Money Markets
Volatile shilling lifts forex bureaus back to profit zone
Photos/FILE Data from the Central Bank of Kenya (CBK) show that forex bureaus earned a pre-tax profit of Sh225 million in the nine months to September last year, against a total loss of Sh28 million in 2010.
Posted Wednesday, January 25 2012 at 20:25
Total assets held by forex bureaus however increased marginally from Sh2 billion to Sh2.2 billion, which operators said was a reflection of reduction in new investments following the losses incurred in 2010.
Agency banking
The Central Bank also allowed forex bureaus last year to offer additional services in order to increase their revenue streams, including offering money transfer.
The members of the KFBA are also talking to the CBK to be allowed to operate as agents of commercial banks under the agency banking programme in order to put their capital to use.
“This will help to make the agency banking initiative successful while increasing the revenues of forex bureaus,” said Tom Muchina, the vice chairman of the association.
Agency banking is faced with liquidity challenges since most agents either lack enough capital or their premises are not secure enough to hold large sums of cash.
In 2008, the CBK lifted the freeze on the licensing of new forex bureaus in Nairobi and Mombasa, which saw a surge in the number of new forex bureaus and squeezed the operators’ profit margins.
The number of forex bureaus in the country had grown to 126 by 2010 but the number has since dropped to 108 currently.
rotini@ke.nationmedia.com
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