Capital Markets and Portfolio Investment

The  banking sector is accounted to provide limited financing to businesses.  The government reports that 2 microfinance institutions operate in country and the government has started a microcredit program for SMEs.  The country does not have its own stock market.  According to investors, capital markets are non-existent.

Credit is available but interest rates are  high, ranging from 12 to 18 percent for mortgages, and about 15 percent for personal loans.  Business loans generally require significant collateral, limiting opportunities for entrepreneurs, and may have rates of 20 percent or greater.  It is unclear if foreigners could obtain credit.

Money and Banking System

There is banking coverage throughout the country and it is concentrated in urban centers.  There is little information available about assets and the health of the banking system. The Equatorial Guinea National Bank (BANGE) has 29 branches throughout the country.  According to a November 2017 article, BANGE had over 80,000 clients, approximately 10 percent of the population. CCEI/CCIW Bank de Guinea Ecuatorial has four branches in the largest cities and is a subsidiary of First Bank Afriland (Cameroon).  BGFIBank Guinée Equatoriale operates as a subsidiary of BGFI Holding Corporation (Gabon). Pan-African EcoBank (Togo) and Societal Générale (France) also operate in Equatorial Guinea. According to the United Nations, in 2016 approximately 20 percent of the population had deposits in commercial banks.  If a bank does not have a branch in the location where an individual wants to do business, they would not have access their funds there. ATMs are in limited locations.

The Government of the Republic of Equatorial Guinea is a member of the Economic and Monetary Community of Central African States (CEMAC) and shares a regional Central Bank with other CEMAC members.  Members have ceded regulatory authority over their banks to CEMAC, but also are entitled to national BEAC Branches. Bata and Malabo each have a branch. The government of the Republic of Equatorial Guinea is also a member of the Banking Commission of Central African States within CEMAC.

Foreigners must provide proof of residency to establish a bank account.

The country is an almost entirely cash economy, with credit cards available, but not widely used in the general population.  Primarily visitors or wealthy citizens use credit cards at international hotels, international airlines, and major supermarkets.

The banking sector is affected by = relatively lengthier bureaucratic procedures and a lack of computerized record-keeping. Customers have reported that currency is not always available on demand, and  occasional problems making transfers or exchanging local currency into foreign exchange.

Foreign Exchange and Remittances

Foreign Exchange Policies

Decree No. 54/1994 provides the right to freely transfer convertible currency abroad at the end of each fiscal year. Many businesses have reported that limited financial services create barriers to successfully executing international transfers.  On April 1, 2019 the CEMAC Central Bank published a regulation to enforce an existing requirement to maintain bank accounts in CFA rather than foreign exchange, with a 6-month moratorium until October 1, 2019. Account holders are theoretically able to convert funds to foreign exchange through an administrative process.  It is unclear if this applies to all accounts in the region.

Local currency is not widely available in the Central African Franc zone, but can be relatively easily obtained in the Republic of Equatorial Guinea.

Equatorial Guinea does not engage in currency manipulation as the CFA franc currently has a fixed exchange rate to the euro: 100 CFA francs = 1 former French (nouveau) franc = 0.152449 euro; or 1 euro = 655.957 CFA francs exactly.  Thus, the exchange rate of the currency fluctuates according to the value of the euro.

Remittance Policies

On April 1, 2019 the CEMAC Central Bank published a regulation to enforce an existing requirement to maintain bank accounts in CFA rather than foreign exchange, with a 6-month moratorium until October 1, 2019.  Account holders are theoretically able to convert funds to foreign exchange through an administrative process. It is unclear if this applies to all accounts in the region.

Sovereign Wealth Funds

The Government of the Republic of Equatorial Guinea established a sovereign wealth fund, the Fund for Future Generations, in 2002.  According to investors, the fund has little transparency regarding how the fund it is managed or the value of the fund. A 2017 press report estimated the fund to have USD 413 million, or 1.6% of Equatorial Guinea’s GDP.  The Sovereign Wealth Fund Institute estimates assets under management of USD 165.5 million. There is no publically available information on its allocations.

