Standard Bank helps clients to interpret Foreign Exchange Law

In addition to disclosing the main changes made to foreign exchange regulations and procedures, as set forth in Notice 20/GBM/2017 of the Bank of Mozambique, as a Foreign Exchange Authority, the purpose of the meeting was to raise awareness among clients about aspects that have an impact on their activities.

The changes made to this law are essentially aimed at adjusting legislation to market dynamics, maintaining the principle of liberalization of current transactions, introducing the automatic authorization of certain capital transactions and strengthening the monitoring of foreign exchange transactions.

Addressing the participants, Joaquim Uaiene, director of Compliance of Standard Bank, explained that the purpose of the meeting was the fact that commercial banks, in light of this decree, started to act as in termediaries between clients and the Central Bank.

“Our goal is to help our clients to carry out operations in a transparent manner and in accordance with the legal principles in force in the country, so we promote this interaction between the clients and the bank team they deal with in their daily activities. Given the fact that communication with the Central Bank is done through commercial banks, we have seen the need to inform clients about the changes made to the Foreign Exchange Law to ensure that operations continue without any constraints”, said Joaquim Uaiene.

Among the innovative aspects introduced by Notice 20/GBM/2017 is the need to create specific accounts for income from exporting goods and services or for investments abroad, which includes a set of restrictions imposed by the regulator on the use of export earnings for payments in the domestic market.

The changes also include, a non-compulsory conversion of export revenues into the national currency (the Metical), foreign investments by residents up to a limit of USD 250,000 through the national banking system, exemption from prior authorization of the Bank of Mozambique for the purposes of Foreign Direct Investment, the authorization to receive loans and financial credit from abroad, up to USD 5,000,000.00.

In the end, the clients recognized the importance of the meeting, given that this matter has to do with the day-to-day activities of companies, regardless of their size or sector.

“The meeting was useful, and we noticed that profound changes were made to the law. It is not always easy to interpret or enforce a law, so it is always important for banks to interact with clients so that they can raise questions and get clarifications”, said Nália Timba, an advisor to the Board of Directors of Portos e Caminhos de Ferro de Moçambique (CFM).

Jaime Novela, from Britam Seguros, is of the opinion that these changes, in addition to liberalizing current transactions, “will strengthen the national currency, Metical, and thus avoid currency fluctuations, which is one of the reasons behind the losses registered by the companies when there is foreign exchange instability”.