06 Apr 2016

The Minister of Finance and Development Planning has presented before Parliament the Non-Bank Financial Institutions Regulatory Authority Bill, 2015 for second reading.

Mr Kenneth Matambo said the objective of the bill is to repeal and re-enact with amendments, the NBFIRA Act (Cap 46:08), which in drafting, it was considered that several non-bank financial institutions were not subject to any form of regulation or supervision and yet their operations posed financial risks to the economy.

He said the bill continues the regulatory authority, with improved corporate governance aspects and focused structure and function.

In his presentation, Mr Matambo noted that the non-bank financial sector in Botswana played a critical role in the economy of the country.

He also said NBFIRA had overarching regulatory responsibility for a number of financial services industries, including insurance, retirement funds, collective investment undertakings, securities and related activities.

Meanwhile, the bill has 11 parts and 63 clauses, with part I, dealing with preliminary matters which include the short tittle of the NBFIRA bill and the definitions of the key terms used in the bill.

Included in the definitions is a detailed definition of financial crime, to cover the offence of money laundering, dealing with the proceeds of a criminal offence and the financing of tourist activity.

Part II is establishment and functions of the regulatory authority, and this part confirms the continuation of NBFIRA and reiterates its objectives and functions. There is also the constitution and qualifications board, which forms part III of the bill and it covers the constitution of the board of directors of NBFIRA and the required qualifications for members.

Under part IV, the bill describes the terms and conditions set for the meetings and proceedings of the board, while part V deals with the terms and conditions of employment of the CEO and other staff of NBFIRA.

Since NBFIRA is expected to be financially independent of government, part VI deals with the sources of funds and their application in the running of NBFIRA.

It also covers the oversight of the usage of funds and NBFIRA’s obligations in administering its funds. Part VII of the bill provides the criteria applicable to the approval of self-regulatory organisations and gives direction to them in carrying out their functions.

Part VIII is taxation status of non-banking financial institutions where NBFIRA is given the authority to supervise such entities for compliance with the terms and conditions of trade, on which the tax certificate was issued to them. The inspections and investigations part, which is part IX, provides the framework under which inspectors and investigators are to carry out their work, as well as the powers that are available to them.

There is also establishment of the tribunal, which forms part X of the bill, and this part provides for the establishment and operational framework of the tribunal to review decisions made by the regulator and self-regulatory organisations.

The last part of the bill is miscellaneous, and this part captures the supervisory aspects that are not specific to the foregoing parts, but are applicable to all licensed entities.

Meanwhile, Mr Matambo said the drafting of this bill involved extensive consultations with a wide range of stakeholders, including the non-bank financial institutions.

“The passage of this bill will contribute significantly to the development of the non-bank financial sector of Botswana, as it seeks to bring the regulatory and supervisory structure in line with international standards,” the minister said. Ends