Capital Markets and Portfolio Investment

In the absence of a stock market, the country’s banking sector remains the main channel for business financing.  The sector is sound, profitable, and well capitalized, although the high rate of non-performing loans (NPL) remains a concern.  The Bank of Albania’s legal measures to address the problem have generated mostly positive results. The banking sector is fully private.  It has undergone significant consolidation over the last year, shrinking the number of banks to 12, down from 16 at the beginning of 2018. As of December 2018, the Turkish National Commercial Bank had further consolidated its position as the largest bank, with 28.4 percent of the market, followed by Austria’s Raiffeisen Bank, with 15 percent, and Albania’s Credins Bank, with 12.9 percent.  The share of Greek banks has significantly decreased in recent years due to the departure from Albania of the National Bank of Greece and Greece-based Piraeus Group’s Tirana Bank.

The government has adopted policies promoting the free flow of financial resources to promote foreign investment in Albania.  The government and Central Bank refrain from restrictions on payments and transfers for international transactions. Despite Albania’s shallow FX market, banks enjoy enough liquidity to support sizeable positions.  Furthermore, portfolio investments remain limited mostly to company shares, government bonds, and real estate.

Nevertheless, the high rate of non-performing loans and the economic slowdown forced commercial banks to tighten lending standards.  After a slight increase in 2017, the stock of loans decreased by 3.3 percent year-on-year in 2018, due also to the 9 percent appreciation of the domestic currency against the euro.  The credit market is competitive, but interest rates in domestic currency can be high, ranging from 6 percent to 8 percent. Most mortgage and commercial loans are denominated in euros, as rate differentials between local and foreign currency average 2.5 percent.  Commercial banks have improved the quality and quantity of services they offer, and the private sector has benefited from the expansion of these instruments.

Money and Banking System

Albania’s banking sector weathered the financial crisis better than many of its neighbors, due largely to a lack of exposure to international capital markets and lack of a domestic housing bubble.  The sector has contracted in recent years. In December 2018, Albania had 474 bank branches, down from 552 in 2016. Capital adequacy, at 18.2 percent, remains above Basel requirements and indicates sufficient assets, which in 2018 totaled USD 13.54 billion.  At the end of 2018, the return on assets was 1.2 percent. Non-performing loans continued to fall, reaching 11.1 percent at the end of the 2018, down from 13.2 percent compared with 2017, and a significant improvement over 2014, when NPLs stood at 25 percent.

The Bank of Albania has the flexibility to intervene in the currency market to protect exchange rates and official reserves, but not for longer than 12 months.  As part of its strategy to stimulate business activity, the Bank of Albania has persistently lowered interest rates, which in June 2018 reached a historic low of 1 percent, down from a rate of 1.25 percent in place since May 2016.

Most banks operating in Albania are subsidiaries of foreign banks, and just two have Albanian shareholders.  However, Albanian ownership is expected to increase because of the sector’s ongoing consolidation. Foreigners are not required to prove residency status to establish a bank account, aside from the normal know-your-client procedures.  However, U.S. citizens must complete a form allowing for the disclosure of their banking data to the IRS as required under the U.S. Foreign Account Tax Compliance Act.

Foreign Exchange and Remittances

Foreign Exchange

The Central Bank of Albania (BOA) formulates, adopts, and implements foreign exchange policies and maintains a supervisory role in foreign exchange activities in accordance with the Law on the Bank of Albania No. 8269 and the Banking Law No. 9662.  Foreign exchange is regulated by the 2009 Regulation on Foreign Exchange Activities no. 70 (FX Regulation).

The Bank of Albania maintains a free float exchange rate regime for its domestic currency, the lek.  Albanian authorities do not engage in currency arbitrage, nor do they view it as an efficient instrument to achieve competitive advantage.  The Bank of Albania does not intervene to manipulate the exchange rate unless required to control domestic inflation, in accordance with the Bank’s official mandate.  Foreign exchange is readily available at banks and exchange bureaus. However, when exchanging several million dollars or more, preliminary notification may be necessary, as the exchange market in Albania remains small.  A 2018 campaign launched by the BOA with a goal to reduce the domestic use of the euro and other foreign currencies has yet to produce tangible results. The campaign is part of a larger reform that aims to improve the effectiveness of domestic economic policies.

Remittance Policies

The Banking Law does not impose restrictions on the purchase, sale, holding, or transfer of monetary foreign exchange.  However, local law authorizes the BOA to temporarily restrict the purchase, sale, holding, or transfer of foreign exchange to preserve the foreign exchange rate or official reserves.  In practice, the Bank of Albania rarely employs such measures. The last episode was in 2009, when the Bank temporarily tightened supervision rules over liquidity transfers by domestic correspondent banks to foreign banks due to insufficient liquidity in international financial markets.  It also asked banks to halt distribution of dividends and use dividends to increase shareholders’ capital, instead. The BOA lifted these restrictions in 2010.

The Law on Foreign Investment guarantees the right to transfer and repatriate funds associated with an investment in Albania into a freely usable currency at a market-clearing rate.  Only licensed entities (banks) may conduct foreign exchange transfers and waiting periods depend on office procedures adopted by the banks. Both Albanian and foreign citizens entering or leaving the country must declare assets in excess of 1,000,000 lek (USD 9,000) in hard currency and/or precious items.  Failure to declare such assets is considered a criminal act, punishable by confiscation of the assets and possible imprisonment.

Although the Foreign Exchange (FX) Regulation provides that residents and non-residents may transfer capital within and into Albania without restriction, capital transfers out of Albania are subject to certain documentation requirements.  Persons must submit a request indicating the reasons for the capital transfer, a certificate of registration from the National Registration Center, and the address to which the capital will be transferred. Such persons must also submit a declaration on the source of the funds to be transferred.  In January 2015, The FX Regulation was amended and the requirement to present the documentation showing the preliminary payment of taxes related to the transaction was removed.

Albania is a member of the Council of Europe Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL), a Financial Action Task Force-style regional body.  The 2019 INCSR maintains Albania in the “Major Money Laundering Jurisdictions” category following its inclusion for the first time in 2017. The category implies that financial institutions of the country engage in currency transactions involving significant amounts of proceeds from international narcotics trafficking.

Sovereign Wealth Funds

Albania does not have a sovereign wealth fund.  A draft law to establish the Albanian Investment Corporation is currently under discussion.  The GOA plans to transfer state owned assets, including state-owned land, and provide initial capital to launch the corporation.  The corporation would develop, manage, and administer state-owned property and assets as public investments.

