Eritrea, the old nakfa vs new nakfa

Africa ExPress Special Correspondent
Saba Makeda
Somewhere in Eritrea, 7 th November 2015

This week the Eritrean Government has issued legal notice 124/2015 Legal Tender Nakfa Currency Notes Regulation. The Regulation provides for the exchange of exchange of the current Nakfa legal tender with new Nakfa legal tender.

http://www.shabait.com/news/local-news/20720-2015-11-05-12-26-32
https://www.youtube.com/watch?v=S9kVxW4Vl6g

The Regulation makes the following provisions:

1. The rate of exchange old Nakfa to new Nakfa is 1:1                                         Article 3(2)
2. The exchange can be made at the Commercial Bank of Eritrea                        Article 4 (1)
3. Individuals /businesses are allowed to redeem currency only at one bank and only once

Article 4 (2)

4. Any amount greater than Nakfa 20,000 must be deposited into an account. That is there is a limit on cash exchange                                                                                                 Article 4 (3)
5. During the redemption period only 20,000 Nakfa may be withdrawn from bank deposit account. Transactions in excess of 20,000 Nakfa must be made by cheques payments in excess

Article 4 (4)

6. Foreigners/visitors may exchange old Nakfa for new Nakfa but must produce evidence of the legal purchase of the old Nakfa                                                                                 Article 4(5)
7. According to Eritrean news sources the redemption /exchanges will take place over a period of 6 weeks                                                                                                                           Article 4 (6)
8. The 6 weeks starts from 04 November 2015

The explanation for the measure is that the Government wants to stimulate the economy and address and stop: the foreign exchange black market; the circulation of counterfeit money, the laundering of money, the hoarding of large bills.

The reality is that this measure does not inject new capital into the ERITREAN economy it does not build business or investment confidence, nor does it actually address the declining trust and confidence of the people.

Makeda Saba Makeda
makedasaba@ymail.com