5 - Illicit Capital Flows and Money Laundering in Botswana: An Institutional Economic Analysis
Corresponding Author(s) : Patricia Kefilwe Mogomotsi
Africa Development,
Vol. 45 No. 1 (2020): Africa Development
Abstract
Despite the success story of Botswana’s economy, the country is among other southern African countries that are highly prone to money laundering and illicit financial flows. Botswana has been regarded as one of the global conduits for illicit economic activities. Approximately US$ 1.1 billion and US$ 1.2 billion illicit financial flows were recorded in 2004 and 2013 respectively. However, there is a dearth of literature on the illicit financial flows in Botswana that takes into account the peculiar institutions, transactions and markets in Botswana. This study therefore aims to contribute to the body of literature by using document analysis and an institutional approach to analyse illicit financial flows in Botswana. The results show that over the years, tremendous efforts have been made to respond to money laundering and related offences. However, some deficiencies still remain. It is essential for financial institutions to carry out remedial exercises in their customer due diligence data in order for them to have useful profiles for risk management purposes. Furthermore, inter-agency co-operation and co-ordination should be enhanced and promoted in order to combat illicit capital flows and money laundering.
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- Best, P., Manktelow, R. and Taylor, B., 2014, ‘Online communication, social media and adolescent wellbeing: a systematic narrative review’, Children and Youth Services Review, Vol. 41, pp. 27–36.
- Brousseau, E. and Glachant, J.M., 2008, eds, New Institutional Economics: A guidebook,Cambridge: Cambridge University Press.
- Castle, E.N., 1999, ‘Natural resource and environmental economics: a retrospective view’, Reviewof Agricultural Economics, Vol. 21, No. 2, pp. 288–304.
- Chang, H.J., 2010, Hamlet without the Prince of Denmark: How Development Has Disappeared from Today’s “Development” Discourse. In Khan, S. and Christiansen, J. (eds.), Towards New Developmentalism: Market as Means rather than Master, Abingdon: Routledge, pp. 47–58.
- Coase, R.M., 1984, ‘The institutional economics’, Journal of Institutional and Theoretical Economics,Vol. 140, pp. 229-231.
- Davis, L.E and North, D., 1971, Institutional Change and American Economic Growth, Cambridge: Cambridge University Press.
- Drobak, J.K., and Nye, J.V., 1997, The Frontiers of the New Institutional Economics, California: Academic Press.
- ESAAMLG, 2007, ‘Mutual Evaluation/Detailed Assessment Report: Anti Money Laundering and Combating the Financing of Terrorism’, Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), Dares Salaam.
- Evensky, J.M., 2004, ‘Economics in Context: On Institutions, Civic Ethics, and Liberal Civil Society’, Journal of Economic Education, Vol. 35, No. 2, pp. 197-211.
- Ferrari-Filho, F., and Conceição, O.A., 2005, ‘The concept of uncertainty in post Keynesian theory and in institutional economics’, Journal of Economic Issues,Vol. XXXIX, No. 3, pp. 579–94.
- FSB, 2012, Shadow Banking: Strengthening Oversight and Regulation, European Commission.
- Furubotn, E. and Richter, R., 1991, ‘New institutional economics: An assessment’, in E. Furubotn and R. Richter, eds., The new institutional economics, College Station, TX: Texas A&M Press.
- HLP, 2016, ‘Illicit financial flows: report of the high level panel on illicit financial flows from Africa’. Available at: https://www.uneca.org/sites/default/files/PublicationFiles/iff_main_report_ 26feb _en.pdf. Accesed on 2 Febuary 2018.
- Kar, D., and Leblanc, B., 2013, Illicit Financial Flows from Developing Countries: 2002–2011, Washington DC: Global Financial Integrity.
- Kar, D., and Spanjers, J., 2015, Flight Capital and Illicit Financial Flows to and from Myanmar: 1960–2013, Washington DC: Global Financial Integrity.
- MacDonald, G., 2003, Using Systematic Reviews to Improve Social Care, London: Social Care Institute for Excellence.