Capital Markets and Portfolio Investment

Angola’s capital markets remain embryonic.  To respond to the need for increased sources of financing of the economy, in 2013, the Angolan Government created the Capital Market Commission (CMC).  Angola’s banks are likely the most established businesses that could potentially list on an exchange. However, many Angolan banks have a high rate of non-performing loans, reported to be as high as 31 percent.  Angola’s banks have struggled in recent years due to the country’s deteriorating economic environment and increasingly high rate of delinquent loans. The Governor of the BNA has stated that Angola’s banks must go through a consolidation phase and has started assessing the banks’ asset capacity.  So far, the BNA has revoked the licenses of three banks based on their failure to meet the mandatory new share-capital minimum requirement. The process may limit banks’ ability in the near-term to list on the country’s fledgling stock exchange.

The Angolan government raised USD 3 billion in its second Eurobond issue in international markets with investor demand reportedly reaching nearly USD 9 billion.  In August 2012, Russia’s second-largest bank, VTB, managed the sale of Angola’s first international bond, a USD 1 billion, 7-year bond with a 7.0 percent yield.  In November 2015, Angola raised a USD 1.5 billion, 10-year Eurobond with a 9.5 percent yield. Angola plans to issue a third Eurobond in the second quarter of 2019.

The BNA has developed a market for short-term bonds, called Titulos do Banco Central, and long-term bonds, called Obrigaçoes do Tesouro.  Most of these bonds are bought and held by local Angolan banks. The Obrigaçoes have maturities ranging from one to 7.5 years, whereas the Titulos have maturities of 91 to 182 days.  For information on current rates, see: http://www.bna.ao/  .

Foreign investors do not normally access credit locally.  For Angolan investors, credit access is very limited, and if available comes with a collateral requirement of 125 percent, so they either self-finance, or seek financing from non-Angolan banks and investment funds.  The termination of the “Angola Invest” government-subsidized funding program for micro, small and medium private enterprises (SMEs) on September 25, 2018 has further reduced funding opportunities for many SMEs. Since its inception in 2012, Angola Invest financed approximately 515 projects worth USD 377 million.

The Angolan National Development Plan provides for the liquidation of unviable state-owned enterprises, the privatization of non-strategic state enterprises and the sale of shareholding by 2022.  In January 2018, the president created a commission to prepare and implement the privatization process, via the Stock Exchange.

Money and Banking System

The BNA has remained under considerable pressure to stabilize Angola’s economy as a high rate, currently 31 percent, of non-performing loans has crippled the banks’ ability and willingness to foster private sector lending. The BNA implemented a contractionary monetary policy, reducing local currency in circulation over fears of escalating inflation and foreign currency arbitrage. To address further these concerns, in early 2018, the government also scrapped the Angolan currency’s fixed peg to the U.S. dollar in favor of greater rate flexibility, and began regular foreign exchange auctions to banks, preventing the allocation of dollars to preferred clients.  A 47 percent devaluation of the local currency throughout the year meant an increase in Angola’s debt, now close to 85 percent of GDP.

The IMF projects Angola’s economy will recover in 2019, in large part due to additional regulatory reforms that should open up the economy to more investment. Angola’s agreement with the IMF for USD 3.7 billion in financial support suggests the government’s intent to reassure investors, and to diversify Angola’s source of borrowing. As a key condition of the IMF loan, Angola cannot have any new oil collateralized debt.  The government also resorted to international capital markets and raised USD 3 billion in its second Eurobond issue with investor demand reportedly reaching nearly USD 9 billion.  The issue was in two installments, the first with a ten-year maturity, a nominal value of USD 1.75 billion, and a coupon fixed at 8.35 percent.  The second, with a 30-year maturity, nominal value of USD 1.25 billion, and a coupon of 9.375 percent.

There are currently 27 banks in Angola.  Five banks, Banco Angolano de Investimentos (BAI), Banco Economico, Banco de Fomento Angola (BFA), Banco BIC Angola (BIC) and Banco de Poupança e Credito S.A.R.L. (BPC), control over 80 percent of total banking assets, deposits, and loans.  Angolan banks focus on profit generating activities including transactional banking, short-term trade financing, foreign exchange, and investments in high-interest government bonds. Banks had until the end of 2018 to comply with the newly BNA-set USD 50 million mandatory capital start-up requirement, up from the previous USD 25 million requirement.  In early 2019, the BNA revoked the operating licenses of two banks, Banco Mais and Banco Postal, for failing to increase their capital to meet the new minimum requirements.  Another bank, Banco Angolano de Negocios e Comercio, is currently under BNA administration.

Angola has been affected by the broader global de-risking trends wherein banks decide to stop lending to businesses in markets deemed too risky from an anti-money laundering and terrorist financing compliance (?) standpoint.  In December 2016, Deutsche Bank, the last international bank providing dollar-clearing services, closed its dollar clearing services in Angola. A limited number of international banks still operate in Angola and provide limited trade finance such as Germany’s Commerzbank and South Africa’s Standard Bank.  In 2018, there were no further correspondent bank losses. International banks previously refrained from entering the Angolan market because of the risk of fines and other penalties, but in 2018 there was more interest, with several banks conducting independent assessments of the business climate.

Foreign Exchange and Remittances

Foreign Exchange Policies

Angola continues trading mostly in two currencies, the U.S. dollar and the Euro, with the Renminbi gaining greater prominence given the degree of trade with China.  In a bid to deal with the foreign currency shortage and substantial foreign currency arbitrage in the parallel market, the government has opted for a managed float for its currency exchange rate.  The Angolan Kwanza was pegged at a rate of 166.00 per U.S. dollar from April 2016 to January 2018 following a steep devaluation due to the slump in oil prices.  On January 10, 2018 the BNA began conducting foreign currency auctions allowing the kwanza to fluctuate within an undisclosed but controlled band.  Since dropping the peg to the U.S. dollar in January 2018, the Kwanza has depreciated by approximately 47 percent.

The National Bank of Angola (BNA) set new rules for foreign exchange and remittances on November 19, 2018 in order to curb depleting foreign currency reserves.  Under Instruction no. 15/2018 of November 19, 2018 the BNA sells foreign currency (U.S. dollar and Euros only) to commercial banks by auction. Commercial banks may then assign foreign currency to their clients based on a schedule submitted and approved by the BNA.  On the sale by banks to exchange offices and remittance companies, banks may only make foreign currency available in physical notes on a collateral basis, as they must, at the time of sale debit the national currency account of those institutions against delivery of physical notes.  Banks may charge a margin of up to 2 percent on the reference exchange rate published on the institutional website of the National Bank of Angola, considered high for investors.

Payment of remittances in any form and non-strategic imports face a lengthy wait between 90-180 days for foreign exchange.  Priority is given to strategic importers of food, raw materials for construction, agriculture, medicine and the oil sector. The government also has a huge backlog of forex arrears of approximately USD 3 billion.

