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Intermediation In Financial Relationship With Foreign Investors

By Martial Akakpo & Sandrine Badjili
Posted: 21st January 2016 10:25

The Togolese economic sector is currently booming.  There is a great increase in money being circulated domestically, largely attributed to the rise in foreign investment from various countries.  The financial relationship with foreign investors calls for a particular regulation that provides for safeguards which serve as intermediaries.  From a Togolese law perspective, there is a need to know that the rules regarding the financial relationship with foreign investors are provided by the West African Economic and Monetary Union (WAEMU) Regulation.  Such Regulation sets out the operations concerned as well as the intermediaries involved and their responsibilities.
About the West African Economic and Monetary Union (WAEMU) Regulation

The Togolese banking and financial environment is regulated by the Community law of West African Economic and Monetary Union (WAEMU).  In consideration of the context of economic liberalisation and the international commitments of the members, a regulation of the financial relationship with foreign investors was established by the “Règlement N°09/2010/CM/UEMOA relatif aux relations financières extérieures des Etats membres de l'Union Economique et Monétaire Ouest Africaine (UEMOA)”.
Generally, this settlement establishes a control of financial transactions with foreign investors.  Specifically, this control needs an intervention of some institutions in charge with the efficiency of the flow of funds.  These institutions are financial intermediary.  They are responsible to implement financial operations.
Thus, the rule sets up a system of the intermediation which provides in its Article 2 that the foreign exchange transactions, capital movements and any kind of payment between a WAEMU Member State and foreigner or in the WAEMU between a resident and a non-resident, may only be made through the Central Bank of West African States (the “BCEAO”), Administration or the Postoffice, an authorised intermediary or an authorised manual exchange. 
The competences of the intermediary are defined in the first annex of the Regulation.
1. What are the relevant operations?
Three kinds of operations are considered: exchange, currents operations and capital transactions.
1.1.             Exchange

  • First, the holding of foreign currencies in the WAEMU space is subject to control, given that the legal currency in the said space is “F CFA”.  The foreign currency must be deposited with the BCEAO or any authorised intermediary.  
  • Second, the sale of foreign currencies is also subject to control.  The currency must be sold in the same condition as mentioned above.  
  • Third, concerning the residents, they have to sell to an authorised bank all incomes in foreign currencies and received abroad or by a non-resident.

1.2.             Current operations

Two types of operations are considered under current operations: 

  • Current payments abroad which must be made by the same intermediary already mentioned.
  • Also, import and export operations that should be domiciled by residents with an authorized intermediary. 

1.3.             Capital movements

These movements are generally payments abroad based on repayment of debts and loans of financing commercial and industrial operations,transfer of products of liquidation of investments or the sale of foreign securities by non-residents and the transactions exchange derivative instruments either for transactions on derivatives and commodities products based.  The intermediaries are responsible for the execution of these payments as well as borrowing by residents from non-residents if they are made available to the borrower in the country. 

2. Who are the intermediaries?
2.1.             The Central Bank of West African States ( the BCEAO)

The BCEAO is the first and most important intermediary which wears several hats.  It acts like a real regulator for the intermediaries.  It defines the role of each intermediary if necessary and interpreting the general regulation.  Sometimes, financial operations have to be authorised by the Finance Minister.  Concerning transfer abroad, the Minister can delegate his power to the BCEAO.  This latter is also required to report on a monthly basis to this Minister the authorisations it has granted in the exercise of this attribution.  Furthermore, it is also responsible for supervising all bodies involved in exchange matters.  To this end, it may ask the authorised intermediaries the supporting of all foreign exchange transactions they perform.
2.2.             The Post Office

The Post Office is in charge of payments made abroad.  The amount of such operation does not exceed 1,000,000 F CFA, the usual postal operations according to the authorised ceilings retained by the different regimes in the various international agreements with member of WAEMU.  Also, the post office executes any other transfer outside the franc zone whose amount does not exceed 500,000 F CFA.  In this case, any supporting document is required.  The Post Office is authorised to receive all payments in CFA francs or currencies from abroad, either on its own behalf or on behalf of it customer.  However, the Post Office has to surrender to the BCEAO, against credit into account all revenues received in foreign currency.
2.3.             The authorised intermediaries

Only the Minister of Finance gives the quality of “authorised intermediary”.  “Authorised intermediaries” are different from “intermediaries”.  The authorised intermediaries are credit institutions located in the WAEMU space and have been approved by the Minister of Finance.
2.4.             The exchange offices

The exchange offices are traders appointed by the Minister of Finance to make manual exchanges.  They have to be agreed by the BCEAO.
2.5.             The Minister of Finance

The Article 2 of the regulation does not refer to the Minister of Finance as an intermediary.  However, we can consider this authority like an intermediary who plays this role indirectly.  We know that some transactions have to be authorised by the Minister of Finance before the circulation of money.  The principle of the financial relationship with foreign investors is the liberty of current payments to foreign countries.  Therefore, the other transactions like the import and export of gold abroad, need authorisation which can be only delivered by the finance minister.  For that, he represents an intermediary in the transactions with foreign investors.
3. What are the intermediaries’ responsibilities?

The intermediaries are in charge of the execution and performance of the WAEMU Regulation.
The authorised intermediaries are accountable to the Department of BCEAO in charge of External Finance, regarding the control payments with foreign country.  Authorised intermediaries which commit violations of the regulation may be disapproved.  This WAEMU regulation liberalises inputs and outflows as recommended by international institutions.  At the same time the control made by the intermediaries used to prevent the financial risk.
Martial Akakpo is lawyer at the Bar of Lomé since 1988.  Holder of a University Post-Graduate Degree in International Business Litigation from the Université de Paris – Est Créteil Val de Marne (Paris 12) with honours. 
He intervenes as counsel of parties in international arbitrations or as arbitrator appointed by the Common Court of Justice and Arbitration of OHADA (CCJA) in Abidjan, and other arbitration centres.
He is lecturer at the Ecole Régionale Supérieure de Magistrature de l’OHADA (Judicial Training School) (ERSUMA) in Porto Novo.
Founder of “Mercuriales Info”, Togolese Business Law and Arbitration newsletter, he was awarded the distinction of Officer of the National Order of Merit in 2009.
Martial can be contacted on (+228) 90 04 10 17 or by email at
Sandrine BADJILI holds a Master degree in Business Law and banking law from the University of Auvergne, Clermont-Ferrand (France).
She works especially on legal consultations in banking, securities, labor, society laws and business law in general.  She has also competence in investment law and wealth management.  She is particularly interested in legal advice in contract law and distribution law.
Sandrine BADJILI contributed to the team working with taxpayers regarding their 2013 income tax statement filling with tax administration of Rouen (France).  She contributed to the Benchmarking Public Procurement 2016 project, annual publications of the World Bank which aims at evaluating the costs associated with regulation of public procurement procedures in the world.  She participates to the writing of the Togolese chapter for the Banking Regulation Second edition of Global Legal Insights.
She joined MARTIAL AKAKPO & PARTNERS, Law firm in 2014.
Sandrine can be contacted on (228) 91 77 11 39 or by email at


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