Under the updated Non-Bank Financial Institutions Regulatory Authority (NBFIRA) Pension Fund Rules, local pension funds are required to gradually increase the proportion of assets they hold domestically to 50% in the years to December 2027.
According to the timetable, by December 2024, pension funds should have moved 41% of their assets onshore, a figure which equals P61.3 billion when using the September value of total pension funds assets. According to the central bank figures, as at September, the domestic assets largely comprised listed equities on the Botswana Stock Exchange at P20.9 billion and government bonds of P15.4 billion. The balance of domestic assets were invested in cash or near cash, property and equities either unlisted or dual listed.
According to NBFIRA’s guidelines, local pension funds are required to increase their domestic portfolios to 44% by December 2025, then 47% by December 2026 with full compliance of a minimum of 50% by December 2027.
Changes in the pension prudential rules were debated in the local capital market for over a decade, with an original proposal made by NBFIRA in 2010 to shift to a minimum of 70% domestic investments over 20 years. Government believes the new PFR 2 could boost the local economy through redirecting assets back home, investing in local infrastructure and fostering the development of the capital market through innovation.