Investors cannot freely convert their earnings in kwanza to any foreign exchange rate due to limited available foreign exchange.  Credit cards and other options for payment are extremely limited and money-servicing businesses (Western Union & MoneyGram) have ceased foreign outward transactions in foreign currency.

Remittance Policies

The Angolan government established anti-money laundering restrictions in January 2014 and is currently revising the law to better combat illicit remittance flows.  The subsequent drop in foreign exchange availability in Angola, beginning in 2015 due to declining petroleum revenues, has severely impeded personal and legitimate business remittances.

International and domestic companies operating in Angola continuously face significant delays securing foreign exchange approval for remittances to cover key operational expenses, including imported goods and expatriate salaries.  Profit and dividend remittances are even more problematic for most companies, including foreign airlines with withheld remittances for the sector currently valued by the International Air Transport Association (IATA) at USD 137 million, down from USD 540 million in June 2018.

The BNA is trying to facilitate remittances of international supplies by introducing payment by letters of credit.  Also, the 2018 NPIL grants foreign investors “the right and guarantee to transfer abroad” dividends or distributed profits, the proceeds of the liquidation of their investments, capital gains, the proceeds of indemnities and royalties, or other income from remuneration of indirect investments related to technology transfer after proof of implementation of the project and payment of all taxes due.  The government continues to prioritize foreign exchange for essential goods and services including the food, health, defense, and petroleum industries.

Sovereign Wealth Funds

In October 2012, President dos Santos established a petroleum-funded USD 5 billion sovereign wealth fund called the Fundo Soberano de Angola (FSDEA).  The FSDEA was established in accordance with international governance standards and best practices as outlined in the Santiago Principles. In February 2015, the FSDEA was recognized as transparent by the Sovereign Wealth Fund Institute (SWFI), receiving a score of 8 out of 10.  The FSDEA has the express purpose of profit maximization with a special emphasis on investing in domestic projects that have a social component (http://www.fundosoberano.ao/investments/  ).  Jose Filomeno dos Santos (Zenu), son of former President Jose Eduardo dos Santos, was appointed chairman of FSDEA in June 2013, but has since been removed by President Lourenco based reportedly on poor results at the FSDEA and conspiracy with the Fund’s wealth manager, Quantum Global (QG) to embezzle FSDEA funds.  Former Minister Carlos Alberto Lopes was named new head of the FSDEA. Zenu, on house arrest, remains under investigation for money laundering, embezzlement, and fraud related to his management of the FSDEA, and for fraud in connection with the transfer of USD 500 million from the Angolan Central Bank to a bank in the UK. On March 22, 2019 the government also freed Jean-Claude Bastos de Morais, QG’s CEO, in preventive detention since September 2018, based on the insufficiency of evidence to support the collection of malfeasance charges.

Half of the initial endowment of FSDEA was invested in agriculture, mining, infrastructure, and real estate in Angola and other African markets, and the other half was supposedly allocated to cash and fixed-income instruments, global and emerging-market equities, and other alternative investments.  The FSDEA is reportedly in possession of approximately USD 2.24 billion of its private equity assets previously under the control of QG.

Capital Markets and Portfolio Investment

The Cameroonian government is open to portfolio investment, though no efforts have been made to increase the capacity of the Douala Stock Exchange to encourage foreign participation.

The Douala Stock Exchange (DSX) is meant to be the stock market for all Economic and Monetary Community of Central Africa (CEMAC) member states.  It was created in 2001 and currently has only three companies listed and five sovereign bonds.  The regulatory system of the DSX permits portfolio investment, but the market is still in its infancy, suffering from low liquidity and bureaucratic inertia.

Cameroon has a limited capital market.  The Embassy is not aware of any policies that facilitate or restrict the free flow of financial resources to the product and factor markets.

CEMAC’s central bank, known by its French acronym BEAC, respects IMF Article VIII by refraining from restrictions on payments and transfers for current international transactions.  In early 2019, international firms began to complain that receiving permission to draw on their foreign exchange accounts was becoming more difficult.

Foreign investors can get credit on the local market and the private sector has access to a variety of credit instruments.  Cameroon is connected to the international banking payment system.

Money and Banking System

Under ten percent of Cameroonians have access to formal banking services.  The Cameroonian government has often spoken of increasing access, but no coherent policy or action has been taken to alleviate the problem.  Mobile money, introduced by local and international telecom providers, is the closest thing to banking services that most Cameroonians access.

The banking sector is generally healthy, but financial institutions suffer from under-performance on local debt and un-serviced loans from both commercial and individual debtors.

According to the World Bank, non-performing loans were 10.31 percent of total bank loans in 2016.

Cameroon has several international banks operating within the country, including:

1. Afriland First Bank Group (approximately USD 6 billion in global assets in 2016)
2. CitiBank (USD 1.917 trillion in global assets in 2018)
3. Societee Generale (USD 1.47 trillion in global assets in 2018)
4. Standard Chartered Bank Cameroon (USD 688 billion in global assets in 2018)
5. Ecobank (USD 23.6 billion in global assets in 2015)

Cameroon is part of the six-member Economic and Monetary Community of Central Africa (CEMAC), which maintains a central bank, known by its French acronym, BEAC.

Foreign banks are allowed to establish operations in Cameroon.  They are subject to the same regulations as locally developed banks.  The Embassy is unaware of any lost correspondent banking relationships within the past three years.

There are no restrictions on foreigners establishing bank accounts, credit instruments, business financing or other such transactions.  Rules on all forms of mergers and acquisitions, including hostile, are governed by OHADA and are detailed in a lengthy body of commercial, legal, and accounting codes.  The OHADA sections on mergers and acquisitions are the Napoleonic version of our SEC regulations.

Foreign Exchange and Remittances

Foreign Exchange

While there are no legal restrictions, each request for a foreign exchange transaction requires a “dossier” that would include various documents.  The documents required vary based on the type of transaction to demonstrate the legitimacy of the planned purchase in foreign exchange that BEAC would approve.  The not yet formalized list of required documents from BEAC includes a significant number of required supporting documents for various purposes.  The IMF has stated that forex transactions of less than USD one million only require approval by local BEAC representatives in each country and should take place in a matter of days.  Forex transactions exceeding USD one million would require approval from BEAC headquarters in Yaounde and should occur in no more than 48 hours.

The Embassy is unaware of any restrictions on investment type and conversion of funds into world currencies.

The Central African CFA Franc is the currency of six independent states in Central Africa: Cameroon, Central African Republic, Chad, Republic of Congo, Equatorial Guinea, and Gabon.  It is administered by BEAC and is currently pegged at roughly 656 CFA to one Euro.

