Botswana

Exchange

Botswana Stock Exchange.

The Botswana Stock Exchange is the only securities exchange operating in Botswana and is licensed by the Non-Bank Financial Institutions Regulatory Authority. The Botswana Stock Exchange is an affiliate of the World Federation of Exchanges, a partner exchange of the Sustainable Stock Exchanges initiative, a member of the African Securities Exchanges Association, a member of the Committee of SADC Stock Exchanges, a member of the Association of National Numbering Agencies, and a recognised stock exchange for purposes of HM Revenue and Customs legislation in the United Kingdom.

The Botswana Stock Exchange is operated by the Botswana Stock Exchange Limited which, through its wholly owned subsidiary, the Central Securities Depository Company of Botswana Proprietary Limited, operates the only central securities depository in Botswana.

Current number of listed companies

As at June 2023, there were 31 (thirty-one) listed companies on the Botswana Stock Exchange. 23 (twenty-three) of the listed companies are domestic companies, 7 (seven) are foreign, and 1 (one) is listed on the Botswana Stock Exchange’s Serala Over-The-Counter board.

As at June 2023, there were 46 (forty-six) listed debt securities on the Botswana Stock Exchange. 7 (seven) of these securities are government bonds, 37 (thirty-seven) are corporate bonds, and 2 (two) are tradeable commercial paper.

As at June 2023, there were 5 (five) Exchange Traded Funds listed on the Botswana Stock Exchange.

Listing rules

Regulatory framework 

Securities in Botswana are regulated primarily by Botswana Stock Exchange regulations (as amended from time to time), the Companies Act [CAP 42:01], and the Securities Act [CAP 56:08].

Equities are listed on the Botswana Stock Exchange in terms of the Botswana Stock Exchange Equity Listings Requirements.

Debt securities are listed on the Botswana Stock Exchange in terms of the Botswana Stock Exchange Debt Listings Requirements. Companies in Botswana are entitled under the Companies Act [CAP 42:01] to issue unlisted debt securities.

Regulatory body or bodies

The Botswana Stock Exchange, in respect of transactions/activities involving listed companies and/or listed debt securities.

The Non- Bank Financial Institutions Regulatory Authority (NBFIRA), in respect of the Botswana Stock Exchange’s activities as a securities exchange.

The Companies and Intellectual Property Authority, in respect of the Botswana Stock Exchange Limited’s activities as a company incorporated in Botswana.

Principal legislation

The Companies Act [CAP 42:01].

The Securities Act [CAP 56:08].

Collective Investments Undertakings Act, 2021 [CAP 56:09].

Corporate Governance Code

The Botswana Stock Exchange requires that listed companies comply with the King III Code on Corporate Governance for South Africa, as amended or replaced from time to time. 

Takeover / merger regulations

As at June 2023, the Botswana Stock Exchange relies on the relevant provisions of Chapter 5 (Fundamental Transactions, Takeovers, and Offers) of the Companies Act No. 71 of 2008 of South Africa (together with the attendant Takeover Regulations) to regulate “affected transactions”.

Impact of regulatory regime on business

Notifiable mergers (being transactions where one or more enterprises directly or indirectly establish direct or indirect control over another enterprise/business) are regulated by the Competition Act, 2018 [CAP 46:09].

A proposed merger is notifiable if (a) the assets or revenue of the target enterprise exceeds BWP10,000,000; or (b) following implementation of the merger, the merging enterprises would control at least 20% of the relevant market.

A notifiable merger requires the prior written approval of the Competition and Consumer Authority. The Competition and Consumer Authority will make a determination on a proposed merger within 30 – 90 working days of formal notification by the merging parties.

A party may challenge a decision of the Competition and Consumer Authority before the Competition and Consumer Tribunal, and may, if it deems a further challenge necessary, challenge a decision of the Competition and Consumer Tribunal before the High Court of Botswana.

Legislation

Competition Act, 2018 [CAP 46:09].

CPI Index rank worldwide for 2022

Botswana ranks 35th under the Corruption Perception Index maintained by Transparency International with a score 60/100 for 2022.

UNAC ratified?