Capital Markets and Portfolio Investment

The Gabonese government encourages and supports foreign portfolio investment, but Gabon’s capital markets are poorly developed.  Gabon has been home to the Central Africa Regional Stock Exchange, which began operation in August 2008.  However, the Bank of Central African States is in the process of consolidating the Libreville Stock Exchange into a single CEMAC zone stock exchange to be based in Doala, Cameroon by July 2019.

There are no existing policies that facilitate the free flow of financial resources into the product and factor markets.

On June 25, 1996, Gabon formally notified the IMF that they accepted the obligations of Article VIII, Sections 2, 3, and 4 of the IMF Articles of Agreement. Article VIII, Sections 2 and 3 provides that members shall not impose or engage in certain measures, namely restrictions on making payments and transfers for current international transactions, discriminatory currency arrangements, or multiple currency practices, without the approval of the Fund.

Foreign investors are authorized to get credit on the local market and have access to all the variety of credits instruments offered by the local banks, without any restrictions.

Money and Banking System

The banking sector is composed of seven commercial banks and is open to foreign institutions.  It is highly concentrated, with three of the largest banks accounting for 77 percent of all loans and deposits.  The lack of diversified economy has constrained bank growth in the country, given that the financing of the oil sector is largely undertaken by foreign international banks.  Access to banking services outside major cities is limited.

The IMF December 2018 report indicated “the banking sector appears broadly sound and profitable,” although the non-performing loan ration was relatively high at 11.3 percent in the first quarter of 2018.  Three public banks are under liquidation. Protracted low oil prices have had an impact on banking activities. Furthermore, CEMAC regulations on currency transfer established in 2000 began to be enforced in earnest in late 2018, restricting access to foreign currency.  At least one commercial bank lost its dollar correspondent banking relationship in 2018.   Gabon estimated the net deposit money of banks in the third quarter of 2018 at 435 billion CFA (USD 725 million).

Gabon shares a common Central Bank (Bank of Central African States) and a common currency, the Communauté Financière Africaine (CFA) Franc, with the other countries of CEMAC.  The CFA is pegged to the euro.

Foreign banks are allowed to establish operations in the country.  There is one U.S. bank (Citigroup) present in Gabon. There are no restrictions on a foreigner’s ability to establish a bank account.

Gabon’s financial system is shallow and financial intermediation levels remain low compared to other developing countries.  The government plays an important role in the financial sector. It controls two of the nine banks and has a stake in most of the others.  Domestic credit is limited and expensive in Gabon. The microfinance sector is only just starting to emerge in the country with few regulated microfinance institutions (MFIs) registered, covering only a limited segment of the population.  However, a substantial number of informal, unregulated MFIs are believed to operate in the country. Banks, even though highly liquid, are extremely prudent in providing credit. The majority of the population lacks access to any type of financial services, as even traditional informal mechanisms, prevalent in other African economies, are scarce.  In efforts to increase access to finance, Gabon has recently supported the establishment of a development and growth fund to support small and medium enterprises, as well as the creation of a specialized agency to promote private investment.

Foreign Exchange and Remittances

Foreign Exchange Policies

The Bank of Central African States’ policy on foreign exchange requirements is in flux.  Please contact the Embassy for additional information.

Gabon’s currency is CFA, which is convertible and tied to the Euro (EUR 1 equals CFA 656).  As of March 2019, 1 U.S. dollar is roughly equivalent to CFA 612.

Remittance Policies

There government recently changed investment remittance policies to tighten access to foreign exchange for investment remittances.  There is no time limitation on capital inflows or outflows.

Sovereign Wealth Funds

Gabon created a Sovereign Wealth Fund (SWF) in 2008.  Initially called the Fund for Future Generations (Fonds des Génerations Futures) and later the Sovereign Funds of the Gabonese Republic (Fonds Souverain de la République Gabonaise), the current iteration of Gabon’s SWF is referred to as Gabon’s Strategic Investment Funds (Fonds Gabonaise d’Investissements Stratégiques, or FGIS).  As of September 2013, the most recent FGIS report, the FGIS had a reported USD 2.4 billion in assets and was actively making investments.  The FGIS has the goals of allowing future generations to share income derived from the exploitation of Gabon’s natural resources, diversifying risk by investing surplus revenue, contributing to economic development, and encouraging investment in strategic sectors of Gabon’s economy.  Officially, 10 percent of Gabon’s annual oil revenues are dedicated to the sovereign wealth fund. Details regarding the FGIS’ assets and investments are not publicly available. Gabon’s sovereign wealth fund does not follow Santiago principles, nor does Gabon participate in the IMF-hosted International Working Group on SWFs.

