The NBFIRA regulates non-bank financial institutions in Botswana to ensure their safety, business conduct standards, fairness in the financial market, stability of the financial system, and reduction of financial crime. It licenses and monitors NBFIs like retirement funds, insurers, and capital markets. Challenges include limited capacity and skills, but NBFIRA promotes collaboration locally and internationally. Effective regulation requires balancing innovation with stability while protecting consumers and markets through principles like fair treatment of customers.

1. ADAPTING TO CHANGES IN
FINANCIAL SYSTEM, POLICIES AND
STRUCTURES
The Role of NBFIRA in Regulation, Experience and
Suggestions for DFIs.
O M RAMASEDI
Presented at the CEO Forum of the WFDFI, GABORONE – Nov 3, 2016

2. Presentation outline
 Introduction
 Mandate
 Purpose of Regulation
 Legislation & Regulated NBFIs
 Licensing and Fit & Properness of Key Personnel
 Regulatory Process (Slides 8 to 13)
 Challenges
 Lessons for DFIs
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3. INTRODUCTION
 NBFIRA was established by an Act of Parliament
 The Act was promulgated in 2006
 Started its operation on April 1, 2008
 The NBFIRA Act is a comprehensive “umbrella statute”
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4. MANDATE OF NBFIRA
 The principal object of NBFIRA is to supervise and regulate
non-bank financial institutions (NBFIs) so as to foster the:-
 Safety and soundness of NBFIs;
 High standards of business conduct;
 Fairness, efficiency and orderliness in the financial
market;
 Stability in the financial system; and
 Reduction and deterrence of financial crime
 Regulated Industries Include: Retirement Funds,
Insurance, Capital Markets and Lending Activities
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5. purpose of regulation
 To ensure through regulation and supervision that these
institutions remain financially healthy and stable in order
to meet their obligations towards their clients.
 To ensure that the consumers are adequately educated,
knowledgeable and protected in order to make informed
decisions over their financial matters (i.e. products and
services there are buying).
 To ensure that proper governance structures are in
place that will result in appropriate internal and external
controls of these institutions leading to financial strength of
the entities.
 Enhancement of public confidence
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6. Legislation
– NBFIRA Act
– Botswana Stock Exchange Act
(Securities Act – still to
commence)
– Insurance Industry Act (the
proposed Insurance Industry Act
is waiting for commencement)
– The International Insurance
Act 2005
– Pension and Provident Funds
( the proposed Retirement Funds
Act awaits commencement)
6
– Collective Investment
Undertakings (CIU) Act
(currently under review)
– The Income Tax Act and
Regulations (Part 2 –
Superannuation Fund)

7. Licensing & fit and properness
 All NBFIS are subject to Licensing Requirements
 Local Incorporation and Local Office Address
 Controllers are vetted for fit and proper at licensing and on
continuous basis
 Vetting is in terms of
 Qualification
 Competence
 Security Clearance
 General Conduct
7

8. Supervision and Monitoring
8
• Risk Base Methodology
– Set a risk tolerance
– Identify the Risk to NBFIRA
– Review the Impact of the problem,
and lastly
– The probability of the problem
occurring
– Linking supervisory resources and
responses to the risk scores.
• License
• Continuous Monitoring,
• Determine a risk rating
• Compliance and Enforcement
Status
Normal
Watch list
Remedial Action
On-Site Supervision
Restructure

9. Market Confidence
• NBFIRA ensures market confidence in several ways
• NBFIRA Act Section 7(C)
– ……Advising the Minister on matters related to non-bank financial
institutions and financial services, whether of its own accord or at the
request of the Minister
• NBFIRA Act Section 8
• be fair and consistent in their implementation of their mandate
• Deter financial crime - ensure there are standards in place – i.e. code of
conduct, corporate governance, risk policies, etc.
• NBFIRA Act Section 54 - 56
– Carry out inspections and investigations
• NBFIRA Act Section 73-75
– Statutory management
• Including – issuing ‘directives’, and collaborating with other
regulatory bodies locally and internationally
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10. Investor Protection
• The Authority strives to ensure Investor Protection
• Treating Customers Fairly (TCF)– Principles
– Culture & Governance -
– Product Suitability
– Disclosure
– Performance and Service in line with expectations
– Claims, Complaints, etc
– Business conduct
• Honesty and fairness
• Diligence
• Capability
• Information for customers
– Governance
• Conflict of interest
• Financial stability
• Capacity
• Approving rules for Self-Regulated Organisations
• Review of new products in the market
10

11. Tribunal
Also geared towards investor protection
The NBFIRA Act Section 85 – 88 provides for
 …a Tribunal shall be established and shall be
responsible for reviewing decisions made by
the Regulatory Authority or self regulatory
organization under this Act.
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12. Cooperation
• The Regulatory Authority has been given the
power to enter into arrangements with other
agencies as per Section 40 of the NBFIRA Act.
• In following the above NBFIRA has signed
Memoranda of Understanding with
12
Locally Regionally Internationally
• Bank of Botswana
• Botswana Unified Revenue Services
• Botswana Accounting Oversight
Authority
• Competition Authority Botswana
• Financial Intelligence Agency
• Committee for Insurance,
Securities & Non-Banking
Authorities, SADC (CISNA)
• Commissao Mercado De Capitais
of the Republic of Angola
• Financial Services Board (South
Africa)
• The Office of the Registrar of
Insurance & Retirement Funds
(Swaziland)
• Financial Services Commission
(Mauritius)
• Securities &
Exchange Board of
India

13. Regulatory Challenges
Capacity Building
Recruitment
Limited Funding Opportunities
IT Accessibility and bandwidth
Market dynamism
Lack of training facilities
Unavailability of skills in market
Limiting on line access
Balancing innovation with
financial stability
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14. 14
Effective
Regulation
Lessons for DFIs
COLLABORATION
COLLABORATION

15. Thank You
• Website: www.nbfira.org.bw
• Facebook page: Nbfirabw
• Email: info@nbfira.org.bw
• Tel: (+267) 368-6100