Yes, Botswana acceded to UNAC on 27 June 2011. UNAC has not been domesticated under extant Botswana law.

Ratified?

N/A

Signatories to United Nations Convention Against Corruption (UNAC)?

Yes

Signatories to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions

No

Signatories to the African Union Convention on Preventing and Combating Corruption?

No, but the African Union Convention on Preventing and Combatting Corruption was ratified by Botswana on 14 May 2014.

Enforcement of foreign judgments

Foreign judgments are recognisable and enforceable in Botswana in terms of the Judgments (International Enforcement) Act [CAP 11:04], which provides that foreign judgments may only be enforced where the judgments are given (i) in countries which accord substantial reciprocal treatment to judgments given in Botswana and (ii) by superior courts of that foreign country. Such judgments must be final and conclusive between the parties and must be for a particular sum of money payable (except a sum of money payable on the basis of taxes, fines or penalties).

Where a foreign judgement cannot be recognised or enforced in terms of the Judgments (International Enforcement) Act [CAP 11:04], the courts of Botswana may apply the common law to enable the recognition and enforcement of such foreign judgment. In assessing whether a recognition order should be granted, the courts of Botswana will consider the following factors:

• the foreign court must have international competence to decide the case;
• the judgement rendered must have been final and conclusive; and
• the recognition and enforcement of the judgement must not be against public policy.

Perception of the local courts

The courts of Botswana largely enjoy a positive perception locally and are relied upon to settle disputes.

That stated, there remains a negative perception of the courts that is attributable to (a) the cost of litigation; (b) geographical barriers associated with the location of courts; and (c) the complexity of court processes. These challenges have been mitigated by (a) the ability of non-lawyers to appear before the Industrial Court (which deals exclusively with trade disputes) and the Customary Courts (which deal primarily with customary law disputes and whose proceedings can be conducted in the Setswana language); (b) ongoing efforts by the Government of Botswana to construct more courts (and the introduction of mobile courtrooms to service some parts of the country); and (c) the introduction of simplified court processes before the Industrial Court and the Small Claims Courts (which deal exclusively with civil claims falling below BWP10,000).

There remain challenges with the expeditious settlement of court cases, as the courts of Botswana have struggled in recent times with a backlog of cases.

Judiciary and structure of the court system

The Constitution of Botswana provides that the President of Botswana appoints the Chief Justice and the Judge President of the Court of Appeal. All other judges are appointed by the President of Botswana following recommendation and in accordance with the advice of the Judicial Service Commission. The Botswana judicial system operates under the following hierarchy:

The Court of Appeal is the highest court in Botswana and is located in the capital city, Gaborone. The High Court is a superior court of Botswana and is located in the following Gaborone, Lobatse, Francistown, and Maun. The Industrial Court is a court of equal rank with the High Court and deals exclusively with trade disputes; it is located in Gaborone and Francistown. The Magistrate Court is subordinate to the High Court; it is located in various areas across Botswana and deals with a majority of litigation proceedings in Botswana.

In addition, there are also customary courts located in various areas in Botswana to deal with customary law disputes. Customary courts do not follow common law procedures or precedent.

Arbitration

Arbitration proceedings in Botswana are governed by the Arbitration Act [CAP 06:01], which currently does not follow the UNCITRAL Model Law.

Freedom of contract and choice of law are recognised under extant Botswana law, and parties are at liberty to adopt arbitration rules and procedures to suit their mutual needs.

Enforcement of FOREIGN arbitral awards

Botswana is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Consequently, foreign arbitral awards are recognisable and enforceable in Botswana in terms of the Recognition and Enforcement of Foreign Arbitral Awards Act [CAP 06:02].

Foreign investment incentives

The corporate tax is fifteen percent (15%) for corporates in the approved manufacturing sector and for companies holding International Financial Services Centre (IFSC) certificates issued by the Ministry of Finance and Economic Development.

In addition, Botswana:

• has no foreign exchange controls, therefore, foreign exchange flows freely and dividends/profits from investments are freely repatriable;
• has acceded to international conventions and is strictly observing internationally accepted guidelines on combating money laundering and financial crime;
• allows duty free importation of raw materials, machinery and equipment; and
• has a stable political environment and good governance and low corruption rates.

