ARRANGEMENT OF SECTIONS
SECTION
PART I
Preliminary
1. Short title
2. Interpretation
PART II
Establishment, Constitution and Objectives
3. Establishment of central bank
4. Objectives of Bank
4A. Operational independence of the Bank
4B. Functions of the Bank
4C. Power to issue directives, circulars, notices, etc.
PART III
Capital, Profits and Reserves
5. Capital
5A. Coverage of shortfall in capital
6. Profits, losses and distributable earnings
7. General Reserve
PART IV
Board, Management and Staff
8. Establishment and powers of Board
9. Membership of Board
10. [Repealed.]
11. Vacancy
12. Meeting and quorum of Board
13. Governor and Deputy Governors
13A. Powers and functions of Governor
14. Ineligibility
15. Disqualification and removal from office
16. Resignation
16A. Cooling-off period
17. Appointment of officers, employees, agents and correspondents
18. Conflict of interest
19. Secrecy
19A. Establishment, powers and functions of Monetary Policy Committee
19B. Membership of Monetary Policy Committee
PART V
Monetary Unit, Notes and Coins
20. Monetary unit
21. Exchange rate
22. Sole right to issue notes and coins
23. Notes and coins to be legal tender
24. Manufacture and characteristics of notes and coins
25. Power to recall currency
26. Exchange of notes and coins
27. Penalty for mutilation of notes
28. Recovery of lost or stolen notes and coins
29. Counterfeiting, forgery, etc.
PART VI
International Reserve
30. Authority to transact foreign exchange business
31. Primary International Reserve
32. Adequacy of Primary International Reserve
33. Operations in foreign exchange
34. Limitations
35. Long term investment funds
PART VII
Relations with Financial Institutions
36. Opening accounts for domestic financial institutions, etc.
37. Opening accounts for other institutions, etc.
38. Operations with account holders
38A. Lender of last resort
39. Determination of rates for discounts and advances
40. Primary reserve requirements
41. Regulation of interest and credit
42. Maximum amounts of foreign currency holdings or loans
43. Clearing facilities
43A. Deposit Insurance Scheme
43B. Licensing and oversight of clearing, payment and securities settlement systems, money or value transfer services
PART VIII
Regulation of Companies which have Applied for or been Issued with a Tax Certificate
44. Interpretation
45. Application
46. Exemptions
47. Supervisory and inspection powers
48. Power to inspect
49. Recommendations of Bank
50. Disclosure of information
51. Levying of fees
52. Offences
53. Penalty
PART IX
Relations with Government
54. Banker, fiscal agent of and adviser to Government
54A. Co-operation with Government and other authorities
54B. Establishment of Financial Stability Council
55. Bank depository of Government funds
56. Management of Government securities
57. Agency functions
58. Banker and fiscal agent to Government boards and agencies
59. Borrowings by Government and public bodies, etc.
60. Advances to Government
61. Transactions in Government securities
62. Prohibition on lending to Government
63. Agent for the administration of exchange control
64. Depository and fiscal agency for international financial organisations
65. Policy directives by the President
PART X
Accounts, Financial Statements and Financial Year
66. Accounts, records and financial year
67. External audit
67A. Audit Committee
68. Annual financial statements and reports
PART XI
General
69. Prohibited activities
70. Bank may call for information
71. Exemption from Banking Act
72. Exemption from taxes, etc.
72A. Indemnity
72B. Restriction on execution against property of Bank
72C. Preferential right
73. Regulations
74. Repeal and saving
Act 19, 1996,
Act 19, 1999,
Act 2, 2007,
Act 24, 2022,
S.I. 8, 2023,
S.I. 73, 2023.
An Act to provide for the establishment of the Bank of Botswana, its constitution, objectives and powers; to regulate the issue of Bank notes and coins; to provide for certain matters connected with banking, currency and coinage, and for matters connected therewith and incidental thereto.
[Date of Commencement:1st January, 1997]
PART I
Preliminary (ss 1-2)
This Act may be cited as the Bank of Botswana Act.
In this Act, unless the context otherwise requires—
"Bank" means the Bank of Botswana established under section 3;
"Board" means the Board of the Bank established under section 8;
"deposit" means a sum of money—
(a) paid by one person to another person denominated in Botswana Pula or any other recognised currency; and
(b) subject to an agreement in terms of which an equal amount or any part thereof may be conditionally or unconditionally repaid by the person to whom the money has been paid—
(i) with or without interest or premium,
(ii) either on demand or at specified or unspecified time, and
(iii) in circumstances agreed by or on behalf of the persons making the payments and the person receiving such payment,
and such deposit is not referable to the provisions of property or services, other than the transmission of money by mobile telephone or electronic system or other giving of security to be rendered;
[24 of 2022, s. 2.]
"Deputy Governor" means a deputy governor appointed under section 13;
"financial institution" means—
(a) a bank as defined under the Banking Act (Cap. 46:04);
(b) a person licensed under this Act to carry out on business of buying and selling foreign exchange; or
(c) a non-bank financial institution as defined under the Non-Bank Financial Institutions Regulatory Authority Act (Cap. 46:08);
[24 of 2022, s. 2.]
