Botswana - Grant from Middle Income Country Technical Assistance Fund to assist the Non-Bank Financial Institutions Regulatory Authority (NBFIRA) in implementing a Risk Based Regulatory Framework


Project Summary

Approval Date 22 Sep 2010
Signature Date 24 Jan 2011
Planned Completion Date 31 May 2015
Last Disbursement Planned Date 31 May 2015
Sovereign / Non-Sovereign Sovereign
Sector Multi-Sector
DAC Sector Code 15124
Commitment U.A 600,000
Status Completion

Project Objectives

Economic diversification has been a central objective of Botswana's development policy, in recognition of the excessive dependence of Botswana's economy on diamonds (Government Paper No 2 of 1984). Results to date have however been mixed: Botswana achieved an impressive average growth rate of 8% since the 1980s and the share of mining in Botswana's GDP declined from 48% in 1990 to 34% in 2008 - services, including financial services have grown from 34% to 49% over the same period. However, other sectors, identified as strategic, have stagnated or declined. For example manufacturing has decreased from 5% to 3% over the same period. As a result, accelerating economic diversification remains an important Government agenda. Economic diversification has become even more relevant in the wake of the recent global economic crisis. Indeed, the decline in diamond prices has weakened Botswana's fiscal position and negatively affected the performance of the economy as a whole. In response to the crisis, the African Development Bank provided in 2009 to the Government of Botswana an Economic Diversification Support Loan (EDSL) of US$ 1.5bn to bridge the revenue gap and support economic diversification reforms, of which 66% has been already disbursed. The development of financial services, including the non-banking financial sector, plays a key role in the country's economic diversification strategy. National Development Plan 10 aims at positioning Botswana as the financial services center of Southern Africa. As part of this strategy, the Non-Banking Financial Institutions Regulatory Authority of Botswana (NBFIRA) was established in 2008; NBIFIRA regulates pensions, insurances and capital markets and aims at fostering the stability, fairness and efficiency of the non-bank financial sector, and hence enhance its attractiveness. The objective of the proposed project is to enable NBFIRA to deliver first class regulation by setting up a Risk Based Regulatory Model (RBRM). Risk based regulation is recognized as the international best practice. One of its key benefits is to help the regulator focus its attention on systemic risks, while allowing for limited and necessary failures to occur, as part of normal market dynamics.

Participating Organization

Funding
Middle Income Countries Fund
Extending
Government Of Botswana
Implementing
GOVERNMENT OF BOTSWANA

Information

IATI identifier 46002-P-BW-KA0-004
Last Update 21 Oct 2020

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Contact Details

Name KOMA Baboucarr
Email b.koma@afdb.org

Geographic Location

Country Botswana
Coordinates Location Name
-24.6545 25.9086 Gaborone