Companies certified by the IFSC have additional incentives, which include:

• a corporate tax rate of 15%;
• exemption from withholding taxes in Botswana;
• exemption from capital gains tax in Botswana;
• credits for withholding taxes levied elsewhere; and
• access to Botswana’s Double Taxation Treaty network.

Companies operating in special economic zones can benefit from a reduced corporate rate of 5% for the first 10 years of operation, and 10% for every year thereafter.

Foreign investor rules

There are no restrictions imposed on foreign investor participation and holdings of investments on the Botswana Stock Exchange.

Foreign investment restrictions/ Local ownership and empowerment

As at June 2023, there are not statutory limitations on foreign direct investment.

In terms of the Trade Act, 2019 [CAP 43:02] certain trades and businesses, primarily in the sector of small to medium size enterprises, have been reserved for citizens of Botswana (or companies wholly owned by citizens). Such trades and businesses include agent, auctioneer, car wash, cell phone shop, cleaning service, curio shop, dry-cleaning depot, florist, general dealer, general hire service, imported pre-owned motor dealer, internet café or copy shop, laundromat, fresh produce business, funeral parlour, hair or beauty parlour, and take-away food business. In addition, certain small-scale manufacturing enterprises are reserved for Botswana citizens or companies wholly owned by Botswana citizens.  

In addition, further reserved enterprises under the Industrial Development Act, 2019 [CAP 43:01] include bread and confectionary manufacturers, ice making, meat processing, peanut butter manufacturing, purification and bottling of water, traditional sour milk manufacturing, and sorghum manufacturing, as well as enterprises manufacturing bricks, burglar bars, gates and windows, candles, fencing materials (excluding gum poles), floor polish, packaging, protective clothing, roof trusses, school furniture, school uniforms, screen printing and embroidery, signage (including electronic signage), traditional crafts, and traditional leather products.

In terms of procurement of goods and services by the Government of the Republic of Botswana, the Minister of Finance may from time-to-time, and in terms of the Public Procurement and Asset Disposal Act [CAP 42:08], reserve certain contracts for citizens of Botswana (or companies wholly owned by citizens) or may implement preferential procurement schemes that favour citizens of Botswana (or companies wholly owned by citizens). The Minister of Finance may also prescribe any applicable procurement reservation and preference schemes to be applied by any procuring entity (i.e. any public body entity). Contracts awarded to non-citizen and/or foreign contractors may contain requirements for such contractors to sub-contract to Botswana contractors.

That stated, the Economic Inclusion Act, 2021, No. 26 of 2022 came into force on 20 April 2022. The Economic Inclusion Act, 2021 has been enacted to promote effective participation of “targeted citizens” (being citizens whose access to economic resources have been constrained by various factors as may be prescribed by the Minister of Entrepreneurship from time to time) in the economic growth and development of the economy, and to facilitate enforcement of the economic empowerment initiatives across the public and private sector. As at June 2023, the Minister of Entrepreneurship has not yet published guidelines on the qualifying criteria for “targeted citizens”.

General legislation

• Banking Act [CAP 46:04]
• Bank of Botswana Act [CAP 55:01]
• Botswana Stock Exchange (Transition) Act [CAP 56:11]
• Capital Transfer Tax Act [CAP 53:02]
• Collective Investment Undertakings Act, 2021 [CAP 46:04]
• Communications Regulatory Authority Act [CAP 72:03]
• Companies Act [CAP 42:01]
• Competition Act, 2018 [CAP 46:09]
• Consumer Protection Act, 2018 [CAP 42:07]
• Corruption and Economic Crime Act [CAP 08:05]
• Data Protection Act, 2018, No. 32 of 2018
• Deeds Registry Act [CAP 33:02]
• Economic Inclusion Act, 2021, No. 26 of 2021
• Employment Act [CAP 47:01]
• Financial Intelligence Act, 2022 [CAP 08:07]
• Immigration Act [CAP 25:02]
• Income Tax [CAP 52:01]
• Industrial Development Act, 2019 [CAP 43:01]
• Insolvency Act [CAP 42:02]
• Insurance Industry Act, 2014 [CAP 46:01]
• Non-Bank Financial Institutions Regulatory Authority Act [CAP 46:08]
• Securities Act [CAP 56:08]
• Special Economic Zones Act, 2015 [CAP 43:13]
• Trade Act, 2019 [CAP 43:02]
• Tribal Land Act, 2018 [CAP 32:02]
• Transfer Duty Act [CAP 53:01]
• Value Added Tax Act [CAP 50:03]

