Tightening controls on financial flows in Africa: Kenya goes first. Egypt opens its doors to non-residents.
Africa has always been and stays a very active banking region, moreover very loyal region, especially Kenyan banks. Recently, the situation is gradually changing and African banks have started to introduce more measures aimed at strengthening control over their financial flows. One of the latest initiatives was decision by the Central Bank of Kenya to oblige commercial banks to track large transactions. This is aimed at meeting international standards and should prevent uncontrolled payments, which are often used in fraudulent schemes and to finance illegal activities.
According to the new rules, all transactions exceeding the amount of 7,707 USD will be subject to mandatory tracking. For this purpose, banks will use payment purpose codes (PoP), which will ensure transparency and compliance with regulatory requirements. This innovation will make it much more difficult to conduct large financial transactions, especially those that do not meet regulatory requirements. Payment processors that rely on African capacity should certainly consider these changes. Failure to comply with regulations threatens banks with heavy fines, which could significantly impact organizations that engage in high-risk transactions. The trend is not quite unexpected, but it is serious and could significantly impact high-risk processing. Will flows from Africa be shifted to more loyal regions? Will see definitely.
On the other hand, Egypt has decided to look into improving its financial situation and attracting real capital into the country. The Central Bank of Egypt (CBE) announced opening doors for foreign nationals, including non-residents, to open bank accounts in local banks. This decision will increase access to banking services for foreigners and, according to the country's leadership, will significantly develop the banking sector.
Faced with a shortage of capital, Egyptian authorities have found an obvious solution — an influx of foreign money. They expect to attract audience willing to open accounts in Egyptian banks. To what extent this will work out and make customers shift their finances from banks in Europe or other stable countries — we can only guess. Certainly, there will be a group of those interested, but whether it will be enough to resuscitate the banking system is again a serious question.
Africa has been under the spotlight in various industries in recent years. Including iGaming is now developing very rapidly in the region. Financial system always responds to merchant’s needs and changes in business. So, this positive changes and increase of foreign investors in the region can in return drive the banking industry.
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