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Bureaus race to beat deadline on Rwf50m minimum capital
Kampala, Uganda | STEPHEN NUWAGIRA | The new regulations by the central bank requiring forex bureaus to hire qualified staff and deploy ICT systems in their operations, among others, have left casualties along the way with some firmsexiting, according to the regulator and the association of forex dealers.
Other operators are planning mergers to raise the required minimum capital of Rwf50 million, an increase from Rwf20 million previously.
Forex dealers are also required to install an information management system and modern technology equipment, among others, to improve operations, according to the regulations and requirements issued by National Bank of Rwanda in March 2017.
However, these requirements have proved challenging for some operators, forcing some of them to merge or leave the sector altogether.
“Cases of merger or openingup to new shareholders have been received by the central bank. Some players have even exited the market ‘willingly’ after we sensitized sector players on the new regulatory framework,” said Françoise Kagoyire, the National Bank of Rwanda (BNR) director banking supervision. “Currently, we see good progress, mainly with the merger process or capital opening for new shareholders,”Kagoyire said, “We believe merging of small operators is a good move because it will improve the financial capacity of the concerned forex bureaus.”
She could, however, not say how many bureaus had closed shop and how many were planning mergers or opening for new shareholders.
Rwanda Forex Bureau Association chairpersonZephaniaMuhigiconfirmed the merger reports, saying the association was aware ofat least four forex bureaus that were considering to merger.
He argued that it was better to have bigger and strong operators instead of undercapitalised and poorly run forex bureaus.
Muhigi said the association will do an evaluation exercise next month to assess the state of the sector, including firms that will have exited.
These regulations and requirements were expected to beimplemented by forex business operators by August last year, but the deadline was later extended to June 1, 2018.
Kagoyiresaid the regulator was to againpostponedeadline to June 30 after Rwanda Forex Bureau Association requested for more time to put in place the new requirements.
She said when the latest extension ends on June 30, the final status data will be assessed and appropriate on actions to be taken decided.
Forex businesses are also expected use this period to sign onto the newInformation Management System (IFMS), which will connect all bureaus on one platform. The system is tipped to boost efficiency and reduce operational costs in the long-run.
Firms must first pay over Rwf1.15 million to be hooked on the Rwf70 millionRwanda Forex Bureau Association IFMS as a BNR requirement.
The web-based platform is designed to enable the association to collect and consolidate forex bureau information easily and fast.
It will also enable forex traders to monitor their revenues easily as it shows the financial position of a firm at any given time.
The new system is in line with the government’s push for adoption of technology across all sectors of the economy.
Currently, many forex bureaus run manual operations and use different reporting systems, making it difficult for the association to track or collect information from members, according to Muhigi.
A sources privy to the process says only a few bureaus have subscribed to the platform. But there is optimism that the majority of the bureaus would meet the new deadline.