Botswana operates under a source-based taxation regime. Taxes are administered and collected by central government through the Botswana Unified Revenue Service. Generally, corporate tax is charged on the taxable income of all companies, unless exempted by law, whilst income tax is charged on the taxable income of all individuals and in terms of a progressive scale.

Corporate tax

Corporate tax is levied at an effective rate of 22% on all taxable profits of resident companies, and 30% in respect of non-resident companies.

Companies engaged in manufacturing activities may apply to the Minister of Finance for a special tax rate that permits them a tax rate of 15%.

IFSC companies also benefit from a tax rate of 15%.

Companies accredited under the Special Economic Zones Act, 2015 [CAP 43:13] are taxed at 5% for the first 10 years of operation, and then 10% for every year after.

Companies that are members of the Botswana Innovation Hub may be eligible for a reduced tax rate of 15%.

Real property tax

Transfer duty is levied on the transfer of immovable property under the Transfer Duty Act [CAP 53:01]. Where the person liable to pay transfer duty is a citizen of Botswana, a rate of 5% of the purchase price or value of the property is applicable. Where the person liable to pay transfer duty is not a citizen of Botswana, the applicable rate shall be 10% of the purchase price or value of the property up to BWP 2,000,000.00, and 15% of the purchase rice or value of the property in excess of BWP 2,000,000.00.

In addition, local authorities (i.e. municipal authorities) charge a real estate taxes to owners of properties located in urban and semi-urban areas.

Interest

The interest payable to residents is taxed at a rate of 10% for residents and 15% in the case of non-residents.

Value added tax

The percentage of value -added tax (VAT) is 14% for standard -rated supplies. Zero -rated supplies (such as agricultural implements, vegetables, cooking oil, sanitary pads, tampons etc.), on the other hand, have a VAT rate of 0%.

Technical services (management/consultancy) fees

Technical service fees payable to non -residents are taxed at 15%.

Personal income tax

In the case of resident individuals, income tax shall be deducted as follows:

There is no social security tax under extant Botswana law.

There is no payroll tax under extant Botswana law, save that employers are required under the Income Tax Act [CAP 52:01] to withhold taxes under a PAYE taxation system.

Royalties

The tax on royalty payments to non-residents is 15%.

Exchange control

There are no exchange control provisions under extant Botswana law.

Transfer pricing

Transfer pricing is regulated under the Income Tax Act [CAP 52:01] and the Income Tax (Transfer Pricing) Regulations. Where a person engages directly or indirectly in any transaction, operation or scheme with a connected person, the amount of each person’s taxable income derived from the transaction must be consistent with the arm’s length principle. A transaction shall be consistent with the arm’s length principle where the conditions of the transaction do not differ from the conditions that would have applied between independent persons in comparable transactions carried out under comparable circumstances.

Stamp duty

There is no stamp duty under extant Botswana law.

Capital transfer tax

Capital transfer tax is charged the transfer of corporeal or incorporeal property, whether movable or movable, transferred by way of gift of or inheritance. It is levied at the rate of 12.5% where the beneficiary is a company and at a maximum rate of 5% where the beneficiary is an individual.

Capital deductions
Capital gains tax

Capital gains tax is regulated in terms of the Income Tax Act [CAP 52:01] which provides that in the case of an individual, the tax payable on the amount of their net aggregate gains shall be calculated as follows:

Capital gains tax is levied at a rate of 22% for resident companies and 30% for non-resident companies.

Dividends

Dividends are taxed at the rate of 10%. Where a double taxation agreement applies this rate may be reduced to as low as 5%.