- Macher, J. and Richman, B., 2006, ‘Transaction Cost Economics: An Assessment of Empirical Research in the Social Sciences’, unpublished manuscript, Georgetown University.
- Madigele, P.K., 2014, Shadow Banking: Financial Market Analysis, Munich: GRIN Publishing.
- Martin, P., 2008, ‘A closer look at Botswana’s development: the role of institutions’, Paterson Review, Vol.9, pp. 35–54.
- Matthews, R.C., 1986, ‘The economics of institutions and the sources of economic growth’, Economics Journal, Vol. 96, No. 4, pp. 903–18.
- Menard, C. and Saleth, R.M., 2011, ‘The effectiveness of alternative Water Governance Arrangements’, in M. Young (ed.), Towards a green economy, Nairobi: United Nations Environment Program, pp. 1–29.
- Nee, V., 2003, ‘New institutionalism, economic and sociological’, in N. Smelser and R. Swedberg, eds, Handbook for Economic Sociology, Princeton: Princeton University Press, pp. 3–71.
- North, D., 1990, Institutions, Institutional Change, and Economic Performance, Cambridge: Cambridge University Press.
- North, D., 1991, ‘Institutions’, Journal of Economic Perspectives, Vol. 5, No. 1, pp. 97–112.
- North, D., 2003, The role of institutions in economic development, Discussion Paper Series no.2003.2., Geneva: United Nations Economic Commission for Europe.
- OECD, 2012, Development Aid at a Glance – Statistics by Region, Paris: OECD.
- Okogbule, N.S., 2000, ‘Regulation of money laundering in Africa: the Nigerian and Zambian approaches’, Journal of Money Laundering, Vol. 10, No. 4, pp. 449–73.
- Republic of Botswana, 1974, ‘Botswana Law Report 48 (HC): State v. Jacobs’, Government Printers, Gaborone.
- Republic of Botswana, 1994, ‘Corruption and Economic Crimes Act’, Government Printers ,Gaborone.
- Republic of Botswana, 2007, ‘Proceeds of Serious Crimes Act (POSCA)’, Government Printers, Gaborone.
- Republic of Botswana, 2009, ‘Financial Intelligence Act’, Government Printers, Gaborone.
- Rossiaud, S., and Locatelli, C., 2010, ‘Institutional economics’, POLINARES Working Paper No. 2.
- Rutherford, M., 1995, ‘The old and the new institutionalism: can bridges be built?’, Journal of Economic Issues, Vol. 29, No. 2, pp. 443–50.
- Rutherford, M., 2001, ‘Institutional economics: then and now’, Journal of Economic Perspectives, Vol. 15, No. 3, pp. 173–94.
- Saleth, R.M., and Dinar, A., 2004, A Cross-Country Analysis of Institutions and Performance, Cheltenham: Edward Elgar.
- Salomon, M., and Spanjers, J., 2017, Illicit Financial Flows to and from Developing Countries: 2005–2014, Washington, DC: Global Financial Integrity.
- Taylor, I., 2006, ‘The limits of the “African Miracle”: academic freedom in Botswana and the deportation of Kenneth Good’, Journal of Contemporary Africa Studies, Vol. 24, No. 1, pp. 101–22.
- Thoumi, F. and Anzola, M., 2012, ‘Illicit Capital Flows and Money Laundering in Colombia’, in P. Reuter, ed., Draining Development: Controlling Flows of Illicit Funds from Developing Countries, Washington, DC: The World Bank.
- UN, 2013, Millenium Development Goals Report 2013, New York: UN.
- UNECA, 2013, ‘The State of Governance in Africa: The dimension of Illicit Financial Flows as a Governance Challenge’, Addis Ababa: UNECA.
- UNECA, 2015, ‘Impact of illicit financial flows on domestic financial mobilisation: Optimizing Africa’s mineral revelunes’, Draft Report, Addis Ababa: UNECA.
- van der Poel, N., van Gerwen, F. and Olomi, D., 2005, ‘Reforming Institutions aimed at Improving the Enabling Environment for Pro-Poor Private Sector Development, Tanzania case study’, International conference on Reforming the Business Environment from assessing problems to measuring results Cairo, Egypt 29 November – 1 December 2005.
