This content is from: Local Insights


On February 19, the Bank of Botswana liberalized exchange controls. The liberalization falls short of a complete abolition of exchange controls, although this may occur in the next six to eight months.

A non-resident can now purchase up to 10% (from 5%) of the public float of a listed company without the permission of the Bank of Botswana, and the aggregate permitted share ownership in a given listed company for all non-resident portfolio investors has been increased from 49% to 55% of the company's public float. Non-residents are also permitted to invest unlimited amounts in pula-denominated bonds, although they still cannot buy Bank of Botswana Treasury Bills.

Repatriation of profits by non-residents has also been liberalized. Non-residents are allowed to repatriate proceeds of up to P100 million (US$26 million) on disinvestment. If the amount to be repatriated exceeds P100 million, it may be required to be repatriated in tranches over a period not exceeding three years.

Subject to certain limitations, non-resident controlled entities can now borrow locally up to the level of a debt to equity ratio of 10 to one without approval from the Bank of Botswana. Non-residents can now issue pula-denominated bonds, so long as they are listed on the Botswana Stock Exchange and have an original maturity in excess of one year.

In addition, the aggregate limit for outward direct and portfolio investment by resident individuals has been increased from P100,000 to P1 million per calendar year. For companies, the limit has been raised from P10 million to P30 million. Offshore borrowings by residents have also been liberalized. The limits have been increased from P100,000 to P200,000 for individuals and P1 million to P2 million for companies.

Residents are free to open foreign currency accounts within Botswana for any amount, although offshore bank accounts held by residents continue to be restricted by exchange control regulations.

Under former regulations, banks were restricted to offering forward contracts for a period not exceeding six months, or under limited circumstances, 24 months. Restrictions on the length of forward contracts offered by banks have now been removed entirely.

Michael R Littenberg

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