Kenya - Foreign Exchange ControlsKenya - Foreign Exchange
Kenya repealed all exchange control laws in 1993, and has moved to a fully market-determined exchange rate system. There are no controls on foreign exchange, and this policy has attracted short-term capital inflows.
The Central Bank of Kenya licenses foreign exchange bureaus, which were introduced in 1995 to enhance efficiency in the forex market. Only the following capital transactions have foreign exchange restrictions:
Investment by foreigners in shares (set in July 2002 at not more than 75 percent for both companies and individuals on shares traded on the NSE); and
Investments by Kenya residents outside Kenya exceeding US$500,000 must be approved by the Central Bank through the facilitating bank.
Residents and non-residents are permitted to buy or sell foreign exchange, without restriction, to and from authorized dealers up to the equivalent of US$10,000. Amounts exceeding this limit require documentation to show the purpose for the transaction. This is, however, primarily only for administrative recording by the Central Bank of Kenya. In December 2009, the GOK assented to the Anti-Money Laundering (AML) Bill, which came into effect in June 2010. The enactment of this AML law has been lauded as a positive move by Kenya’s bankers and financial representatives, who see it as a major step in the fight against money laundering in the country and region given Kenya’s unfortunate position as a base or transit point for money laundering activities.
Exporters may retain all their export proceeds in foreign currency accounts with local banks, or sell such proceeds to obtain local currency. Residents may borrow abroad with no limit on the amount; however, the government will not guarantee any borrowing by the private sector. Although payments under technical, management, royalty, and patent fees are freely remittable, relevant agreements and renewals are subject to approval.
Persons leaving or entering Kenya are permitted to take from or bring into the country up to KSh500,000 of Kenyan currency and a foreign currency equivalent to a maximum of US$6,250 without duty. Amounts beyond these limits may be taken out or brought into the country provided they are declared at the point of departure or entry.
The foreign exchange market has remained stable even as the global markets were volatile due to narrowing current account deficit with improved exports, strong diaspora remittances, and a lower oil import bill.