Capital Markets and Portfolio Investment

In Guyana, interest rates on capital loans typically range from 10 percent to 20 percent.  The Minister of Finance must grant permission for a foreign investor to borrow more than USD 10,000 (GYD 2 million) from a local bank.  The GoG sells Treasury Bills at auction to finance the public debt. Past attempts at private bond financing have failed, and private companies have not made any large bond offers in recent years.

Guyana adopted the Credit Reporting Act No. 9 of 2010, which guarantees consumers’ right to access their data.  The first credit reporting bureau license was granted to Creditinfo, which went into effect on July 15, 2013, and was open for business to the public starting December 1, 2013. The credit-reporting bureau has been working with banks and utility companies to compile reliable credit information for use by lenders.  Lack of access to capital remains a serious barrier to entrepreneurship and business expansion in the country.

The Guyana Association of Securities Companies and Intermediaries Inc. (GASCI) was formed in 2003 and operates the Guyana Stock Exchange.  GASCI consists of four member firms, all of which trade on the stock exchange. The Guyana Stock Exchange trades shares in companies that are either listed on the primary list or on the secondary list.  Inclusion on the primary list is a time consuming and expensive process. Thus far, only one company, Trinidad Cement Ltd., has been able to register on the primary list. However, it voluntarily delisted from the Guyana Stock Exchange effective January 18, 2016.  The secondary list is composed of 16 companies, and consists of those companies that are registered with the Guyana Securities Council (GSC) and, thus, eligible to trade. As of December 2018, total market capitalization was USD 1.4 billion. Trade volume on the Guyana Stock Exchange remains very light due both to the limited number of companies and shares on offer.

The Guyana Securities Council (GSC) is the regulatory body for the securities industry.  According to some reports, since its creation in 2001, it has struggled to obtain required disclosure information from listed, local firms.

Money and Banking System

The Central Bank of Guyana was established by virtue of the 1965 Bank of Guyana Ordinance.  Guyana’s banking system remains underdeveloped. Inefficiencies and delays periodically plague the foreign currency market.  In addition, most Guyanese banks are owned by large Guyanese companies that sell locally and export. Because Guyana has yet to develop an effective interbank trading system, some banks may be short of foreign exchange while others have currency available.  Despite some businesses reporting currency shortages at times, the overall reserves of the Central Bank and commercial banks are more than sufficient for the amount of trading that occurs.

The banking system in Guyana is liquid.  Local bank statements reveal that deposits continue to increase even as loans remain flat, a trend that suggests the existence of a large informal, cash-only economy. Analysts estimate that informal economic activity accounts for 50 percent or more of Guyana’s total economy.  Eager to lend money, but skeptical of Guyana’s legal system, banks claim an inability to find suitable local applicants for loans at prevailing interest rates.

The six commercial banks are by far the most important financial institutions in Guyana with assets worth GYD 471 billion (USD 2.3 billion) in 2017, equivalent to 74 percent of the Gross Domestic Product (GDP).  Two of the six banks, Scotia Bank and the Bank of Baroda, announced in late 2018 that they intend to sell their banking operations in Guyana.

Foreign banks are able to provide domestic services or enter the market with the applicable license from the Central Bank.  There are also no restrictions on a foreigner’s ability to establish a bank account. The Central Bank is currently in the process of implementing Real-Time Gross Settlement, allowing for money transactions to occur in real time.   The country has lost correspondent banking relationships with Bank of America, but banks have been able to maintain and acquire other correspondent banking relationships with banks from the United States, Canada, India, and the United Kingdom.

Foreign Exchange and Remittances

Foreign Exchange

The Guyana dollar (GYD) is fully convertible and transferable.  The Guyanese dollar is also generally stable and its value against the U.S. dollar remained relatively unchanged during the second half of 2018.

