The National Bank of Rwanda (BNR) revealed that problems with illegal currency and dollar transactions remain significant around the border towns of Gisenyi and Rusizi.
The bank previously designated the city of Kigali as a prominent area with illegal foreign exchange transaction activity and transactions in dollars instead of local currency.
The BNR is mandated to manage foreign currencies. It is through this mandate that the National Bank of Rwanda is responsible for regulating and supervising Forex Bureaux to ensure their compliance with laws and regulations.
This means that it is illegal for an individual or company to transact in foreign currency unless licensed by the National Bank of Rwanda.
The central bank’s decision aims to reduce the impact of speculators on the dollar’s price and the resulting artificial shortages of foreign currency in the market.
The Central Bank states that buying or selling foreign currency from street vendors is not allowed.
Apparently, in most cases, although the dollar rate is published daily by the central bank, some traders hoard the currency, leading buyers to source from unlicensed traders.
Other challenges also include the issue of owners and some traders remain inclined or prefer to price products and services in foreign currencies, which is illegal and can lead to penalties.
The sentences, in this case, can range from six to two years in prison and a heavy legal fine depending on the case.
Despite the measures taken to curb these practices, Gérard Nsabimana, an inspector at the BNR, affirms that the habits have developed in other large commercial border towns, notably in Gisenyi (district of Rubavu) and Kamembe (district of Rusizi).
“We have identified the two border districts (Rubavu and Rusizi) as areas where there is a problem of businessmen and women from the Democratic Republic of the Congo, who prefer to use dollar notes to do business in instead of exchanging money in francs,” Nsabimana mentioned.
“This has led cross-border traders to prefer doing business this way, thus forcing many Rwandans to transact in dollars as well,”
This situation, according to the BNR, results in a shortage of foreign currency in the local market and creates a superficial demand for the dollar instead of the local franc which is legally accepted as a mode of commerce and transaction in Rwanda.
Nsabimana said therefore the Central Bank will in the coming days embark on educating business communities in Rubavu and Rusizi but will also seek engagement from local leaders to curb the current problem.
Jean Bosco Tuyishime, the executive secretary of the Gisenyi sector, told Kigali Today that local leaders will step up measures to address the problem of illegal currency exchange and educate citizens on the need to use local currency to do business.
Tuyishime said one of the solutions at hand would be to set up forex dealer cooperatives and provide them with legal operating documents within a month. This, he said, will reduce the existing turmoil among forex dealers who are found in most border towns and operate in the corridors. along border crossings.
According to BNR regulations, all forex traders are supposed to be licensed and operate in designated business establishments such as exchange offices, banks and other financial institutions.