NBFIRA - Press Release
NBFIRA CONTINUING TO DO MORE FOR NON-BANK FINANCIAL INSTITUTIONS: A DECADE OF FINANCIAL STABILITY
- NBFI sector grows in strength and dynamism
- NBFI sector critical to socio-economic fabric of Botswana
- NBFIRA committed to countering Money Laundering and the financing of terrorism and proliferation in the NBFI sector
Botswana: the Regulator of Non-Bank Financial Institutions (NBFI’s), reflects on the growth of the NBFI sector during the Authority’s first decade in operation.
“During the past 10 years of the Authority’s existence, the NBFI sector has grown noticeably. In 2017 its assets were valued at P123 billion, accounting for 68% of the nation’s Gross Domestic Product, and made up 57% of total assets in the local financial system. That same year, the sector’s gross income was P 16,347 billion, contributing 9% to GDP. The NBFI sector has evolved in depth and sophistication and currently comprises of a wide array of new market players, products and services. Its centrality to the financial stability and socio-economic fabric of the nation is conspicuous.” said Sriram Gade, Deputy Chief Executive Officer - Regulatory of NBFIRA.
The sector comprised of 775 active entities in 2018, of which 80% operate in the non-bank lending activities and insurance industries.
The Non-Bank Lending industry’s growth was largely driven by a phenomenal 1546% increase in licensed micro-lenders, a 590% increase in pawn shops, as well as the introduction of exempted finance companies between 2013 and 2018. The industry’s loan book grew significantly and total assets increased by 56% over the same period.
During the decade Insurance industry’s gross written premiums grew by a commendable138% since 2008 and were recorded as P5 billion in 2017. This growth was primarily attributable to the increase in the number and range of products offered, as well as the rise in the public’s demand for insurance cover. There were new market entrants namely reinsurers, medical aid funds and insurers. Distribution channels were expanded to include mobile phone and post office services and the advent of two new industry associations for short term insurance and insurance brokers is a welcomed development.
Within the Retirement Funds industry, pension fund assets grew at an average rate of 10% over the period, predominantly driven by the 85% growth in membership levels, as well as rising income on investment and general pensionable salary. Levels of investment in equities has increased noticeably compared to other investment classes. The nation’s largest fund Botswana Public Officers Pension Fund (BPOPF) continued to constitute over 60% of total membership over the period.
The Capital Markets industry grew by an additional 52 licensed players as well as the advent of an additional seven (7) categories of operation within the industry. These include Asset Managers, IFSC accredited entities and management companies and trustees for Collective Investment Undertakings (CIU) thus representing increased sophistication and diversity of the industry. 2015 saw the BSE achieve record annual turnover (P3 billion) and volume of shares traded (P803.1 million) since its inception.
Gade elaborated that key regulatory developments during this period had a catalytic effect on the growth and dynamism of the sector holistically. Most notably the implementation of Prudential Rules for Insurance, Retirement Funds and Capital Markets in 2012, as well as the promulgation and commencement of the Micro-lending Regulations which also took place the same year.
“Also of great importance, was the introduction of the NBFIRA Act (2016), which replaced the previous NBFIRA Act (2006) that established the Authority. The new Act is structured to address the organization’s operational issues, while all regulatory provisions are captured under the relevant industry specific legal frameworks.” He said
Other regulatory milestones include the introduction of the Central Securities Depository (CSD) in 2008, which replaced the use of physical share certificates.
“It is worth noting that this growth and dynamism in the NBFI sector occurred against a backdrop of challenging macroeconomic conditions both globally and locally. Other significant factors at play were sector developments in international best practices and the advent of contemporary risks such as money laundering and terrorism financing. The Authority therefore aptly adopted a risk based supervisory approach to strengthen its nimbleness and ability to pre-emptively mitigate emerging risks” said Gade.
The Authority plays a supervisory role in ensuring the NBFI sector’s compliance to local laws and international best practices on the globally imperative issue of Anti-Money Laundering/Countering the Financing of Terrorism and Proliferation (AML/CFTP). The Authority is therefore part of the collaborative nationwide effort working toward the de-listing of Botswana by the Financial Action Task Force (FATF/ICRG).
Looking forward, Gade is ambitious about the future of the NBFI sector and its continued contribution toward the nation’s financial eco-system.
Notes To Editor
About Non-Bank Financial Institutions Regulatory Authority (NBFIRA)
Promulgated by an Act of Parliament in 2006, NBFIRA began its operations in 2008 and since then has achieved significant regulatory and supervisory milestones that have enabled the NBFI sector to grow and operate in line with international standards and best practices. The Authority oversees the NBFI sector which in 2017 had assets worth P123 billion, accounting for 57% of total assets in the local financial system. In 2018, the sector comprised of 775 active entities.
The Authority is governed by the NBFIRA Act (2016) which repealed the previous NBFIRA Act (2006).
For more information, please contact:
Boa M. Chombah
Head, Communications & International Affairs
Tel: +267 310 2595 / 368 6100
Email: bchombah@nbfira.org.bw