According to the 2017 Bank of Guyana Annual Report, the official, average exchange rate was USD 1 to GYD 206.5 at the end of 2017 (https://www.bankofguyana.org.gy/bog/images/research/Reports/ANNREP2017.pdf ).  However, in recent years, the exchange rate has been under pressure, as evidenced by a 2017 rise in real prices reflecting a reported shortage of foreign currency by the private sector and “cambios” (or currency houses).  Consequently, the GoG was forced to introduce a stipulation limiting the spread between the buying and selling rate to 3 points in January 2017. Since then, the Ministry of Finance and the Bank of Guyana have jointly noted that stabilizing the foreign exchange rate, which currently floats as high as GYD 215-220 per USD, is of utmost priority to the GoG, though both have stated that there is no shortage of dollars at the Bank of Guyana or Guyana’s reserves and retention bank accounts.

As noted above, Guyana generally has a floating exchange rate that is determined by supply and demand, which is predominantly driven by activities in Guyana’s three largest commercial banks.  In 2017, the government lightly intervened in support of the Guyanese dollar with some success, such as limiting the local conversion of Barbados and Trinidad and Tobago dollars to US dollars.  The government will likely continue to intervene as necessary in defense of the Guyanese dollar and its international reserves, but is also committed to a free market floating exchange rate.

No limits exist on inflows or repatriation of funds, although there are spot shortages of foreign currency.  Regulations also require that all persons entering and exiting Guyana declare all currency in excess of USD 10,000 to customs authorities at the port of entry.

In practice, many large foreign investors in Guyana use subsidiaries outside of Guyana to handle earnings generated by the export of primary products, including timber, gold, and bauxite.  Those companies then advance funds to their local entities to cover operating costs.

Remittance Policies

There is no limit to the acquisition of foreign currency, although the government limits the amount that a number of state-owned firms may keep for their own purchases.  Regulations on foreign currency denominated bank accounts in Guyana allow funds to be wired in and out of the country electronically without having to go through cumbersome exchange procedures.  Foreign companies operating in Guyana have experienced no government-induced difficulties in repatriating earnings in recent years.

Many businesses have reported that Guyana is neither an important regional nor offshore financial center.  It also does not have any free trade zones. Money laundering is perceived as a serious problem and has been linked to drug trafficking (principally cocaine), illegal gold trade, firearms, corruption, and fraud, as well as to the influx of foreign currency. Guyana has a large informal economy in which cash is preferred by both buyers and sellers for most transactions, making it highly vulnerable to money laundering.

However, Guyana has strong legislation relating to money laundering and terrorist financing.  Its anti-money laundering legislation covers legal persons and provides enhanced due diligence for politically exposed persons.  Guyana has comprehensive know-your-customer (KYC) and suspicious transaction reporting (STR) regulations.  There is also a records exchange mechanism in place with the United States and other governments.  Guyana is a member of and most recently chaired the Caribbean Financial Action Task Force (CFATF), a FATF-style regional body.

Sovereign Wealth Fund

On February 6, 2019, President David Granger assented to the Natural Resources Fund Bill, bringing it into law.  This law provides the legal framework for the establishment of the Natural Resources Fund (NRF, sovereign wealth fund) that will manage 100 percent of the imminent oil wealth for future generations, while emphasizing greater initial spending to develop the country’s lacking infrastructure.

Capital Markets and Portfolio Investment

The regulatory system is effectively established to encourage and facilitate portfolio investment.   Through the Central Bank of Lesotho (CBL), the GOL promotes the development of financial markets in Lesotho through managing official foreign reserves, implementation of monetary policy through Open Market Operations, and contracting and managing the Government’s domestic debt through issuance and redemption of treasury securities.  Financial markets in Lesotho have been developed in phases.  The first phase focused on money markets development (treasury bills) in 2008 by increasing the frequency of auctions and increasing the number of tenors.  To broadly develop capital markets, this was followed by the introduction of government bonds in 2010, with the last phase being the development of a corporate bonds and equities market.  The stock of portfolio investment liabilities amounted to USD28.5 million at the end of 2010 and comprised mostly bonds. Lesotho’s capital market is relatively underdeveloped, with no secondary market for capital market transactions.  Through publication of the Capital Markets Regulations of 2014, the government established and launched the Maseru Securities Market, the country’s stock market, in January 2016. The Regulations, documented in the Government Gazette No. 76, provide for the operation of a market that is fair, orderly, secure, and transparent.  The Regulations further provide for investor protectios and the licensing of all market players. Although the stock market was formally launched three years ago, it is not functioning; there are neither companies listed nor securities being traded. The registering of companies in the stock market will increase the ability of businesses to raise medium to long-term capital.  The trading of government bonds; corporate bonds and company shares is strictly electronic—there is no physical building. For now, bond trading is operated by the Central Bank of Lesotho, with the hope that the private sector will take over when fully capacitated. For the 2018/19 fiscal year, the government financed a fiscal deficit of approximately USD 85.7 million through domestic borrowing.