Remittance Policies

The Embassy is unaware of any recent changes or plans to change investment remittance policies that either tighten or relax access to foreign exchange for investment remittances.

There are no time limitations on transactions beyond the classic banking transactions timeline.  BEAC regulates remittances and banking transactions.  Foreign investors can remit convertible and negotiable instruments through legal channels recognized by BEAC.

Domestically, the remittance market is expanding.  Cameroon currently counts more than six million registered mobile money subscribers.  In addition, 1.5 million people are using four digital solutions currently offered by banks and mobile phone companies, namely ATM, mobile wallet, mobile debit card, and website.  These systems are supporting various forms of remittances and financial services.

Sovereign Wealth Funds

Cameroon does not have a sovereign wealth fund.

Capital Markets and Portfolio Investment

The Dominican stock market, the Bolsa de Valores de Santo Domingo, is regulated by the Monetary Council and supervised by the Superintendency of Securities, which approves all public securities offerings.  The private sector has access to a variety of credit instruments. Foreign investors are able to obtain credit on the local market, but tend to prefer less expensive offshore sources. The Central Bank regularly issues certificates of deposit, using an auction process to determine interest rates and maturities.

Money and Banking System

The Dominican banking sector is comprised by 124 entities, as follows: 60 financial intermediation entities (including multiple banks, savings and loans associations, savings and loans banks, financial intermediation public entities, credit corporations), 47 foreign exchange and remittance agents (specifically, 42 exchange brokers and 5 remittances and foreign exchange agents), and 17 trustees.

The mission of the Dominican Central Bank is to ensure the stability of prices, guarantee the efficient regulation of the financial system and the proper functioning of payment systems, as the issuing entity and executor of monetary, exchange, and financial policies to contribute with the growth of national economy

Foreign banks may establish operations in the Dominican Republic, although it may require a special decree for the foreign financial institution to establish domicile in the country.  Foreign banks not domiciled in the Dominican Republic may establish representative offices in accordance with current regulations. Major U.S. banks have a commercial presence in the country, but most focus on corporate banking services as opposed to retail banking.  Some other foreign banks offer retail banking. There are no restrictions on foreigners opening bank accounts, although identification requirements do apply.

The Dominican government enacted robust banking reforms in the wake of a 2003 financial crisis.  Today, the Dominican Republic’s financial sector is relatively stable and the IMF declared the financial system indicators largely satisfactory during 2019 Article IV consultations.  The IMF team’s preliminary report noted that the country’s “robust economic performance benefitted from the strengthened policy frameworks, competitiveness, and banking system over the past decade.”

Foreign Exchange and Remittances

Foreign Exchange

The Dominican exchange system is a market with free convertibility of the peso.  Economic agents perform their transactions of foreign currencies under free market conditions.  There are generally no restrictions or limitations placed on foreign investors in converting, transferring, or repatriating funds associated with an investment.

The Central Bank sets the exchange rates and practices a policy of managed float.  Some firms have had repeated difficulties obtaining dollars during periods of high demand.  Importers may obtain foreign currency directly from commercial banks and exchange agents. The Central Bank participates in this market in pursuit of monetary policy objectives, buying or selling currencies and performing any other operation in the market to minimize volatility.

Remittance Policies

The Regulation No. 214-04 on the Registration of Foreign Investment in the Dominican Republic establishes the requirements for the registration of foreign investments, the remittance of profits, the repatriation of capital, and the requirements for the sale of foreign currency, among other issues related with investments.

Sovereign Wealth Funds

The Dominican government does not maintain a sovereign wealth fund.

Capital Markets and Portfolio Investment

Guatemala’s capital markets are weak and inefficient because they lack a securities regulator.  The local stock exchange (Bolsa Nacional de Valores) deals almost exclusively in commercial paper, repurchase agreements (repos), and government bonds.  The Guatemalan Central Bank (Banguat) and the Superintendence of Banks (SIB) were drafting an updated capital markets bill as of April 2019. Notwithstanding the lack of a modern capital markets law, the government debt market continues to develop.  Domestic treasury bonds now represent 56.4 percent of total public debt.

Guatemala lacks a market for publicly-traded equities, which raises the cost of capital and complicates mergers and acquisitions.  As of December 2018, borrowers faced a weighted average annual interest rate of 15.7 percent, with some banks charging over 30 percent on consumer or micro-credit loans.  Commercial loans to large businesses offered the lowest rates and were on average 7.2 percent as of December 2018. Dollar-denominated loans typically are several percentage points lower than those issued in local currency.  Foreigners rarely rely on the local credit market to finance investments.

Money and Banking System

Overall, the banking system remains stable.  According to information from the SIB, Guatemala’s 17 commercial banks had an estimated USD 43.75 billion in assets in 2018.  The six largest banks control about 89 percent of total assets. In addition, Guatemala has 13 non-bank financial institutions, which perform primarily investment banking and medium- and long-term lending, and three exchange houses.  Access to financial services is very high in Guatemala City, as well as in major regional cities. Guatemala has 16.9 access points per 10,000 adults at the national level and 23.4 access points per 10,000 adults in the metropolitan area.  Most banks offer a variety of online banking services.

Foreigners are normally able to open a bank account by presenting their passport and a utility bill or some other proof of residence.  However, requirements may vary by bank.

In April 2002, the Guatemalan Congress passed a package of financial sector regulatory reforms that increased the regulatory and supervisory authority of the SIB, which is responsible for regulating the financial services industry.  The reforms brought local practices more in line with international standards and spurred a round of bank consolidations and restructurings. The 2002 reforms required that non-performing assets held offshore be included in loan-loss-provision and capital-adequacy ratios.  As a result, a number of smaller banks sought new capital, buyers, or mergers with stronger banks, reducing the number of banks from 27 in 2005 to 17 in 2018.

Guatemalan banking and supervisory authorities and the Guatemalan Congress actively work on new laws in the business and financial sectors.  In August 2012, the Guatemalan Congress approved reforms to the Banking and Financial Groups Law and to the Central Bank Organic Law that strengthened supervision and prudential regulation of the financial sector and resolution mechanisms for failed or failing banks.  In July 2010, the Guatemalan Congress approved a new insurance law, which strengthened supervision of the insurance sector and allowed foreign insurance companies to open branches in Guatemala. Groups of affiliated credit card, insurance, financial, commercial banking, leasing, and related companies must issue consolidated financial statements prepared in accordance with uniform, generally accepted, accounting practices.  The groups are audited and supervised on a consolidated basis.