- Williamson, O.E., 1995, ‘Hierarchies, Markets and Power in the Economy: An EconomicPerspective’, Industrial and Corporate Change, Vol.4,pp. 21 – 49.
- Williamson, O.E., 1998, ‘The institutions of governance’, The American Economic Review, Vol. 88, No. 2, pp. 75–79.
- Williamson, O.E., 2000, ‘The new institutional economist: taking stock, looking ahead’, Journal of Economic Literature, Vol. 38, No. 3, pp. 595–613.
References
Best, P., Manktelow, R. and Taylor, B., 2014, ‘Online communication, social media and adolescent wellbeing: a systematic narrative review’, Children and Youth Services Review, Vol. 41, pp. 27–36.
Brousseau, E. and Glachant, J.M., 2008, eds, New Institutional Economics: A guidebook,Cambridge: Cambridge University Press.
Castle, E.N., 1999, ‘Natural resource and environmental economics: a retrospective view’, Reviewof Agricultural Economics, Vol. 21, No. 2, pp. 288–304.
Chang, H.J., 2010, Hamlet without the Prince of Denmark: How Development Has Disappeared from Today’s “Development” Discourse. In Khan, S. and Christiansen, J. (eds.), Towards New Developmentalism: Market as Means rather than Master, Abingdon: Routledge, pp. 47–58.
Coase, R.M., 1984, ‘The institutional economics’, Journal of Institutional and Theoretical Economics,Vol. 140, pp. 229-231.
Davis, L.E and North, D., 1971, Institutional Change and American Economic Growth, Cambridge: Cambridge University Press.
Drobak, J.K., and Nye, J.V., 1997, The Frontiers of the New Institutional Economics, California: Academic Press.
ESAAMLG, 2007, ‘Mutual Evaluation/Detailed Assessment Report: Anti Money Laundering and Combating the Financing of Terrorism’, Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), Dares Salaam.
Evensky, J.M., 2004, ‘Economics in Context: On Institutions, Civic Ethics, and Liberal Civil Society’, Journal of Economic Education, Vol. 35, No. 2, pp. 197-211.
Ferrari-Filho, F., and Conceição, O.A., 2005, ‘The concept of uncertainty in post Keynesian theory and in institutional economics’, Journal of Economic Issues,Vol. XXXIX, No. 3, pp. 579–94.
FSB, 2012, Shadow Banking: Strengthening Oversight and Regulation, European Commission.
Furubotn, E. and Richter, R., 1991, ‘New institutional economics: An assessment’, in E. Furubotn and R. Richter, eds., The new institutional economics, College Station, TX: Texas A&M Press.
HLP, 2016, ‘Illicit financial flows: report of the high level panel on illicit financial flows from Africa’. Available at: https://www.uneca.org/sites/default/files/PublicationFiles/iff_main_report_ 26feb _en.pdf. Accesed on 2 Febuary 2018.
Kar, D., and Leblanc, B., 2013, Illicit Financial Flows from Developing Countries: 2002–2011, Washington DC: Global Financial Integrity.
Kar, D., and Spanjers, J., 2015, Flight Capital and Illicit Financial Flows to and from Myanmar: 1960–2013, Washington DC: Global Financial Integrity.
MacDonald, G., 2003, Using Systematic Reviews to Improve Social Care, London: Social Care Institute for Excellence.
Macher, J. and Richman, B., 2006, ‘Transaction Cost Economics: An Assessment of Empirical Research in the Social Sciences’, unpublished manuscript, Georgetown University.
Madigele, P.K., 2014, Shadow Banking: Financial Market Analysis, Munich: GRIN Publishing.
Martin, P., 2008, ‘A closer look at Botswana’s development: the role of institutions’, Paterson Review, Vol.9, pp. 35–54.
Matthews, R.C., 1986, ‘The economics of institutions and the sources of economic growth’, Economics Journal, Vol. 96, No. 4, pp. 903–18.
