Closure of Forex shops in Tanzania stirs worry

What you need to know:

  • Closure of Unimoni Bureau de change - formerly UAE Exchange means that the local forex business is now left with only two players dominating the market

Dar es Salaam. The Unimoni Bureau de Change - formerly known as UAE Exchange - has closed its shops, The Citizen can report.
UAE Exchange had been operating in the country for a long time.
The closure of Unimoni means that the money changing business will now be dominated by only two companies: are Posta [Tanzania Posts Corporation] and Kadoo, which have a total of 34 branches scattered across Dar es Salaam, Arusha, Kigoma, Manyara, Kilimanjaro, Mbeya, Tanga, Songwe, Dodoma, Mwanza and Zanzibar.
In 2019, Unimoni - operating as UAE - emerged as one of the only four bureaux de change that managed to continue with business after the government conducted a special operation that resulted in the suspension of many other money shops in the country.
The government said the suspended bureaux de change were found to be operating in a manner that was flouting the laws, regulations and procedures relating to the money changing business.
With the suspension of all the other bureaux de change, it was only UAE (now Unimoni), Terminal, Kariakoo and Posta bureaux de change that were doing business in the country at the time.
Thus, commercial banks rub their hands in glee, and they effectively cashed in on misfortunes of tens of suspended bureaux de change operators.
But fast forward to 2022 - and the story is different.
UAE closed its shop in what officials said was due to capital inadequacy.
“We have revoked their licence because they could no longer meet the capital requirement of not less than Sh1 billion,” the BoT manager responsible for supervision of microfinance institutions, Mr Victor Tarimo, told The Citizen on Tuesday.
UAE had five branches operating in various places.
He said the licence was revoked on January 4, this year.
There was no word from the company, but a public notice put on its branches says all will remain closed until further notice.
“Dear esteemed customers, we are pleased to inform you that due to technical and maintenance issues, with effect from 07/01/22, we will remain closed to all our branches until further notice. We apologise for any inconvenience caused,” the statement says.
In 2019, BoT introduced new requirements for operating a bureau de change. For example, any application for a business licence must be accompanied with a written declaration and assurance of availability of not less than Sh1 billion set aside as capital.
Any addition of capital must have the approval of the central bank. A bureau de change may increase or add its branch network in Tanzania, but only upon obtaining a licence from the central bank.
Regulation 16 requires the central bank to issue a branch opening licence on a special circumstance such as the needs of a particular location. Among others, a feasibility study substantiating the demand gap must be submitted to the Central Bank for that purpose. It is important to note that a bureau de change cannot relocate to another area without prior approval of the central bank, and payment of Sh1 million as a relocation fee (regulation 21).