Foreign banks may open branches or subsidiaries in Guatemala subject to Guatemalan financial controls and regulations.  These include a rule requiring local subsidiaries of foreign banks and financial institutions operating in Guatemala to meet Guatemalan capital and lending requirements as if they were stand-alone operations.

There have been some changes to correspondent banking relationships over the past few years, but the changes were similar to those seen throughout the region and reflected a trend of de-risking.  The total number of relationships with Guatemala’s financial sector showed a slight decline in 2016 but the situation stabilized in 2017.

Alternative financial services that are present in Guatemala include credit and savings unions and microfinance institutions, which serve those segments not covered by banks.

Foreign Exchange and Remittances

Foreign Exchange

Guatemala’s Foreign Investment Law and CAFTA-DR commitments protect the investor’s right to remit profits and repatriate capital.  There are no restrictions on converting or transferring funds associated with an investment into a freely usable currency at a market-clearing rate.  U.S. dollars are freely available and easy to obtain within the Guatemalan banking system. In October 2010, monetary authorities approved a regulation to establish limits for cash transactions of foreign currency to reduce the risks of money laundering and terrorism financing.  The regulation establishes that monthly deposits over USD 3,000 will be subject to additional requirements, including a sworn statement by the depositor stating that the money comes from legitimate activities. There are no legal constraints on the quantity of remittances or any other capital flows and there have been no reports of unusual delays in the remittance of investment returns.

The Law of Free Negotiation of Currencies allows Guatemalan banks to offer different types of foreign-currency-denominated accounts.  In practice, the majority of such accounts are in U.S. dollars. Some banks offer “pay through” dollar-denominated accounts in which depositors make deposits and withdrawals at a local bank while the bank maintains the actual account on behalf of depositors in an offshore bank.

Capital can be transferred from Guatemala to any other jurisdiction without restriction.  The exchange rate moves in response to market conditions. The government sets one exchange rate as reference, which it applies only to its own transactions and which is based on the commercial rate.  The Central Bank intervenes in the foreign exchange market only to prevent sharp movements. The reference exchange rate of Quetzals (GTQ) to the U.S. dollar has remained relatively stable since 1999.

Remittance Policies

There are no time limitations on remitting different types of investment returns.

Sovereign Wealth Funds

Guatemala does not have a sovereign wealth fund.

Capital Markets and Portfolio Investment

Commercial credit for private and public enterprises is difficult and expensive to obtain in Guinea. The FY 2019 Millennium Challenge Corporation score for Access to Credit in Guinea dropped from 24 percent to 23 percent, and was at 50 percent in FY 2017. This means investors largely need to find their own source of capital (92.4 percent of firms are internally financed).

The legislature passed a Build, Operate, and Transfer (BOT) convention law in 1998 (changed to Public-Private Partnership or PPP in 2018), which provides rules and guidelines for PPP and related infrastructure development projects. The law lays out the obligations and responsibilities of the government and investors and stipulates the guarantees provided by the government for such projects. The Investment Code allows income derived from investment in Guinea, the proceeds of liquidating that investment, and the compensation paid in the event of nationalization, to be transferred to any country in convertible currency. The legal and regulatory procedures, based on French civil law, are not always applied uniformly or transparently.

Individuals or legal entities making foreign investments in Guinea are guaranteed the freedom to transfer the original foreign capital, profits resulting from investment, capital gains on disposal of investment, and fair compensation paid in the case of nationalization or expropriation of the investment to any country of their choice. The Guinean franc uses a managed floating exchange rate. The few commercial banks in Guinea are dependent on the BCRG for foreign exchange liquidity, making large transfers of foreign currency difficult.

Laws governing takeovers, mergers, acquisitions, and cross-shareholding are limited to rules for documenting financial transactions and filing any change of status documents with the economic register. There are no laws or regulations that specifically authorize private firms to adopt articles of incorporation that limit or prohibit investment.

Money and Banking System

Guinea’s financial system is small and dominated by the banking sector. It comprises 15 active banks and 22 microfinance institutions with a total of 155 branches across the country. Guinea also has ten insurance firms, three money-transfer companies and 45 currency exchange offices. Guinea’s banking sector is overseen by the BCRG and it serves as the agent of the treasury for overseeing banking and credit operations in Guinea and abroad. The BCRG manages the foreign exchange reserves on behalf of the State. The Office of Technical Assistance of the Department of the Treasury assesses that Guinea does not properly manage debt and that its treasury is too involved in the process, although improvements in 2017-2018 point to a better future. Further information on the BCRG can be found in French at http://www.bcrg-guinee.org  .

Due to the difficulty of accessing funding from commercial banks, small commercial and agricultural enterprises have increasingly turned to microfinance, which has been growing rapidly with a net increase in deposits and loans. The quality of its products remains mediocre, with bad debt accounting for five percent of loans with approximately 17 percent of gross loans outstanding.

Guinea plans to broaden the country’s SME base through investment climate reform, improved access to finance, and the establishment of SME growth corridors. Severely limited access to finance (especially for SMEs), inadequate infrastructure, deficiencies in logistics and trade facilitation, corruption and the diminished capacity of the government, inflation, and poor education of the workforce has seriously undermined investor confidence in Guinean institutions. Guinea’s weak enabling environment for business, its history of poor governance, erratic policy, and inconsistent regulatory enforcement exacerbate the country’s poor reputation as an investment destination.  As a result, private participation in the economy remains low and firms’ productivity measured by value added is one of the lowest in Africa. Firms’ links with the financial sector are weak: only 3.9 percent of firms surveyed in the 2016 World Bank Enterprise survey have a bank loan. http://www.enterprisesurveys.org/data/exploreeconomies/2016/guinea#finance  

Credit to the private sector is low, but increasing, at around 14 percent of GDP in 2015 from five percent in 2010, with the Sub-Saharan African average around 60 percent. The banking sector is highly concentrated, technologically behind, and banks tend to favor short-term lending at high interest rates. While the microfinance sector grew strongly from a small base, microfinance institutions were hit hard during the Ebola crisis; they are not profitable and need capacity and technology upgrades. Finally, the efficiency and the use of payment services by all potential users needs to be improved, with an emphasis on greater financial inclusion. Guinea is a cash-based society driven by trade, agriculture, and the informal sector, which all function outside the banking sector. However, digital cellphone fund transfers are increasing their penetration in the country.

Generally, there are no restrictions on foreigners’ ability to establish bank accounts in Guinea. EcoBank is the preferred bank for most U.S. dealings with the U.S. Foreign Account Tax Compliant Act (FACTA) reporting requirements. Post was unable to find any information related to rules concerning hostile takeovers.

