Beware African exchange controls

Companies working in Africa
need to ensure that they are
compliant with the local
exchange control regulations – or
face sometimes severe penalties,
warns PwC associate director
Michael Butler.
Addressing a PwC Africa Tax
Business Symposium conference
in Dubai recently, Butler said
foreign investors would face
exchange controls “if they went
directly into African countries, for
example Nigeria or Mozambique.
They could encounter them on
multiple levels if they used South
Africa (frequently seen as the
gateway to the rest of Africa)
as a continental head office for
their other African operations
– as there would be regulations
between the operational country
and SA, and then from SA to the
offshore head office.”
Alternatives for head offices
would be countries without
exchange controls, such as
Botswana, Egypt, Kenya,
Mauritius, Rwanda, Uganda and
Zambia.
Butler said regulations differed
from country to country, and
an offshore investor needed
to become familiar with
the requirements of each to
understand how it affected inward
and outward remittances, and
how the regulations affected
foreign personnel working in
Africa.
Most countries with foreign
exchange control also have
detailed requirements on
approvals and supporting
documentation.
Some countries, such as
Nigeria, will not generally permit
retrospective approvals in certain
circumstances.
“This means offshore investors
should ensure that they work
closely with their advisers/
bankers before making inward
remittances.”