30 Nov 2015 20:20pm
WINDHOEK, 30 NOV (NAMPA) The Bank of Namibia (BoN) and Banco Nacional de Angola (BNA) have temporarily suspended the Currency Conversion Agreement (CCA) as from 02 December 2015.
The suspension will run for the next 19 days to allow the two banks to prepare mechanisms for a new CCA, BoN Govenor Ipumbu Shiimi said during a media briefing on Monday.
The BoN and BNA implemented the CCA on 18 August 2015 to enable the residents of the boarder tows of Oshikango in northern Namibia and Santa Clara in southern Angola to exchange their respective national currencies to facilitate the payment of goods and services.
The aim of the agreement was to promote trade and reduce transaction costs for individuals and small businesses when paying for goods and services at the two border towns.
The agreement enabled the reciprocal acceptance of legal tender banknotes in Namibia and Angola by legally authorised financial institutions to conduct foreign currency exchange operations at the two border towns. Currently, one Namibian Dollar is equal to about 14 Angola Kwanza.
Shiimi explained the temporary suspension of the CCA was driven by challenges, including the exchange of currencies outside the scope of the agreement.
Certain measures were introduced to address identified challenges; however these did not fully address these challenges, Shiimi said without mentioning the challenges.
Early November, the two central banks convened a meeting to discuss the challenges affecting the business community on the inflated exchange rate of 40 per cent between the Kwanza and Namibian Dollar.
The implementation of the new mechanism could be one of the resolutions to address the challenges affecting the business communities in the border towns.
Shiimi said the two central banks will ensure the continuation of this agreement by implementing a new mechanism as from 21 December 2015.
He explained that the new mechanism will not see further exchange of Angola Kwanzas in Namibia but will see the exchange of the Namibia Dollar in Santa Clara.
The new mechanism entails that the BoN will issue the Namibian Dollars to BNA as start-up capital, Shiimi said.
He further noted that the BNA will then facilitate currency exchange at commercial banks and bureaux de change in Santa Clara.
Shiimi explained that Namibians who wish to convert their Namibian Dollars into Angolan Kwanzas or Angolans who wish to convert Kwanzas into Namibians Dollars will be able to do so at commercial banks in Angola only.
The governor noted that the implementation of the alternative mechanism will ensure effective implementation and sustainability of the agreement.
He emphasised that this agreement remains beneficial for trade promotion and facilitation between the two countries and will continue to strengthen economic relations at the two border towns.