The members of the Economic and Monetary Community of Central African States (CEMAC) adopted on March 1, 2019, a new currency regulation. Gabon, Cameroon, Republic of Congo, Equatorial Guinea, Central African Republic and Chad have essentially mandated their Central Bank (BEAC) to restrict foreign currency payments from individuals and businesses in member countries.

For Leoncio Amada Nze, president for the CEMAC region of the African Energy Chamber (AEC), the BEAC must reconsider its new Forex regulations to save jobs in Gabon, Cameroon, the Republic of Congo, Equatorial Guinea, Central African Republic and Chad. And he argues:

“On March 1, 2019, new currency regulations were adopted by members of the Economic and Monetary Community of Central African States (CEMAC). Its member states Gabon, Cameroon, Republic of Congo, Equatorial Guinea, Central African Republic and Chad have essentially mandated their Central Bank (BEAC) to restrict foreign currency payments from individuals and businesses in these member countries. . Recognizing the importance of the energy sector and the challenges of its implementation, the Central Bank authorized an implementation period until December 31, 2020. On this date, all sectors of the economy without exception will be subject to the new regulations. Its key measures include:
• Any transaction of more than 1 million F.CFA (approximately 1,700 USD) per month and per entity or person now attracts much more bureaucracy and therefore leads to delays of several weeks. Small and medium-sized service providers in the oil and gas and energy infrastructure sectors are now doomed to seek qualification documents and approval from Government and Central Bank bureaucrats, who very often use their powers discretionary to slow down or reject justifiable documents for their day-to-day transactions. The result is that local businesses, already facing significant challenges, especially small and medium-sized entrepreneurs, are being pushed out of business. For the energy sector, the African Energy Chamber estimates in particular hundreds of thousands of jobs lost.
• Companies and individuals must now also receive authorization from the BEAC before opening an account outside the region. This again puts businesses in the region at the mercy of the Central Bank and government bureaucrats who have full discretion to decide whether to accept or reject an application for a foreign account. There are many valid reasons for businesses to have offshore accounts, including ease of doing business, ease of payments, tax efficiency, and lower transaction costs. Local Central African companies, such as suppliers of chemicals used in the oil industry in Malabo, or EPC contractors in Douala will be at a clear disadvantage compared to foreign competitors who will be able to supply the same goods and services from their offshore base, thus avoiding additional costs and hassles. The result is the inability to create local content in Central Africa's energy sector and a reduction in the amount countries earn per dollar barrel of revenue generated.
• As for requesting authorization before opening foreign accounts, foreign currency accounts domiciled in the region are now only possible with the express authorization of the BEAC. The result will probably be similar. Local companies operating in the oil and gas sector, for example, which is dominated by the dollar, will be unnecessarily exposed to currency fluctuations, eating into their margins and resulting in poor competitiveness vis-à-vis foreign competitors. Local suppliers, in Congo or in Gabon's oil and gas sector who source from abroad, are already unable to compete with foreign companies under these new regulations.
• In addition to the commissions that economic actors already pay to commercial banks during transactions, the Central Bank also announced a month ago that it was going to levy an additional tax of 0.5% on all transfers outside the zone CEMAC. The consequences for local content development will be devastating when this new tax comes into effect, starting in January 2021.
• Finally, the regulation requires that the product of exports of 5 million F.CFA and more be repatriated within 150 days from the date of export. While the African Energy Chamber understands the desire to repatriate these export products, we expect that many companies will seek to avoid placing their export proceeds under the highly restrictive foreign exchange regime that will come into place. on January 1, 2021.
The African Energy Chamber therefore understands the willingness of governments to protect their declining foreign exchange reserves following the reduction in revenue from oil and gas revenues since the oil price crash of 2014 and the recent plunge triggered by COVID. -19. However, we believe that the new exchange regulations are a bad and inappropriate response to these new market dynamics. It's a trigger for more bureaucracy, corruption and it's the ultimate job killer.
The fight for decent, well-paid jobs in Africa's energy sector is central to what the African Energy Chamber stands for. We believe that affordable energy and reliable energy is a major ingredient for development. The energy sector is therefore at the forefront of Africa's development and its jobs must be sacrosanct for any well-meaning government. In many African countries, the energy industry is not only responsible for providing much-needed energy for the country's development, it is also responsible for a large portion of government revenue. In Central Africa, it is more than 60% on average, up to 90% in countries like Gabon. Such policies adversely affecting the oil and gas industry are therefore incomprehensible, especially in light of recent efforts to strengthen local content and empower local entrepreneurs.
The end of investments. The restrictions will lead to a drying up of foreign investment in Central Africa. Access to foreign financing for local businesses, which was already a challenge, now seems insurmountable. Foreign banks, hedge funds and other traditional and non-traditional lenders will not subject their investments to such restrictions. Foreign companies based abroad will continue to strengthen their position to serve the industry from abroad, to the detriment of local companies and local jobs in the sector.