New regulations governing the exchange of foreign currencies in Burundi has created a scarcity of the dollar, affecting local traders. The laws are in line with the overhauling of the foreign exchange (forex) space in the East African country.

In September, the Bank of the Republic of Burundi (BRB) announced a revision of the exchange regulations that were operational since June 2010. Regarding forex bureaus, the bank’s governor, Jean Ciza said that the operators have to be known by the central bank.

BRB asked all forex bureau operators to purchase software valued at two million Burundian Franc ($1,081). As Ciza explained, the tool will “help the central bank to follow closely the bureau’s activities in efforts to comply with the central bank’s exchange rate.”

The new regulations also require private forex bureaus to increase their minimum capital to Bfi100 million ($54,054) from Bfi50 million ($81,081) and they are expected to provide receipts for all exchange transactions.

Daily withdrawal of foreign currencies without a voucher was also revised downward from $3,000 to $500 per day. “Whoever exceeds the amount will have to justify it and get permission to do so,” said Ciza in his announcement. On a monthly basis, the amount transacted should not exceed $3,000.

According to the BRB governor, travelers must declare cash held in excess of $10,000 or equivalent in another currency. The people who want to go outside the country for a business transaction will have to go with $5000 at most instead of $40,000.

Ciza added that foreign exchange offices must create and register under a professional association to which they must all adhere in accordance with the new laws. The bureaus have one year to comply with the new regulations.

The Burundi central bank clampdown on forex bureaus is meant to clear up illegal dealings in currency exchange as well as stop the sale of dollars at twice the official rate.

Following the 2015 political crisis, the exchange rate almost doubled with the dollar exchanging at Bfi3,050 ($1.65) against an official rate of between Bfi1,700 ($0.92) and Bfi1,800 ($0.97).

However, small-scale traders are now having difficulty finding the foreign currency and according to a local trader, the availability of the dollar is more important than the high exchange rate.

“We don’t mind the high rates, but the issue is getting the dollars so that we can travel to keep our businesses afloat,” a trader in Bujumbura said, as quoted by The East African.

According to the trader, the central bank’s move means that private forex operators will not readily sell dollars. This creates scarcity and an even higher black market rate and the issue is further compounded by the inability of the apex bank to meet the demand for the dollar.

BRB, despite imposing tough measures on private forex bureaus, does not have enough foreign currency to satisfy the market. The trader asked, “If I was to walk into the central bank today to buy dollars, they won’t have enough. So how are we expected to import goods?”

As at the time the article was written, one dollar was equal to Bfi1,860.

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