The African Energy Chamber has explained why it expects the Bank of Central African States to relax its currency control rules.
The Chamber, in a statement on Monday, joined oil industry stakeholders in calling on BEAC to relax its Forex regulations adopted in June 2019.
Last year, the BEAC introduced new rules controlling the flow of currency in Central Africa, to promote financial transparency and ensure that oil revenues stay within local economies and local banks.
While the Chamber continues to support sound and transparent revenue management and distribution across the oil and gas industry, it stated that the rules created a very unattractive environment for foreign investors seeking to invest in CFA union states.
Financial Street gathered from the new rules that all foreign exchange transfers over $1,680 would be vetted for approval by the bank, and all export proceeds above $8,400 be repatriated in 150 days to a local bank account. Unfortunately, such controls are causing transaction delays and preventing foreign investors to repatriate proceeds from their investment, which is a key condition for any attractive investment jurisdiction. With such controls and rules in place, Central African Economic and Monetary Community will suffer and become less attractive to credible investors.
Reacting, the Minister of Mines and Hydrocarbons of Equatorial Guinea, Gabriel Lima, called the measures deadly for the local oil and gas industry, stating that they could destroy economies and make it impossible to attract investments.
“Local and regional entrepreneurs will suffer and the oil sector will see a decline in investment,” he added.
Given the current scenario of historic low oil prices and coronavirus pandemic, the Chamber calls on the BEAC to listen to industry voices and concerns and relax such currency controls to maintain the region’s attractiveness as an investment destination.
Said the minister, “The FX Regulations adopted in June 2019 make it very difficult for our companies to compete and create employment, and render our business environment very unattractive for foreign investors. Given the worsening of the region’s economic outlook in light of COVID-19, the industry needs urgent action on the relaxing of these FX Regulations.”
Following the release of Africa’s Energy Commonsense Agenda this week, the Chamber believes that reforming business environments across the continent should be a priority for every regulator and all central banks, to ensure swift economic recovery and make the continent more competitive on the global stage.