Mbabane – Central Bank of Eswatini Governor Majozi Sithole says the shift from the Exchange Control regime to a Financial Surveillance model means that a significant aspect of monitoring financial flows is now delegated to Authorized Dealers, being banks and bureaus as well as remittance providing entities.
Speaking at the Financial Surveillance Launch at Sibane Hotel, Sithole said the Central Bank has its authority delegated by the Ministry of Finance, through the Exchange Control Order of 1974. The relevant subordinate legislation is made up of the Exchange Control Regulations 1975; and the Money Laundering and Financing of Terrorism (Prevention) Act 2011.
The governor said, “only a few transaction categories will still require pre-approval by the Central Bank. As mentioned earlier, this is aimed at enhancing the efficiency of the financial sector as a payment instruction is processed instantly by the Authorized Dealer henceforth eliminating the process lag that was experienced with the 100 percent exchange control regime. Ultimately, it will contribute to improving the ease of doing business in Eswatini.”
“It should be noted that there are of-course other structural bottlenecks that constrain the ease of doing business in Eswatini. The pre-approval requirement in the exchange control process created a bureaucratic layer which slowed the flow of funds, affected trade and increased the workload for both the financial institutions and the regulator. Further, the increasing trade activities has led to the regulator experiencing high volume of applications which, increases the turnaround time.”
He said the previous predominantly pre-approval processes combined with the phrase “Exchange
Controls” were undesirable, perceived as stringent and therefore not investor friendly. It is in that light that the Central Bank is adopting the financial surveillance regime.
The Minister of Finance, Neal Rijkenberg also mentioned that “exchange controls have been used by Eswatini to safeguard and boost foreign currency reserves. They have also provided the assurance that the foreign currency reserves are used to the maximum benefit of the country. Notwithstanding that, exchange controls were not intended to prohibit or frustrate trade even though they may have been laborious and time consuming. The migration to financial surveillance will therefore ease the pressure on businesses and reduce some of the structural impediments. The newly adopted concept of financial surveillance complements the country’s National Development strategy and serves as the Ministry’s contribution to easing the control of the purchase and sale of foreign currency, gold and securities.”
Rijkenberg said the Financial Surveillance approach will improve efficiencies of the financial institutions, enhance the creation of an enabling environment for the country to improve the ease of doing business. The migration from exchange controls to financial surveillance regime will stimulate foreign direct investments and further lead to an increased likelihood of Eswatini attaining trade driven economic growth.
The commitments are as follows;
1. To establish a framework for co-operation and co-ordination with regard to the promotion of exchange control in respect of (i) current account transactions; and (ii) capital and financial account transactions;
2. To review exchange control policies to ensure exchange control convergence as State Parties move towards full exchange control liberalization;
3. To improve the availability of information regarding cross-border foreign exchange flows amongst State Parties, with the aim of facilitating performance monitoring and assessment, as well as of maintaining transparency and accountability.
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