week parliament made an unprecedented decision to suspend Saleshando, from parliament for a period of a week. Saleshando is also Member of Parliament for Maun West. Subsequent to Saleshando’s suspension, opposition Members of Parliament boycotted parliamentary proceedings, save for Alliance for Progressives’ Wynter Mmolotsi.

Saleshando was suspended for refusing to withdraw his statement in which he implicated President Mokgweetsi Masisi’s sister in a tender alleged to have been awarded corruptly. While Skelemani has relatively enjoyed respect from opposition parties since the beginning of the 12th parliament, it appears the Tuesday events will turn things around.

“The speaker is risking losing the moral authority to precede over the house. Because we don’t have the numbers but we can’t participate in a match,” Saleshando told media on Wednesday.
Saleshando who has since written a letter to the speaker to outline the opposition’s displeasures, pointed out that the Speaker has on many occasions spoke to members of opposition in a disrespectful manner.

One example, according to the Leader of Opposition was during the State of Emergency when the speaker ordered that Oneetse Ramogapi, Member of Parliament for Palapye, to sit down “because matters being discussed are too complex for him to comment on.” Saleshando indicated that some of the jabs being thrown at them undermine themselves as MPs because of use of condescending expressions.

Saleshando further emphasised that his suspension from parliament was not an independent decision made by the Speaker. He also pointed out that his suspension was staged hence Masisi was present on the day. Former BDP MP Tshekedi Khama also expressed his displeasure, further indicating that they stand in solidarity with the Umbrella for Democratic Change (UDC).

“We already knew that Saleshando was going to be suspended on that day. Skelemani must understand one thing, that he is not the speaker of the Botswana Democratic Party but that of the national assembly,” said Khama.  “We are totally disappointed by yesterday’s events, this can only mean one thing. That democracy in Botswana has come to pass.

Secondly we have heard that the three institutions the third being parliament are supposed to be independent but we have seen clearly that Speaker Skelemani is wearing a BDP cap and not his wig.” Moreover, they further indicated that they have observed a very disturbing trend by the Speaker to want to turn parliament into a court of law.

They elaborated that on numerous occasions the Speaker demands that the MPs prove opinions with facts which they point out as unfair on them. “As members pf parliament our role is to raise a suspicion based on what we are observing. We are not supposed to be demanded to prove evidence. That is the duty of other agencies, maybe if we could call the DCEC to explain to Skelemani what constitutes corruption maybe it can be something,” said Ngami MP, Carter Hikuama.

The opposition members said their main concern with the way the Speaker conducts his day to day business is that he might end up losing the authority to control the parliament proceedings altogether. Furthermore, they indicated that the speaker should not stand in the way of attempts by MPs of the opposition to hold the President accountable with fear or favour. Mahalapye East Member of Parliament Yandani Boko said it is surprising how the speaker has elevated himself to the role of a judge in parliament.

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IFSC fiscal framework here to stay – BITC

3rd August 2020
Keletsositse Olebile

Botswana Investment & Trade Centre (BITC), the country‘s intergraded trade & investment promotion agency has reiterated Botswana’s position on the International Finance Services Centre (IFSC), a tax incentive provision for accredited companies.

Speaking at a media engagement session on Tuesday BITC Chief Executive Officer, Keletsositse Olebile underscored that the IFSC is not a breeding vehicle of illicit capital flows but a provision purely crafted as an investment wooing instrument which already has tangible and significant benefits to the country’s economy.

Olebile explained that the provision is a mechanism to attract foreign investment, channel capital into local investment projects, provide additional opportunities for local investors and create sustainable employment opportunities for suitable and qualified Batswana.

Furthermore the BITC Chief added that the IFSC fiscal framework plays a role in the enhancement of skills base for the Botswana workforce, fostering of innovation and sophistication in financial and business services and enhancement of Botswana’s already excellent reputation in the international financial and business community as well as generate tax revenue for Botswana.

BENEFITS TO ACCREDITED COMPANIES

Whilst most companies pay Corporate Tax at 22%, IFSC companies are generally taxed at 15%, Eighth Schedule to Income Tax Act. When deliberating on the provision leading tax consultant Jonathan Hore of Aupracon said because IFSC companies predominantly deal with non-residents, they are taxed 15 % on nonresident proceeds, while paying the normal 22 % for Botswana resident’s proceeds.

“This means that the tax computation of an IFSC company will most likely have two columns, to separate the 15% income from that taxable at 22%, IFSCs can, just like any other taxpayer, also claim withholding tax credits for tax suffered in foreign countries,“ he said. Hore added that such credits cannot exceed the Botswana tax on the foreign income, that is to say BURS cannot refund a taxpayer because the taxpayer paid tax offshore.