The government accepted the obligations of IMF Article VIII in 1997, and continues to refrain from imposing restrictions on the making of payments and transfers for current international transactions.  Foreign participation in government securities is allowed as long as foreign investors can open accounts with local banks through which funds can be collected. Lesotho is part of the Common Monetary Area (CMA) and therefore facilitates free movement of capital.  The current account has been fully liberalized for all inward and outward cross-border transactions. However, some transactions still need approval from the Central Bank. Credit is usually allocated on market terms, although there are structural bottlenecks in the market and perceived distortions.  For example, lending rates are considered to be higher in the country despite excess liquidity in the system.

According to the IMF and the World Bank private sector credit is growing.  A Central Bank of Lesotho report in December 2018 reflected that private sector credit grew by 10.2 percent.  Credit is allocated on market terms, and foreign investors are able to get credit on the local market. However, the banking sector is characterized by conservative lending guidelines, high interest rates, and large collateral requirements.  Foreign investors that meet credit extension criteria are provided with credit from commercial banks. While the local banking system may not be as developed in terms of credit instruments, there are foreign investors who have qualified for loans, bank overdrafts, etc. from commercial banks.  LNDC does not provide credit to foreign investors but can acquire equity in foreign companies investing in strategic economic sectors. The private sector has access to a limited number of credit instruments, such as credit cards, loans, overdrafts, checks, and letters of credit.

In January 2016, Lesotho’s first credit bureau was launched; the latest in a long series of incremental steps by the government to further improve access to finance for the private sector.  The credit bureau, run by Compuscan, a South African credit bureau, facilitates the exchange of consumer credit information among credit providers to enable them to make better assessments of risk and promote responsible borrowing and lending practices.

Money and Banking System

Lesotho has a central bank and four commercial banks—three subsidiaries of South African banks (subject to measures and regulations under the Institutions Act of 2012) and the government-owned Lesotho Post Bank (LPB)— which serve about 435,000 Basotho, approximately 38 percent of the adult population, through 49 branches.  The number of bank branches and automated teller machines (ATMs) are distributed unevenly across the country. In Maseru, there are about 16 branches and ATM locations for every 100,000 people, whereas in Mokhotlong, for example, there are only three branches and ATM locations for every 100,000 people. According to the CBL, the banking system is sound—commercial banks in Lesotho are well-capitalized, liquid, and compliant with international banking standards.  Three South African banks account for almost 92 percent of the country’s banking assets, which totaled over M16.07 billion (USUSD 1.1 billion) by December 2017. The share of bank nonperforming loans to total gross loans was approximately 3.7 percent in December 2018. Foreigners are allowed to establish a bank account and may hold foreign currency accounts in local banks; however, they are required to provide a residence permit as a precondition for opening a bank account to comply with the “know your customer” requirements.

Foreign Exchange and Remittances

Foreign Exchange Policies

There are no restrictions on converting or transferring funds associated with an investment into a freely usable currency and at a legal market-clearing rate.  Subject to foreign exchange (forex) control rules, Lesotho’s policy is that foreign investors may access forex for day-to-day business purposes and can remit capital and profits overseas.  Investors may hold foreign currency accounts in local banks. Lesotho has acceded to Article VIII of the IMF charter, which provides for foreign exchange convertibility of current account transactions.  For loan repayments, investors must notify the Central Bank of Lesotho (CBL) at the outset of an investment that the capital for that investment is a loan and must disclose the terms of the loan. Lesotho is a member of the Southern African Common Policy on approval of foreign loans.  The Central Bank has fully liberalized inward flows. For outward flows, individuals are allowed to invest up to USD 285,714 per year while legal entities are allowed up to USD 36 million per year. Repatriation of funds abroad by non-residents is not restricted provided there is proof that the declaration of such funds was made when non-residents came to the country.  Loans require approval from the Central Bank.