Foreign Exchange and Remittances

Foreign Exchange

There are no restrictions or limitations placed on foreign investors for converting, transferring, or repatriating funds associated with an investment. Although there have been no recent changes to remittance policies, it is difficult to obtain foreign exchange in Guinea. Guinea has experienced significantly weakened liquidity levels over the last several years due to government mismanagement, populist policies, corruption, and a decrease in mining revenue due to lower global commodity prices. Liquidity levels of commercial banks are affected by tight reserve requirements (22 percent of deposits) that are in line with IMF performance criteria. The 2015 entry of Sino-Franco-Singaporean conglomerate SMB into the bauxite mining industry in Guinea coupled with a recovery of bauxite and alumina prices have meant projected budget surpluses for Guinea that were unfortunately eclipsed in 2017 by excess spending, but corrected in 2018.

Until December 2015, the exchange rate was managed by the BCRG and held to a four percent variance from the unofficial rate. The exchange rate has remained relatively stable since 2013 and has only recently depreciated versus the U.S. dollar. Between 2013 and 2015, the Guinean franc maintained a value between 7,000 and 7,500 GNF/USD. In late 2015, the unofficial rate reached a value 10 percent higher than the official rate, during which Guinea had nearly exhausted its foreign currency reserves. The IMF recommended the BCRG float the GNF and the official rate jumped to just over 9,000 GNF/USD by March 2016, where it now remains. The Annual Report on Exchange Arrangements and Exchange Restrictions, published by the IMF, describes the foreign exchange regimes of every IMF member. https://www.imf.org/en/Publications/Annual-Report-on-Exchange-Arrangements-and-Exchange-Restrictions/Issues/2017/01/25/Annual-Report-on-Exchange-Arrangements-and-Exchange-Restrictions-2016-43741  

Remittance Policies

Guinea has no limitations on the conversion and transfer of money or the repatriation of capital and earnings, including branch profits, dividends, interest, royalties, or management or technical service fees. The BCRG needs to be informed of any major transfers, and the wait time to remit investment returns is less than 60 days. Guinea is a member of the Inter-Governmental Action Group against Money Laundering in West Africa, but is not included on the Financial Action Task Force. Guinea does not have a country report in the 2018 International Narcotics Control Strategy Report.

There are no limits on the conversion of U.S. dollars to Guinean francs. Post knows of no issues related to currency conversion and does not see any issues with convertibility risks going forward. The official exchange rate retains the capacity for volatility, but is currently holding at approximately 9,100 GNF/USD (as of March 2019). A weakened economy largely resulting from low commodity prices caused the GNF to depreciate from an average of 7,000 GNF/USD in early 2015. Since mid-2016, the official exchange rate has been keeping pace with the rate in the parallel black market.

Guinea does not have a sovereign wealth fund.

Capital Markets and Portfolio Investment

There is no stock exchange in Madagascar, though the private Mercantile Exchange Madagascar (MEX), launched crypto-currencies (bitcoin and ethereum) in January 2018.

The Central Bank and the Ministry of Finance require documents prior to any transfer of currency to foreign countries.  There is no ceiling imposed to international transactions but justification remains mandatory.

Credit is allocated on market terms and the Government/Central Bank does not cap.  The Central Bank uses indirect tools to limit credit/loans, such as reserve requirements ratio (13 percent of deposits) imposed on banks.  Foreign investors are able to get credit on the local market if they have an officially registered company/subsidiary located in the country.

The private sector has access to a variety of credit instruments, such as short, medium, and long-term loans in different categories (e.g., credit lines and leasing).  The Government does not limit the amount of credit available.

Money and Banking System

Madagascar’s financial sector is comprised of 11 commercial banks, one of which is local, with the rest subsidiaries of foreign banks, mostly based in Mauritius, France, and mainland Africa.  The top four banks account for more than 80 percent of assets and deposits. Only 12 percent of the population has a bank account, which includes accounts with microfinance institutions. The vast majority of the banking clientele is therefore represented by corporate or professional entities.

The sector is stable and highly profitable with a return on equity of approximately 31 percent.  The overall assets of all banks amount $2.1 billion. Following the IMF recommendation for further independence, the Central Bank has adopted a new chart in which two Deputy Governors assist the Governor, one dealing with the monetary policy and the other with all administration affairs.

In order to establish a bank account, foreigners must have established residency status.

Foreign Exchange and Remittances

Foreign Exchange

To date, there is no restriction on capital inflows and outflows; however, justification is mandatory before sending money overseas.

Funds must be converted into any world currency.  U.S. dollars and Euros are the most used foreign currencies.

The Central Bank performs a managed floating exchange rate. The exchange rate is neither fixed nor pegged to any major foreign currency.  However, the Central Bank allows it to fluctuate within a band of 2 percent (up or down) in a daily basis in order to avoid abrupt variation.  Therefore, whenever the local currency tends to fall beyond 2 percent within a day, the Central Bank intervenes by selling its reserve to respect the maximum acceptable daily variation rate.

Remittance Policies

There are no restrictions on converting or transferring funds associated with foreign investment, including remittances of investment capital, earnings, loan repayments, and lease payments.

There are no plans to change remittance policies that have tightened or relaxed access to foreign exchange for investment remittances.  There is no limitation on the inflow or outflow of funds for remittances of profits, debt service, capital, and returns on intellectual property.

Sovereign Wealth Funds

No Sovereign Wealth Fund (SWF) or Asset Management Bureau (AMB) exist in the country, aside from the Privatization Trust Fund established in 1996, whose sole function is to manage the State’s minority shares in privatized enterprises in preparation for their auction to the local private sector.  All of the Privatization Trust Fund’s investments are domestic, given that the shares it holds are the remaining minority shares of the State resulting from the privatization of earlier state-owned companies. The fund adopts a passive role as a portfolio investor and does not take an active role in the management of the assets in which it holds shares.

Capital Markets and Portfolio Investment

The Mozambique Stock Exchange (BVM – Portuguese acronym) is a public institution under the guardianship of the Minister of Economy and Finance and the supervision of the Central Bank of Mozambique.  Corporate and government bonds are traded on the BVM and there is only one dealer that operates in the country, with all other brokers incorporated into commercial banks, which act as the primary dealers for treasury bills.  The secondary market in Mozambique remains underdeveloped.  Available credit instruments include medium and short-term loans, syndicated loans, foreign exchange derivatives, and trade finance instruments, such as letters of credit and credit guarantees.  The BVM remains illiquid, in the sense that very limited activity occurs outside the issuing time.  Investors tend to hold their instruments until maturity.  The market also lacks a bond yield curve as government issuances use a floating price regime for the coupons with no price discovery for tenures above 12 months.

The GRM notified the IMF that it has accepted the obligations of Article VIII sections 2, 3, and 4 of the IMF Articles of Agreement, effective May 20, 2011.