"financial institution", "bank" and "licensed" shall have the same meanings ascribed thereto under the Banking Act (Cap. 46:04);
"Governor" means the Governor of the Bank appointed under section 13;
"International Financial Reporting Standards" means the most recent and applicable international accounting standards issued by the International Accounting Standards Board;
[24 of 2022, s. 2.]
"legal tender" means currency which, legally, cannot be refused to settle debt or to effect payment at an agreed price;
"member" means a member of the Board and includes the Governor;
"Monetary Policy Committee" means the Committee established under section 19A;
[24 of 2022, s. 2.]
"officer" means an employee of the Bank who is authorised by the board to sign legal or other documents on behalf of the Bank;
"ordinary revenue" means all revenue from taxes, duties, fees, rents, profits and income from any investment or undertaking by the Government and any contribution to the revenue of the Government from any statutory corporation, but shall not include loans, grants, other forms of economic aid or capital raised and the average of the annual ordinary revenues for the three financial years immediately preceding for which audited accounts are available;
[24 of 2022, s. 2.]
"public issue" means any financial instrument issued or guaranteed by Government, which members of the public are eligible to hold.
PART II
Establishment, Constitution and Objectives (ss 3-4C)
3. Establishment of central bank
(1) There is hereby established a central bank, to be known as the Bank of Botswana, which shall be a body corporate with perpetual succession and a common seal, capable of suing and being sued in its corporate name and which, subject to the provisions of this Act, may hold and dispose of movable and immovable property and do all such other things as are necessary for or conducive to the proper carrying out of its objectives and the performance of its functions.
(2) The Bank shall have its head office in Gaborone and may establish branches in Botswana and, with the approval of the Minister, abroad, and may appoint agents and correspondents in Botswana and abroad.
(1) The primary objective of the Bank shall be to achieve and maintain domestic price stability.
[24 of 2022, s. 3.]
(2) Subject to subsection (1), the Bank shall contribute to the stability of the financial system and foster and maintain a stable, sound and competitive market-based financial system.
[24 of 2022, s. 3.]
(3) Without prejudice to subsections (1) and (2), the Bank shall support national economic development goals.
[24 of 2022, s. 3.]
(4) In the attainment of the objectives set out in this section, the Bank shall have and may exercise all the powers generally conferred upon a central bank.
[24 of 2022, s. 3.]
4A. Operational independence of the Bank
The Bank shall be operationally independent in pursuit of its primary objectives, and in the performance of its functions under this Act, shall act without fear, favour or prejudice or direction of any person, authority or institution.
[24 of 2022, s. 4.]
The functions of the Bank shall be to—
(a) formulate and implement monetary policy;
(b) formulate and implement policies to maintain financial stability;
(c) implement the exchange rate policy;
(d) conduct foreign exchange operations;
(e) hold and manage the official foreign exchange reserves of Botswana;
(f) issue and manage the currency of Botswana;
(g) establish, promote, regulate and oversee safe, sound, efficient payment, clearing and securities settlement systems, operators and providers under this Act or any legislation;
(h) regulate, license and supervise banks and such other financial institutions as may be specified in this Act or any legislation and impose remedial measures and administrative sanctions on banks and other financial institutions as may be specified in this Act or in the Banking Act;
(i) act as a banker to banks and other financial institutions as the Board may decide;
(j) provide services as banker, advisor and act as fiscal agent to the Government;
(k) collect data and produce statistics in accordance of its mandate under this Act;
(l) advise the Council on any potential risks to financial stability;
(m) propose recommendations, actions or programmes for adoption by the Council;
(n) periodically issue publications about its policies, functions and operations and the achievements of its objectives; and
(o) carry out any ancillary activities incidental to the exercise of its functions under this Act or any legislation.
[24 of 2022, s. 4.]
4C. Power to issue directives, circulars, notices, etc.
(1) The Bank shall have the power incidental or ancillary to give effect to its objectives and to carry out its functions to issue Bye-laws, directives, circulars, notices and guidelines.
[24 of 2022, s. 4.]
(2) A bank or a financial institution that falls under this Act shall comply with the requirement issued under subsection (1).
[24 of 2022, s. 4.]
(3) A person or a financial institution that fails to comply with a requirement issued by the Bank under subsection (1), commits an offence and is liable to a fine not exceeding P2 500 000 or to imprisonment for a term not exceeding 10 years.
[24 of 2022, s. 4.]
PART III
Capital, Profits and Reserves (ss 5-7)
(1) The authorised capital of the Bank, fully subscribed and paid-up, shall be P150 000 000.
[24 of 2022, s. 5.]
(2) The authorised capital stock of the Bank shall be held solely by the Government and shall not be transferrable in whole or in part or be subject to any encumbrance whatsoever.
[24 of 2022, s. 5.]