The CBL has authorized three commercial banks and two private money exchange bureaus in Lesotho to deal in forex. However, the CBL still retains the power to approve forex requirements for all capital account transactions including FDI, capital disinvestment, and contracting and servicing offshore debt.  The procedures for approving dividend remittances are somewhat bureaucratic, similar to other countries that have forex control regimes. Copies of audited company accounts are required for final dividend payments, while interim dividends require only management accounts. Tax clearance certificates are required for both interim and final dividend payments.

Lesotho’s fiscal and monetary policies operate within the context of its membership of the Common Monetary Area (CMA).  The CMA consists of the following SACU countries: Lesotho, Namibia, Swaziland, and South Africa. Under the CMA, the national currency, the loti, is pegged at par to the South African rand, which is also accepted as legal tender in Lesotho.  As a member of the CMA, Lesotho has free convertibility of transactions with Namibia, South Africa, and Swaziland. Under this regime, Lesotho has effectively surrendered its monetary policy to the South African reserve bank, and, therefore, cannot engage in currency manipulation.  To maintain the rand/loti peg, Lesotho maintains reserves in rand and other foreign currencies. Lesotho’s prudent management of its reserves enables it to offer free forex convertibility for all current account transactions.

The country, through its central bank, issued a statement on November 2017, to announce its position on emerging block-chain technologies, in particular cryptocurrencies.  In its statement, the bank highlighted that cryptocurrencies do not fall under the purview of its regulatory scope, and the nature of cryptocurrency transactions violate existing laws, exchange laws, and anti-money laundering/combatting of terrorist financing laws.

Remittance Policies

According to the CBL, there are no plans to change remittance policies in the near future.  The current average delay period for remitting investment returns such as dividends, return of capital, interest and principal on private foreign debt, lease payments, royalties, and management fees through normal legal channels is two days, provided the investor has submitted all the necessary documentation related to the remittance.  There has never been a case of blockage of such transfers, and shortages of forex that could lead to blockage are unlikely given that the CBL maintains net international reserves at a target of six months of import cover.

Sovereign Wealth Funds

There is no sovereign wealth fund or asset management bureau in Lesotho. 

Capital Markets and Portfolio Investment

In accordance with Article 3.1 of the Investment Code, the Government of Mauritania guarantees any individual or legal entity wishing to undertake business activities in the country the freedom of establishment in accordance with laws and regulations.  Private entities, whether foreign or national, have the right to freely establish, acquire, own, and/or dispose of interests in business enterprises and receive legal remuneration. Privatization and liberalization programs have also helped put private enterprises on an equal footing with respect to access to markets and credit.  In principle, government policies encourage the free flow of financial resources and do not place restrictions on access by foreign investors. Most foreign investors, however, prefer external financing due to the high interest rates and procedural complexities that prevail locally. Credit is often difficult to obtain due to a lax legal system to enforce regulations that build trust and guarantee credit return.  There are no legal or policy restrictions on converting or transferring funds associated with investments. Investors are guaranteed the free transfer of convertible currencies at the legal market rate, subject to the availability. Similarly, foreigners working in Mauritania are guaranteed the prompt transfer of their professional salaries.

Commercial bank loans are virtually the only type of credit instrument.  There is no stock market or other public trading of shares in Mauritanian companies.  Currently, individual proprietors, family groups, and partnerships generally hold companies, and portfolio investments.

Money and Banking System

The IMF has in the past assisted Mauritania with the stabilization of the banking sector and access to domestic credit has become easier and cheaper.  A proliferation of banks has fostered competition that has contributed to the decline in interest rates from 30 percent in 2000 to 10 percent in 2009, not including origination costs and other fees.  Interest rates have remained stable since 2009, ranging between 10 to 17 percent as of April 2019.