Money and Banking System

The Mozambican Association of Banks (AMB) and KPMG reported in 2017 that the four largest commercial banks accounted for almost 98 percent of the profits in Mozambique’s banking sector.  The remaining 15 banks earned 2 percent of banking profits.  The number of bank branches in Mozambique rose from 616 in 2015 to 637 in 2016 with the bulk of these branches concentrated in major cities; rural districts often have no banks at all.  Credit is allocated on market terms but eligibility requirements exclude much of the population from obtaining credit. Banks request collateral, but since land cannot be used as collateral, the majority of individuals do not qualify for loans.  Foreign investor export activities in critical areas related to food, fuel, and health markets have access to credit in foreign and local currencies.  All other sectors have access to credit only in the local currency.

Seeking to strengthen the banking sector in 2017, the Central Bank increased shareholder capital requirements from USD 1 million to USD 25 million and raised the capital adequacy ratio from 9 percent to 12 percent.  Although non-performing loans (NPLs) as a percentage of bank loans had declined to 11.1 percent at the end of 2018 from a high of 13.8 percent reached at the end of 2017, it remains elevated and relatively high compared to 2015 and 2016, when NPLs were 4 percent and 6 percent.  Even so, the IMF has stated that the banking system remains stable, and noted that the the Bank of Mozambique (BOM) has continued to address banking sector vulnerabilities.

The Central Bank, in 2016, took administrative control over Moza Banco, Mozambique’s fourth largest commercial bank, dissolving its board and replacing it with a provisional board.  Moza Banco’s shareholders failed to recapitalize the bank in March 2017 and the BOM recapitalized the bank by purchasing 80 percent of Moza Bank’s shares using the Central Bank’s pension fund.  In 2018, the BOM twice sanctioned commercial banks operating in the domestic market that did not meet the necessary reporting requirements for suspicious transactions, fining five banks more than a million dollars for providing incomplete information and failing to control transactions vulnerable to money laundering.

During 2018, the BOM introduced changes in the banking system in order to improve the sector. The BOM now has the power to issue rules on foreign exchange.  In October 2018 through 10/GBM/2018, it established parameters to help it identify credit institutions that could pose a systematic risk to the Mozambican banking system.  The BOM also set out the Code of Conduct for Credit Institutions and Financial Companies in 2/GBM/2018 to specify responsibilities that financial institutions have related to providing information to clients, data protection, and abusive contracts.  The BOM also liberalized commercial banks’ current operations, doing away with Central Bank pre-authorizations for some capital operations, such as the registration of foreign exchange.

In terms of monetary policy, the BOM has also been cautiously easing monetary policy in response to reduced inflationary pressures.  The Monetary Policy Committee cut the policy rate by 750 basis points, stabilizing it at 14.25 percent.

Foreign Exchange and Remittances

Foreign Exchange

In December 2017, Mozambique approved new exchange control rules in Decree 49/2017. Residents in Mozambique are now required to remit export earnings to Mozambique into an export earnings account in foreign currency, which can only be used for specifically defined purposes.  Under the new decree, the mandatory registration of foreign exchange operations will now be processed electronically in real time by the commercial banks.  Applications for capital operations are now processed by commercial banks and forwarded to the Central Bank of Mozambique.  Foreign direct investment (FDI) up to USD 250,000 no longer requires prior authorization from the Bank of Mozambique and only needs to be registered with the commercial bank handling the transactions.  Shareholder and intercompany loans made by foreign entities up to USD 5 million require no authorization from the Central Bank, provided the loans are interest free or lower than the base lending rate for the relevant currency, the repayment period is at least three years, and no other fees or charges apply.

A special foreign exchange regime for oil, gas, and mining sectors allows for greater flexibility in foreign exchange and financing operations.  The law, which went into force in January 2018, stipulates that profits from petroleum rights are entirely taxed at an autonomous tax rate of 32 percent.  The law also guarantees tax stabilization for up to 10 years, starting from the beginning of commercial production with an investment amount of USD 100 million.  The Ministry of Economy and Finance can also approve the use of U.S. dollars, if the company has invested at least USD 500 million and more than 90 percent of its transactions are in U.S. dollars.  The law also revoked a 50 percent tax rate reduction related to the production tax that was available when extracted products were used locally.

Remittance Policies

Under the 2017 Decree, there is no longer an obligation to convert 50 percent of export proceeds into the local currency.  The new decree only requires that a sufficient quantity be converted into the local currency to cover payments to residents locally.

Sovereign Wealth Funds

The GRM is exploring establishing a sovereign wealth fund for LNG revenues that are expected in the next decade.  Currently there is an off-budget account for capital gains revenues.  The Budget Law authorizes the government to save or spend windfall revenues on investment projects, debt repayment, and emergency programs.  However, there are limited details on how off-budget spending should be planned and approved.

Capital Markets and Portfolio Investment

Portfolio investment is undeveloped.  The Central Bank of STP (BCSTP) issued Treasury bills (T-bills) for the first time on June 29, 2015 for 75 million Dobras (around USD 3.7 million) at the fixed interest rate of 6.2 percent, with a maturity of six months.  The demand was 20 percent higher than the offer, resulting from the participation of three domestic banks. The most recent issuance occurred on March 15, 2018. STP does not have a stock market. Articles 13 and 14 of the Foreign Exchange Regulations facilitate the free flow of financial resources under the supervision of the Central Bank.

Foreign investors are able to get credit on the local market; however, access to credit is difficult due to the limited variety of credit instruments, high interest rates, and the number of guarantees requested by the commercial banks.  The World Bank Doing Business Report 2019 ranks STP 161 out 190 economies regarding access to credit, a two point drop from 2018. There are currently few significant U.S. investors active in STP.

Money and Banking System

STP has four private commercial banks.  Portuguese, Nigerian, Angolan, Cameroonian, Gabonese and Togolese interests (as well as those of STP) are represented in the ownership and management of the commercial banks.  In early 2018, the Central Bank (BCSTP) declared commercial bank “Private Bank” insolvent and opened a public tender to liquidate its assets and liabilities. The Gabonese investment bank BGFI opened its Sao Tomean operation in March 2012.  Banking services are available in the capital with a few smaller branches in cities in the north, south, and center of the country, as well as in Principe.

In addition to retail banking, commercial banks offer most corporate banking services, or can procure them from overseas.  Local credit to the private sector is limited and expensive, but available to both foreign and local investors on equal terms.  The country’s main economic actors finance themselves outside STP. Foreigners must establish residency to open a bank account.