An IFSC entity which invests in an offshore entity to the extent of at least 25 % is not taxed on the dividends it earns from such investments. The investments are called Qualifying Foreign Participation (QFP) and are exempt in terms of the Second Schedule to the Income Tax Act, which states that, any dividends received by international financial services Centre Company in respect of a qualifying foreign participation as defined under section 2; shall be exempt from tax to the extent indicated.

The act defines Qualifying Foreign Participation (QFP) as participation held by an international financial services centre company in a company which is not resident in Botswana, where the international financial services centre company controls either directly or indirectly, alone or with connected persons, 25 per cent or more of the share capital including 25 per cent or more of the voting rights of the nonresident company.

IFSC companies also enjoy zero Capital Gains Tax (CGT). CGT is levied on the capital appreciation of any specified assets such as shares, immovable properties etc. Any person who disposes shares must pay the CGT.

However, IFSC companies do not suffer CGT when they dispose of shares held in a Qualifying Foreign Participation, i.e. at least 25% shareholding in nonresident subsidiaries. Secondly, the shareholders in an IFSC company are exempt from CGT.

WHAT ARE BOTSWANA’S BENEFITS?

Jonathan Hore noted that IFSC is an incentive which attracts FDI as foreign dividends are not taxed – “CGT exemption means that investors can set-up holding companies in Botswana and when they want to exit, they don’t have to worry about CGT.

Mauritius doesn’t have CGT at all and this Botswana incentive can only be compared to Mauritius. Most SADC states have CGT for most investors. Botswana is therefore ahead of the pack, together with Mauritius,” he said.

The renowned Tax consultant explained that this helps IFSC entities to obtain the best of non-resident consultants and investors. “Dealing with IFSCs is more business-friendlier as compared with dealing with any other BW entity, which deducts WHT from payments due to non-residents.”

BITC CEO noted that as a consequence of the framework insisting on a physical presence (Office) as opposed to brass plating, indirectly this contributes to business tourism in the form of shuttle services, lodging, dining fees when non-resident directors visit their head offices.

PREVIOUS CONCERNS

Previously various global economic and financial commentators such as the International Monetary Fund (IMF), Organisation for Economic Cooperation & Development (OECD) expressed concerns over Botswana’s tax incentives noting a possibility of the provisions being used as window of tax invasion, raking in all returns, eroding national tax bases and compromising domestic resources mobilization systems.

OEDC observed that tax exemptions such as IFSC fiscal framework if not tightly managed have little impact on investment attraction but only cripple the country‘s revenue collection vehicles.
“Under pressure to offer internationally-competitive tax environments, developing countries offer generous tax breaks that undermine their domestic resource mobilization efforts with little demonstrable benefit in terms of increased investment,” said OECD in previous publications in 2018.

“There is limited information on the way in which Botswana’s IFSC is used for illicit and criminal practice, but according to a 2017 evaluation carried out by Eastern and Southern Africa Anti-Money Laundering Group, without developed anti-money laundering and counter-terrorist financing regime the country is at risk of being used as a conduit,” noted the Tax Justice Network in 2017.

THE FRAMEWORK & SUCCESFULLY DUSTING OFF THE ‘TAX HAVEN’ TAG

Botswana as since refined the IFSC fiscal framework in a bid to tighten compliance with international practices. The investment promotion boss who championed Botswana‘s campaign against the tax haven tag in 2014 noted that Botswana has since joined the Inclusive Framework by OECD and G20.

Furthermore Botswana has since complied with resolutions of OECD Forum on Harmful Tax Practices (FHTP) by subscribing to Base Erosion and Profit Shifting Standard (BEPS), Substantive Presence, Tax Information Exchange agreements which are requested from time to time.

Olebile reiterated that Botswana is not a tax haven, noting that in conjunction with respective industries regulatory and compliance authorities such as Bank of Botswana, NBFIRA , BURS , IFSC accredited companies are regularly zoomed into check if they living up to promises and comply with the law.

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Masisi misses critical BDP meet

3rd August 2020
President Masisi

President Mokgweetsi Masisi has this week left a number of Botswana Democratic Party (BDP) legislators disappointed after not gracing the party’s parliamentary caucus, where they expected to slap him with a litany of concerns they encounter within the party.

The Tuesday meeting was the first BDP caucus meeting since the country went into lockdown in March this year. Chronicles of activities within the party leading to this week’s meeting necessitated Masisi to be present at Boipuso Hall held meeting, posit some MPs. Some legislators have been unhappy with how the party leadership and the party in general conduct its business in relation with the backbenchers.

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