A 2014 note on the main provisions of the exchange regulations governing CEMAC, the Central African Economic and Monetary Community (Communauté Economique et Monétaire de l’Afrique Centrale), adopted in 2000.
CEMAC was founded in 1994; it is composed of six central African states: Cameroon, the Republic of Congo, the Central African Republic, Chad, Gabon and Equatorial Guinea. Its purpose is to create a common market amongst its member states through the implementation of a commercial, custom and monetary harmonized regulatory framework.
On 29 April 2000, the ministerial committee adopted regulation n°02/00/CEMAC/UMAC/CM on foreign exchange (the Exchange Regulation) aimed at providing a basic regulatory framework; each member state can choose to adapting the Exchange Regulation. Local legislation of individual member states should therefore also be taken into account, especially with regard to the thresholds.
The legal currency within CEMAC is the CFA Franc (FCFA), which is pegged to the euro at 0.001524 euros to 1 FCFA. Its exchange rate with other currencies is based on a fixed exchange rate between those currencies and the euro on foreign exchange markets.
The Exchange Regulation distinguishes between Zone Franc states (members of CEMAC; of UEMOA, the West African Economic and Monetary Union [Union Economique et Monétaire des Etats d’Afrique de l’Ouest ]; and France including its overseas departments and territories [Zone Franc]) and other countries.
The Exchange Regulation also distinguishes between ‘residents’ (entities whose principal place of business/economic interest is located within CEMAC and ‘foreigners’ (entities in countries which are not CEMAC member states) (Non-Residents). Zone Franc residents are assimilated to Residents, except for transactions relating to gold, certain loans, direct investments and transactions relating to foreign securities (valeurs mobilières), as well as the export and repatriation of their revenue.
Payment within Zone Franc
The Exchange Regulation does not apply to transactions between CEMAC member states and states within Zone Franc, except for the provisions relating to gold, certain loans, direct investments and transactions relating to foreign securities (valeurs mobilières). All other payments to Zone Franc states are free but may be subject to declarations for statistical purposes if their amount exceeds 1,000,000 FCFA.
Payments and transactions in the normal course of business
Payments relating to ‘current’ international transactions – as defined by the Articles of Agreement adopted by the International Monetary Fund (IMF Articles) – are unrestricted. According to the IMF Articles, payments for current transactions are payments not made for the purpose of transferring capital. They include payments due in connection with foreign trade and other current transactions including services, normal short-term banking and credit facilities, and payments due as interest on loans and as net income from other investments. Transactions ‘on capital’, notably certain loans, direct investment and transactions involving foreign securities, are subject to administrative surveillance (see below).
Transfers of funds from CEMAC are subject to administrative fees charged by local banks. These fees are determined by the bank but must not exceed 0.25 per cent of the funds transferred within CEMAC and 0.50 per cent of funds transferred outside CEMAC. Overseas fund transfers exceeding 5,000,000 FCFA (~US$ 10,000) must be carried out through authorised intermediaries, for instance approved local banks (the Authorised Intermediaries).
Cash import or export of FCFA is not allowed except up to 100,000 FCFA for Resident travellers’ convenience. Import of foreign currencies is free, however, when carried out through Authorised Intermediaries; this type of import is subject to a stamp fee of 0.01 per cent of face value.
Residents, unlike Non-Residents, are not allowed to hold a foreign currency account in CEMAC. However the minister in charge of finance of the relevant country and the Bank of Central African States (the BEAC) may authorise Residents to hold a foreign currency account, provided the account is not credited with FCFA or receives transfers from an FCFA account.
There are no provisions in the Exchange Regulation preventing Residents from holding offshore accounts, but this has proven difficult in certain jurisdictions.
All payments for imports and services are subject to declaration and must be supported by a pro forma invoice or any other relevant documentation, to be provided to the Authorised Intermediary. Where a transaction exceeds 5,000,000 FCFA, they must be domiciled with an Authorised Intermediary. Transactions which exceed 100,000,000 FCFA (~US$ 200,000) are also subject to enhanced monitoring by the Authorised Intermediary.
Loans subject to subsequent declaration
Payments in respect of the following loans must be declared to the competent authority of the local ministry of finance and the BEAC within 30 days:
- loans constituting a direct foreign investment previously authorised by the competent authority
- loans undertaken or granted by an approved local bank
- other loans undertaken or granted which do not exceed 100,000,000 FCFA for the same borrower
- loans directly related to services provided overseas by a subsidiary or branch of foreign companies established within CEMAC
- financing of overseas’ commercial transactions involving Residents.
Loans subject to prior declaration
Any loans granted to a Non-Resident by a Resident, or vice versa, must be declared 30 days prior to their execution to the competent authority of the local ministry of finance and the BEAC.
Reimbursements must be declared within 30 days of their execution to the relevant department of the local ministry in charge of finance and the BEAC.
Any loan a branch receives from a foreign bank or entity and its related reimbursement must be declared to the competent authority of the local ministry of finance and the BEAC, even if the borrowed amounts are held in an offshore account.
The currency of hedging agreements must be stipulated in the settlement currency of the related agreement, and the duration not exceed nine months. If the total amount exceeds 100,000,000 FCFA, a request must be filed with the BEAC.