Foreign Exchange and Remittances

Foreign Exchange

The Central Bank supervises the national financial system and defines monetary and exchange rate policies in the country.  Among other responsibilities, the Central Bank sells hard currency and establishes the reference rate. Access to foreign currency is limited; however, there is no official norm restricting access.  The Article 18 of the Investment Code, foreign investors are allowed to transfer or repatriate funds associated with an investment.

The Dobra, denoted by DB is the country’s national currency.  In July 2009, STP and Portugal signed an economic cooperation agreement to peg the Dobra to the Euro rather than a weighted basket of currencies.  As a result, since 2010, the Dobra has been pegged to the Euro. The Central Bank introduced the new currency in January 2018 to modernize and strengthen the country’s financial system.  The exchange rate is currently 1 euro to 24.5 DB. This peg offers credible parity, minimizes monetary instability costs, and provides better credibility for the exchange rate and monetary policy.  As of April 2019, USD 1 was equivalent to about DB 21.7.

Remittance Policies

Repatriation of capital is possible with prior authorization.  According to both the Foreign Exchange Law and the Investment Code, transfer of profits outside the country is also allowed after the deductions for legal and statutory reserves and the payment of existing taxes owed.  The government encourages reinvestments with associated reductions in income taxes.

Sovereign Wealth Funds

STP has a National Oil Account (NOA).  The NOA was previously funded by signing bonuses paid by energy and oil companies to gain rights to conduct exploration and production activities.  The Petroleum Law allows the government to withdraw up to 20 percent of the balance of the NOA every year as calculated on June 30 of the previous year.  Details are available on the state budget and under NOA online.

Capital Markets and Portfolio Investment

Tanzania’s Dar es Salaam Stock Exchange (DSE) is a self-listed publicly-owned company.  In 2013, the DSE launched a second tier market, the Enterprise Growth Market (EGM) with lower listing requirements designed to attract small and medium sized companies with high growth potential.  As of December 2017, DSE’s total market capitalization reached USD 10.5 billion, a 20.6 percent increase over the previous year’s figure. The Capital Markets and Securities Authority (CMSA) Act facilitates the free flow of capital and financial resources to support the capital market and securities industry.  Tanzania, however, restricts the free flow of investment in and out of the country, and Tanzanians cannot sell or issue securities abroad unless approved by the CMSA.

Under the Capital Markets and Securities (Foreign Investors) Regulation 2014, there is no aggregate value limitation on foreign ownership of listed non-government securities.  Despite progress, the country’s capital account is not fully liberalized and only foreign individuals or companies from other EAC nations are permitted to participate in the government securities market.  Even with this recent development allowing EAC participation, ownership of government securities is still limited to 40 percent of each security issued.

Tanzania’s Electronic and Postal Communications Act 2010 amended in 2016 by the Finance Act 2016 requires telecom companies to list 25 percent of their shares via an initial public offering (IPO) on the DSE.  Of the seven telecom companies that filed IPO applications with the CMSA, only Vodacom’s application received approval. In 2017, Vodacom planned to offer its shares from March 9 to April 19, but lack of demand required it to extend the offering period to July 28.  Moreover, to spur demand, the GoT opened the IPO to foreign investors who purchased 40 percent of the total shares offered.

As part of the Mining (Minimum Shareholding and Public Offering) Regulations 2016, large scale mining operators were required to float a 30 percent stake on the DSE by October 7, 2018.  On February 24, 2017, however, the GoT surprised the industry by amending the regulations so that the 30 percent stake had to be floated by August 23, 2017, rather than October 7, 2018. However, some mining companies have not listed on the DSE.

Money and Banking System

Finscope’s 2017 Financial Inclusion Report revealed that Tanzania’s financial inclusion rate increased to 65 percent in 2017 from 58 percent in 2013, primarily because of increased mobile phone usage.  However, participation in the formal banking sector still remains low. In 2017, low private sector credit growth and high non-performing loan (NPL) rates were persistent problems. In March 2017, the Bank of Tanzania (BoT) cut its discount rate to 12 percent from 16 percent to boost lending and economic growth, the first time it had cut interest rates since 2013.  In April 2017, the BoT reduced commercial banks’ statutory minimum reserves (SMR) requirement from 10 to 8 percent. These measures did not adequately spur lending, so in August 2017, the BoT reduced its discount rate for the second time from 12 to 9 percent. Despite these measures, private sector credit growth was lower than expected and NPL rates in December 2017 remained more than double the BoT’s targeted 5 percent rate.

In 2018, the BoT continued to address problems in the banking sector.  In January 2018, the BoT closed five community banks for under capitalization and gave an additional three until June 2018 to raise capital.  In its February 14, 2018 Tanzania Country Partnership Framework FY18-FY22, the World Bank reported that Tanzania’s “financial sector is stable despite high nonperforming loans…, which must be addressed.”  In a February 19, 2018 Circular titled “Measures to Increase Credit to Private Sector and Contain Non-Performing Loans,” the BoT issued guidelines to boost lending and reduce NPLs.

As of March 31, 2018, the banking sector was composed of 41 commercial banks, 6 community banks, 5 microfinance banks, 3 development financial institutions, 3 financial leasing companies and 2 credit bureaus. The two largest banks are CRDB Bank and National Microfinance Bank (NMB), which represent almost 30 percent of the market.  Private sector companies have access to commercial credit instruments including documentary credits (letters of credit), overdrafts, term loans, and guarantees. Foreign investors may open accounts and earn tax-free interest in Tanzanian commercial banks.

The Banking and Financial Institution Act 2006 established a framework for credit reference bureaus, permits the release of information to licensed reference bureaus, and allows credit reference bureaus to provide to any person, upon a legitimate business request, a credit report.  Currently, there are two private credit bureaus operating in Tanzania – Credit Info Tanzania Limited and Dun & Bradstreet Credit Bureau Tanzania Limited.

Foreign Exchange and Remittances

Foreign Exchange Policies

Tanzanian regulations permit unconditional transfers through any authorized bank in freely convertible currency of net profits, repayment of foreign loans, royalties, fees charged for foreign technology, and remittance of proceeds. The only official limit on transfers of foreign currency is on cash carried by individuals traveling abroad, which cannot exceed USD 10,000 over a period of 40 days. Investors rarely use convertible instruments.

In 2018 and 2019, the Bank of Tanzania inspected all forex shops in the country and ultimately found that most of them did not meet the requirements of new laws governing the businesses.  As a result, more than ninety percent of the Forex bureaus in country were closed. The government then licensed the commercial banks and Tanzania Post Corporation to open forex shops.

Remittance Policies

There are no recent changes or plans to change investment remittance policies that either tighten or relax access to foreign exchange for investment remittances.

Sovereign Wealth Funds

Tanzania has not established a sovereign wealth fund.