The exodus of exchange companies from Sanaa to the capital, Aden

English - السبت 17 سبتمبر 2022 الساعة 04:49 م
Sana'a, NewsYemen, private:

A banking source confirmed that the majority of exchange companies moved their activities from Sanaa to the capital, Aden, but under different names, after the Central Bank of Yemen opened, Aden, granting licenses, despite the large financial requirements included in its recent decision.

The Central Bank of Yemen, headquartered in Aden, issued a decision on August 4 last to regulate the exchange business, which stipulated raising exchange company licensing fees to one billion riyals, a cash guarantee of 500 million riyals, and 20 million riyals annual fees.

The decision raised the capital of individual establishments to 500 million riyals, the guarantee to 150 million, and 4 million riyals annual fees.

The banking source told NewsYemen that the exodus of money exchange companies and facilities to the capital, Aden, came due to the losses incurred by these companies as a result of the harassment and levies of the Houthi militia, Iran's arm in Yemen.

The source, who works in the Central Bank of Yemen, Aden, did not disclose the number of new companies and exchange facilities that have been granted licenses and that have applied for licenses from the bank since opening the door for granting licenses last August.

Bankers say that the market for selling and trading currencies in Houthi-controlled areas is almost frozen, and all banking transactions of exchange companies and banks to provide foreign exchange for food and fuel importers take place in Aden, Hadramout, Marib and the rest of the liberated cities.

Private sector institutions, companies and banks are subjected to harassment and blackmail by the Houthi militia, which prompted it to reduce its business and dump it with debts, as businessmen complain of losing profits in exchange for increased levies and economic stagnation.

Economists assert that the Iranian currency arm's militia ban from the new edition banknotes has made travel and exchange between the north and south more difficult, and caused the areas under the militia's control to face a major cash crisis.

The report, "Yemeni Financial Sector Challenges and Opportunities for Recovery," confirmed that Yemeni exchange companies have accumulated huge public savings, after Yemeni banks lost their role in financing trade and the roles of the financial sector were transferred to the exchange sector.

The report clarified that exchange companies work efficiently to facilitate internal and external personal transfers and import financing, and offer financing offers (unregulated services), which means that they are currently operating as physical banks.

The report, issued on July 22, indicated that exchange networks are the main channel for foreign currency remittance flows of Yemeni migrants and outbound and domestic trade finance flows, as they are the only local transfer channel and foreign currency buyers in the market.

The report indicated that there was a sharp increase in the number of exchange companies, both licensed and unlicensed, operating in Yemen during the conflict, which increased from 605 money changers in 2014, to more than 1,350 companies, including 800 unlicensed companies.