Menard, C. and Saleth, R.M., 2011, ‘The effectiveness of alternative Water Governance Arrangements’, in M. Young (ed.), Towards a green economy, Nairobi: United Nations Environment Program, pp. 1–29.
Nee, V., 2003, ‘New institutionalism, economic and sociological’, in N. Smelser and R. Swedberg, eds, Handbook for Economic Sociology, Princeton: Princeton University Press, pp. 3–71.
North, D., 1990, Institutions, Institutional Change, and Economic Performance, Cambridge: Cambridge University Press.
North, D., 1991, ‘Institutions’, Journal of Economic Perspectives, Vol. 5, No. 1, pp. 97–112.
North, D., 2003, The role of institutions in economic development, Discussion Paper Series no.2003.2., Geneva: United Nations Economic Commission for Europe.
OECD, 2012, Development Aid at a Glance – Statistics by Region, Paris: OECD.
Okogbule, N.S., 2000, ‘Regulation of money laundering in Africa: the Nigerian and Zambian approaches’, Journal of Money Laundering, Vol. 10, No. 4, pp. 449–73.
Republic of Botswana, 1974, ‘Botswana Law Report 48 (HC): State v. Jacobs’, Government Printers, Gaborone.
Republic of Botswana, 1994, ‘Corruption and Economic Crimes Act’, Government Printers ,Gaborone.
Republic of Botswana, 2007, ‘Proceeds of Serious Crimes Act (POSCA)’, Government Printers, Gaborone.
Republic of Botswana, 2009, ‘Financial Intelligence Act’, Government Printers, Gaborone.
Rossiaud, S., and Locatelli, C., 2010, ‘Institutional economics’, POLINARES Working Paper No. 2.
Rutherford, M., 1995, ‘The old and the new institutionalism: can bridges be built?’, Journal of Economic Issues, Vol. 29, No. 2, pp. 443–50.
Rutherford, M., 2001, ‘Institutional economics: then and now’, Journal of Economic Perspectives, Vol. 15, No. 3, pp. 173–94.
Saleth, R.M., and Dinar, A., 2004, A Cross-Country Analysis of Institutions and Performance, Cheltenham: Edward Elgar.
Salomon, M., and Spanjers, J., 2017, Illicit Financial Flows to and from Developing Countries: 2005–2014, Washington, DC: Global Financial Integrity.
Taylor, I., 2006, ‘The limits of the “African Miracle”: academic freedom in Botswana and the deportation of Kenneth Good’, Journal of Contemporary Africa Studies, Vol. 24, No. 1, pp. 101–22.
Thoumi, F. and Anzola, M., 2012, ‘Illicit Capital Flows and Money Laundering in Colombia’, in P. Reuter, ed., Draining Development: Controlling Flows of Illicit Funds from Developing Countries, Washington, DC: The World Bank.
UN, 2013, Millenium Development Goals Report 2013, New York: UN.
UNECA, 2013, ‘The State of Governance in Africa: The dimension of Illicit Financial Flows as a Governance Challenge’, Addis Ababa: UNECA.
UNECA, 2015, ‘Impact of illicit financial flows on domestic financial mobilisation: Optimizing Africa’s mineral revelunes’, Draft Report, Addis Ababa: UNECA.
van der Poel, N., van Gerwen, F. and Olomi, D., 2005, ‘Reforming Institutions aimed at Improving the Enabling Environment for Pro-Poor Private Sector Development, Tanzania case study’, International conference on Reforming the Business Environment from assessing problems to measuring results Cairo, Egypt 29 November – 1 December 2005.
Williamson, O.E., 1995, ‘Hierarchies, Markets and Power in the Economy: An EconomicPerspective’, Industrial and Corporate Change, Vol.4,pp. 21 – 49.
Williamson, O.E., 1998, ‘The institutions of governance’, The American Economic Review, Vol. 88, No. 2, pp. 75–79.
Williamson, O.E., 2000, ‘The new institutional economist: taking stock, looking ahead’, Journal of Economic Literature, Vol. 38, No. 3, pp. 595–613.