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BD Insider: Ghana’s new forex regulation

In this letter, we explore; Bank of Ghana tightens grip on forex market, Crypto exchanges dodge taxes in Kenya, Meta’s privacy violation issue.

In this letter, we explore:

Bank of Ghana tightens grip on forex market
Crypto exchanges dodge taxes in Kenya
Meta’s privacy violation issue

We also curated updates on startup funding in Africa, weekend reads, and several opportunities.

The big three!

#1 Bank of Ghana tightens grip on forex market

Ghana's apex bank is making a power play in the forex market. They’ve rolled out some strict new rules to clean up the system and stabilise the country’s currency. From now on, all forex trading has to go through a centralised foreign exchange trading platform, and you'll need to provide a Ghana card as proof of identification before you’re allowed to trade foreign currencies. Foreigners must also present their passports and undergo biometric verification before any transaction.

What does this mean? Only licensed foreign exchange Bureaus or foreign currency dealers can conduct forex transactions in Ghana, and they are required to issue electronic receipts to customers for all foreign currency transactions.

Why are they doing this? It’s a bold move that aims to crack down on the black market and ensure everyone plays by the rules. The idea is to streamline and regulate forex transactions by ensuring transparency and compliance with financial regulations.

Ghana has been on the trail of illegal forex operators. In May, the Bank of Ghana set up a task force to monitor all foreign exchange bureaus and ensure compliance with their regulatory framework. This move led to the arrest of thirteen people involved in illegal foreign exchanges in July.

Context: The apex bank has been making moves to regulate foreign exchange in the country. In March, it suspended the foreign exchange trading licences of two Nigerian-owned banks — Guaranty Trust Bank and First Bank.

Ghana’s West African neighbour, Nigeria, recently moved to regulate forex trading. In May, the Central Bank of Nigeria directed all Bureau de Change operators to reapply for licenses under new guidelines.

Earlier in January, Egyptian banks also imposed card limits on foreign currency spending within the country.

We’ll have to wait and see if these regulatory measures fix the problems in the forex market.

#2 Crypto exchanges dodge taxes in Kenya

Photo by GuerrillaBuzz on Unsplash

Kenya boasts the biggest cryptocurrency market in East Africa and is only behind Nigeria in the list of top countries with the most cryptocurrency ownership in Africa. Little wonder, the government implemented a 3% tax on revenue from trading digital assets last September.

Almost a year later, Kenya’s Court of Appeal has declared the 2023 Finance Bill, including the Digital Asset Tax (DAT), unconstitutional. The tax law required crypto exchanges in Kenya, such as Kotani Pay and AZA Finance, to remit crypto taxes within five working days. However, none of the crypto exchanges had remitted the taxes to the Kenyan Revenue Authority before the court declared the bill illegal.

The 2023 finance law faced strong opposition and violent protests due to its tax increases and new levies. But, President Ruto has argued that higher taxes are necessary for development and debt management.

Context: Kenya is not the only country that has attempted to tax crypto. In June, the South African Revenue Services started notifying crypto traders in the country that they would start paying taxes on their crypto profits. In July, KuCoin, a popular crypto exchange in Nigeria, introduced a 7.5% VAT on trading fees for its Nigerian users. This has led to speculations that the Nigerian government intends to tax cryptocurrency.

Looking Forward: Although this is a win for crypto traders in Kenya, this case is not sealed yet, considering that the government can appeal this new ruling at the Supreme Court.

#3 Meta’s privacy violations issues

A week after the Nigeria Federal Competition and Consumer Protection Commission (FCCPC) fined Meta $200 million over data privacy violation, the social media company has agreed to a record $1.4 billion settlement with the state of Texas, USA, over data infringement.

The state of Texas accused Meta of using its “Tag Suggestions” feature to collect biometric data from users' pictures without their knowledge.

Despite agreeing to this settlement, Meta still maintains that the payout is not an admission of guilt.

Context: Meta’s ongoing case with the FCCPC specifically targets WhatsApp. Yesterday, the Nigerian Commission released a statement on X, stating that the company is trying to force the commission to reconsider its decision by influencing public opinion. This response comes after speculations that WhatsApp is threatening to leave the country.

The commission maintained that similar measures have been taken in other jurisdictions without forcing the company to leave Nigeria.

💰 State of Funding in Africa

Here’s a roundup of African startups that secured funding last week:

Egyptian startup Cartona has raised a $8.1 million Series A extension round. Algebra Ventures led the round led the round, while Silicon Badia, SANAD Fund, Camel Ventures and GlobalCorp participated.
Egypt’s AI startup Synapse Analytics has raised $2 million. Silicon Badia and Hub 71, Abu Dhabi, led the round.
Egypt-based ed-tech Educatly has raised a $ 2.5 million round led by TLcom Capital and Plus VC. The round also saw participation from Egypt Ventures and the HBAN syndicate.