The new Central Bank of Kenya (CBK) regulations that have reduced the number of licenses that can be issued to an individual operator to one has caused seven foreign exchange bureaus to close shop. The following bureaus had their licences revoked by CBK, ABC Forex Bureau, Chase, Muthaiga, Shepherds, Gigiri, Connection and Village Market bureaus. By June 30 this year the bureaus are expected to comply with this requirement. The Forex Bureau Guidelines provide that a person who wishes to transact foreign exchange business shall not have an interest directly or indirectly as a shareholder or an officer in any other forex bureaus licensed by the Central Bank of Kenya. This is to narrow the exchange rate spread and safeguard against monopoly in the foreign exchange market.Last year Central Bank also increased the capital requirements per bureau by 200 percent, from Sh2.55 million ($30,000) to Sh5.1 million ($60,000). In the new rules the minimum balance has been increased, forex bureaus must now maintain $4,000 from $2,000 (Sh340,000 from Sh170,000). Due to the new regulations entrepreneurs with five bureaus will need five times more capital than if they had only one bureau. The new rules will allow them to hold only one licence per bureau since all the other bureaus will be converted into branches. CBK also doubled the licence fee per bureau to Sh20,000 from Sh10,000.
Tom Muchina, Vice Chairman of the Kenya Forex Bureau Association had this to say, “The new changes will make work easier for regulators to easily audit the operations of various forex bureaus.”