Efforts by the Bank of Central African States (BEAC) to tackle money laundering and restock woefully thin foreign exchange reserves are causing dire currency shortages and delays to transactions across the six-nation currency union, businesses say.
New BEAC rules introduced in June are aimed at bringing order to a monetary bloc awash with petrodollars which, owing to lax controls, often end up in offshore bank accounts after bypassing local economies completely.
The central African CFA union comprises former French colonies Chad, Congo Republic, Equatorial Guinea, Gabon, Cameroon and Central African Republic – all but the last of them among sub-Saharan Africa’s top oil producers, whose financial dealings are among the world’s most opaque.
The rules include: that all forex transfers over a 1 million CFA francs ($1,680) be vetted for approval by the bank, and that all export proceeds above 5 million CFA ($8,400) be repatriated in 150 days to a local bank account.
The bank has also ordered onshore foreign currency accounts shut – some of which may be re-opened with its approval – and prohibited the use of offshore accounts by firms with a presence in the region without prior approval, two banking sources and Paris-based Gabonese banking analyst Mays Mouissi told Reuters.
Businesses have complained of waiting months to get hold of hard currency and of being unable to import materials or pay suppliers.
“Slow money transfers mean there is a reticence, a climate of mistrust between operators and their foreign partners,” Celestin Tawamba, President of the Cameroon Employers Group, told Reuters in a phone interview.
Big mining and oil companies with the most clout are lobbying against the changes, oil industry lobbyist NJ Ayuk, whose Centurion Law Group is representing some energy companies in their dispute with the bank, told Reuters.
“The new foreign exchange regulations do not sufficiently take into account the specific needs of mining activity, which is very export-oriented in markets denominated in U.S. dollars and euros,” French mining company Eramet, a major producer of manganese from mines in Gabon, said in an emailed statement.
Responding to complaints, BEAC in a directive seen by Reuters extended the deadline for companies to fully comply to Dec. 1 from the original Sept. 1.
Oil majors themselves declined to comment while negotiations were ongoing, as did other multinationals such as telecoms firms.