(3) The authorised capital of the Bank may be increased by such an amount as may be proposed by the Bank and approved by the Government and no reduction of the authorised capital shall be permitted at any time.
[24 of 2022, s. 5.]
5A. Coverage of shortfall in capital
(1) In the event the audited annual financial statements of the Bank show that the value of the Bank’s assets has fallen or is below the sum total of its liabilities and its unimpaired authorised capital and the general reserve, the Board, with advice of the external auditor of the Bank, shall assess the situation and examine the report on the causes and extent of the shortfall, within a period of not more than 30 days.
[24 of 2022, s. 6.]
(2) In the event the Board approves the report under subsection (1), the Bank shall request the Minister for a capital contribution by the Government to remedy the deficit.
[24 of 2022, s. 6.]
(3) Notwithstanding any other provision of this Act, the Minister shall cause to be transferred to the ownership of the Bank, non-negotiable, non-interest bearing securities at market rate, issued by the Government from time to time, for such an amount which in the opinion of the Board may be necessary for the purpose of preserving the Bank’s capital from any impairment.
[24 of 2022, s. 6.]
6. Profits, losses and distributable earnings
(1) The net profits or losses of the Bank shall be determined in accordance with the International Financial Reporting Standards and such other relevant international accounting standards applicable to central banks.
[24 of 2022, s. 7.]
(2) The Bank shall at the end of each financial year, transfer any net profits from its operations to the Government in accordance with a schedule to be agreed between the Bank and the Minister after—
(a) meeting all expenses for such year;
(b) making provision for bad and doubtful debts;
(c) making provision for depreciation of physical assets;
(d) making provision for pensions, gratuities and other benefits for its officers and employees;
(e) making provision for such other items as the Board may deem necessary;
(f) making good the issued capital and General Reserve balances; and
(g) deducting any amounts due and payable to the Bank by the Government.
[24 of 2022, s. 7.]
(3) Any net losses incurred by the Bank in any financial year shall, after the Bank has advised Government thereof, be charged first to the General Reserve and then to the capital.
[24 of 2022, s. 7.]
(4) In determining profits and losses at the end of the financial year, the Bank shall clearly distinguish profits and losses arising from normal operations and profits and losses arising from exchange fluctuations.
[24 of 2022, s. 7.]
(5) The distributable earnings for allocation under subsection (2) shall be determined as follows—
(a) by deducting from net profits the total amount of unrealised revaluation gains and by allocating an equivalent amount to the respective unrealised revaluation reserve accounts; and
(b) by deducting from the unrealised revaluation reserve accounts and adding to the distributable earnings as determined under paragraph (a) the amount of any unrealised profit that was deducted from the net profits for one or more previous years and was realized during the current financial year.
[24 of 2022, s. 7.]
(6) Unrealised revaluation losses shall be transferred by the Bank to the respective unrealised revaluation reserve accounts until such time as the revaluation reserve accounts have zero balance, then be charged against the current year’s realised income until such time the income is zero, after which the losses shall be covered by the current year’s profit, then by the general reserve.
[24 of 2022, s. 7.]
(1) The Bank shall establish and maintain a General Reserve sufficient to enable it to accomplish its principal objectives, the amount of which General Reserve shall be determined from time to time by the Board in consultation with the Minister.
(2) The Bank may transfer, to the General Reserve, funds from other reserve accounts which it maintains.
PART IV
Board, Management and Staff (ss 8-19B)
8. Establishment and powers of Board
(1) There shall be a Board of the Bank, constituted in accordance with section 9, in which, subject to the provisions of this Act, shall be responsible for the policy and general administration of the Bank.
[24 of 2022, s. 8.]
(2) The Board shall—
(a) formulate and adopt policies of the Bank, other than monetary policy;
(b) supervise implementation of policies and execution of functions of the Bank;
(c) appoint external auditors;
(d) appoint the executive management of the Bank;
(e) on the recommendation of the Monetary Policy Committee, approve the issuance of debt certificates by the Bank;
(f) appoint such committees, as the Board may consider necessary for the discharge of the functions of the Bank;
(g) determine general policies and adopt Bye-laws and internal rules applicable to the administration and operations of the Bank;
(h) determine the organisation of the Bank, including the establishment and location of branches, representative offices, and operations facilities;
(i) approve the appointment of officers to the post of Deputy Head of Department, including that of the head of the internal audit function in the Bank;
(j) determine and approve the Staff Establishment necessary to fulfil the functions of the Bank and the general terms and conditions of service for staff, including allowances and other benefits;
(k) approve the budget of the Bank;
(l) determine the accounting policies of the Bank and approve the annual report, other formal reports and financial statements of the Bank;
(m) determine the categories of assets that shall be suitable for investment of the Bank’s financial resources, as well as those assets in which to invest the official foreign reserves;
(n) approve or deny the issuance of licences for clearing, payment and securities settlement systems operators and providers subject to this Act or any other Act;
(o) approve or deny the issuance by the Bank of licences for banks and other financial institutions, subject to this Act or any other Act;
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