The banking system is stable but fragile.  In 2018, GDP growth is estimated at 3.5 percent, up from 3.0 percent in 2017 and 1.4 percent in 2015.  Nevertheless, this rebound remains fragile as liquidity constraints in the financial market, arising from fiscal consolidation and an ineffective monetary policy, continue to dampen liquidity in the banking sector.  The country’s five largest banks are estimated to have USD 100 million in combined reserves; however, these figures cannot be independently verified, making an evaluation of the banking system’s strength impossible. As of April 2019, 25 banks, national and foreign, currently operate in Mauritania, despite the fact that only some 15 percent of the population holds bank accounts.  The Central Bank of Mauritania is in charge of regulating the Mauritanian banking industry, and the Central Bank has made reforms to streamline the financial sector’s compliance with international standards. The Ministry of Economy and Finance mandates that the Central Bank perform yearly audits of Mauritanian banks. There are no restrictions enforced on foreigners who wish to obtain an individual or business banking account.

In 2017, the Central Bank significantly reduced direct foreign currency sales to the private sector to better enforce foreign exchange regulations as part of its drive to allow for a more flexible determination of the exchange rate.  In 2018, the Central Bank of Mauritania lost all correspondence banking relationships with banks in the United States. This occurred because of de-risking policies enforced by U.S. banks.

Foreign Exchange and Remittances

Foreign exchange

There are no legal or policy restrictions on converting or transferring funds associated with investments.  Due to the global de-risking phenomenon, there are currently no correspondent banking relationships between U.S. and Mauritanian banks.  Local branches of international banks (such as Societe Generale or Attijari) do maintain correspondent banking relationships with U.S. banks and are able to clear transactions in USD.

Investors are guaranteed the free transfer of convertible currencies at the legal market rate, subject to the availability of such currencies. Similarly, foreigners working in Mauritania are guaranteed the prompt transfer of their professional salaries.  To transfer funds, investors are required to open a foreign exchange bank account in Mauritania. There are no maximum legal transaction limits for investors transferring money into or out of Mauritania, although regulations to withdraw money may be complicated in practice.

The local currency, the ouguiya, is freely convertible within Mauritania, but its exportation is not legally authorized.  Hard currencies can be obtained from the central bank and local commercial banks. The Central Bank holds regular foreign exchange auctions, allowing market forces to fix the value of the ouguiya.  Individuals and companies may obtain hard currency through the informal market and commercial banks for the payment of purchases or the repatriation of dividends. If the bank has hard currency available, there is no delay in effect for remitting investment returns.  However, if the bank does not have sufficient reserves, the hard currency must be obtained from the Central Bank in order to conduct the transfer. The Central Bank is required to prioritize government transfers, which could present further delays. Delays of one to three weeks, although relatively uncommon, can occur.

In January 2018, the government of Mauritania introduced a new currency.  The new currency drops a zero from the country’s previous currency; however, the value and the name of the currency remain unaffected by the change.  Local banks had to adapt their software, change their checkbooks, and reconfigured their ATMs to bring them into compliance with the new currency.

Remittance Policies

There are no legal parallel markets in Mauritania that would allow investors to remit investments through other means.  There is no limit on the inflow or outflow of funds for remittances of profits, debt service, capital or capital gains.

Businesses transfer money through the traditional Hawala system—they deposit their money in a Hawala store and designate a beneficiary for pick up.  The Hawala system has become a reliable substitute to the high interest rate, long wait period and transaction fees imposed by local banks. However, in March 2019, the Central Bank closed 700 illegal money transfer points to restructure the financial sector.  Currently, only nine agencies have a provisional authorization for transfer of funds.

Sovereign Wealth Funds

The Central Bank administers the National Fund for Hydrocarbon Reserves, a sovereign wealth fund (SWF), which was established in 2006.  The SWF is funded from the revenues received from the extraction of oil, any royalties and corporate taxes from oil companies, and from the profits made through the fund’s investment activities.  The fund’s mandate is to create macroeconomic stability by setting aside oil revenues for developmental projects. However, the fund’s management is considered to lack transparency and the projected revenue streams remain unrealized.