Investing in Botswana

Botswana's formal capital market is shaped primarily by Botswana's national stock exchange (Botswana Stock Exchange), abbreviated BSE. The BSE is the country's only stock exchange and is governed, among other laws, by the Securities Act and the Companies Act. Many non-bank financial services are supervised by the regulator for many non-bank financial services (Non-Bank Financial Institutions Regulatory Authority), abbreviated NBFIRA. At the time researched, the BSE dashboard showed 25 local shares, 9 foreign shares, 3 ETFs, 7 government bonds, 39 corporate bonds, 2 foreign bonds and one Serala OTC security, for a total of 83 listed securities. Available sectors include banking, financial services, tourism, energy, mining and minerals, real estate, telecommunications, agriculture and retail. The appropriate investment depends on the objective, time horizon, need for access to money, capacity to bear losses, tax status and currency risk. Shares can provide dividends and long-term capital growth, but their prices fluctuate. Corporate bonds combine interest payments with the issuer's credit risk. Government bonds and Treasury bills, known as T-Bills, are more suited to defined maturities and capital preservation, but they also provide no guaranteed outcome. ETFs and pooled investment vehicles (Collective Investment Undertakings), abbreviated CIUs, combine multiple investments. Real estate and direct company investments can generate rental income or business earnings, but they often tie up capital for longer and are harder to sell. Virtual assets remain a small and particularly high-risk asset class. Government bonds and T-Bills are auctioned monthly by the Bank of Botswana. T-Bills have maturities of 3, 6 or 12 months; benchmark bonds have maturities of 5, 10, 15, 20 or 25 years, depending on the issue. Access is provided through five Primary Dealers: Absa Bank, Access Bank, First National Bank, Stanbic Bank and Standard Chartered. These institutions facilitate participation in auctions and trading on the secondary market. Issue denominations differ by offering; for example, they may be P1,000 or P25,000. A longer maturity increases interest-rate and price risk, while a thinly traded security may incur a larger price discount when sold. For shares, bonds and ETFs, an investor opens a trading account with a licensed BSE broker and a securities account with Botswana's central securities depository (Central Securities Depository Botswana), abbreviated CSDB. The broker conducts identity and address checks and sends orders to the electronic trading platform (Automated Trading System). Retail clients typically need an Omang or passport, together with proof of income and residence. Companies submit, among other things, incorporation documents, director details, proof of address and income, and a board resolution. After execution, a contract note follows; settlement generally takes place on a delivery-versus-payment basis within T+3. There is no fixed minimum amount for shares because the price and quantity determine the capital invested. BSE trading hours are 09:50 to 14:00. The CSDB holds listed securities and processes dividends, rights issues and other corporate actions in accordance with the applicable deadlines. After settlement, the investor becomes a shareholder; voting and dividend rights also depend on the terms set by the respective issuer. Transfers between participants may take place without changing the beneficial owner. Inheritances require legal evidence, and gifts generally concern close family members. Securities may be pledged or blocked while pledged. In the event of default, the lender may acquire ownership through forced realization. The BSE Investor Compensation Fund protects eligible retail investors against misconduct or insolvency by a participant, but not against price losses. Compensation is limited to the lower of 5 percent of the fund and P500,000; claims must generally be filed within three years after the default, and payment may take up to six months. Institutional investors and defaults in CSDB settlement are excluded. CIUs include Unit Trusts and investment funds. A professional manager manages the assets; an independent trustee or custodian has separate fiduciary duties. NBFIRA licenses or recognizes these entities and prescribes permitted investments and limits. Open-ended CIUs generally repurchase units on request, but may restrict redemptions under certain suspension rules. The issue or redemption price is based on net asset value plus or minus applicable levies and fees. Before entering into a contract, the current annual and half-year reports should be available. At the time researched, the sector comprised 49 local CIU funds, 9 CIU management companies, 20 asset managers, 18 investment advisers and 3 custodians. The state does not guarantee performance. Retirement provision includes occupational defined-contribution schemes as well as private or personal pension solutions through pension funds and insurers, including the Botswana Public Officers Pension Fund. The Retirement Funds Act 2022 has been in force since 14 October 2022; NBFIRA supervises pension funds. Access is mainly intended for retirement. Deferred members may access funds early under certain conditions, such as after six months of unemployment and with evidence of hardship. According to NBFIRA information, an active member generally cannot simply withdraw all accumulated amounts. At retirement, up to 50 percent of the accumulated balance may be taken as a lump sum. Members receive an annual benefit or projection statement within 30 days after the audited annual financial statements and may make a beneficiary nomination; older nominations must be renewed regularly. Administration, fund and investment fees depend on the product. Direct investments in companies, agriculture, logistics, education, financial and business services, health, information and communications technology, manufacturing, mining or tourism may be supported through the investment and trade promotion agency (Botswana Investment and Trade Centre), abbreviated BITC, and the one-stop government service centre (Botswana One Stop Service Centre), abbreviated BOSSC. According to the information provided, there are no general foreign-exchange controls or general restrictions on corporate ownership, and profits or dividends can generally be repatriated. Non-citizens and foreign companies may apply through BITC, SPEDU or the relevant line ministry for state land not intended for residential use. Residential state land is primarily allocated to citizens and Botswana companies. An available state-land allocation may take approximately six months. Registration of a lease can take approximately one working day where the documents, passport and required ministerial approval are complete. Ownership and lease rights, changes of use, construction and sector permits, vacancy, concentration, exchange rates and limited liquidity create separate risks. Virtual assets are governed by the Virtual Assets Act 2022 in its revised 2025 version. NBFIRA licenses and supervises Virtual Asset Service Providers and certain initial token issuers. Securities do not fall within the definition of virtual assets. Such investments should be made only through licensed and verified providers because substantial price volatility, loss of private access keys, fraud, money-laundering and terrorist-financing risks, platform failures, low liquidity and regulatory changes may arise. The Bank of Botswana specifically warns against crypto offerings that promise quick wealth. Unlicensed deposit-taking, pyramid schemes and unauthorized investment offerings may fall outside investor protection or be unlawful. BSE transaction fees are charged exclusive of value-added tax. For shares, BSE charges 0.15 percent up to P5 million and 0.12 percent above that amount; CSDB charges 0.12 percent. For ETFs, BSE and CSDB fees up to P50,000 are P9.60 and P6.40 respectively, and above that threshold they are 0.01920 and 0.01280 percent respectively. For bonds, BSE fees are 0.010 percent and CSDB fees are 0.012 percent. Depending on the instrument and transaction, brokers typically charge 0.60 to 1.85 percent for shares, 0.20 to 0.50 percent for ETFs, and 0.025 percent or 0.010 percent for bonds below or above P1 million. Additional charges include P10 processing fees on purchases and P15 on sales, P100 for a CSDB withdrawal and P50 for a transfer. CIUs, pension funds, companies and real estate each have their own fees. The Botswana Unified Revenue Service (BURS) generally levies 15 percent withholding tax on dividends for residents and non-residents; double-taxation agreements may produce different results. Interest is generally subject to 10 percent withholding tax as an advance payment, although exceptions apply. On the disposal of shares, the net gain is calculated according to BURS requirements; 25 percent is deducted and 75 percent is treated as the taxable portion. Residents must declare foreign capital income. Before investing, product costs, tax status, currency, maturity, liquidity, concentration in individual issuers and the possibility of a total loss should therefore be part of the assessment.