22 August 2014

Kenya: Firm Seeks Forex Trader Licence, Denies Its a Pyramid Scheme

A Kenyan firm carrying out forex trade wants the government to formulate guidelines for electronic currency transactions adding that lack of proper legislation has led to a "misunderstanding" of its business by the Central Bank of Kenya.

VIPorta said its an electronic communication network forex broker which serves individual and corporate clients where various investors put their money in a pool which is then used for the trading. However, it said, the CBK has termed it a pyramid scheme hence causing panic among its clients.

Currency trading is conducted electronically over the counter which means that all transactions occur via computer networks between traders around the world.

"Increase in long term forex trading will be beneficial for the Kenya shilling. Therefore our business should be nurtured instead of being bullied around," said a trader at VIPortal Mwangi Gicheru.

The company has a case pending in court where its charged with allegedly operating a forex bureau without a licence.

"We do not operate in cash. We do not exchange actual money whereas a forex bureau deals in hard cash. We link ourselves to the international currency market through an electronic framework," said another VIPortal trader Collin Mundia.

CBK did not respond to The Star's request for comment.

The forex exchange market is deemed the most liquid financial market globally with average transactions of slightly over $4 trillion daily.

Trading is usually based on the world reserve currency -the dollar- in the market that is open for 24 hours for five working days.

In Kenya, forex trading is mainly done by banks through their treasury departments.

VIPortal said it was incorporated in Kenya a year ago, said it has lost a lot of money over the last two months, as it sought clarification and clearance by CBK which it accused of instructing banks to freeze its account pending investigations and resolution of the matter.

Apart from being registered in Kenya, VIPortal is also incorporated in - St. Vincent & Grenadines and with a licence number 21787/ IBC/ 2013. The company said it has employed at least 500 people directly and indirectly and is registered with all mandatory government agencies such as Kenya Revenue Authority, NSSF and NHIF and thus does not operate in mystery.

VIPortal director Charles Njuguna accused the police of harassment as the investigations into the matter continue and accused some established lenders of playing a role in the trading firm's current woes.

"The type of interest your money earns is huge. If you can get 60 per cent a month for your investment, what is it compared to 10 per cent per annum that banks give?" posed Njuguna.

Njuguna has urged the company's clients to remain calm in the mean time as it works to resolve the issues.

A client Samuel Chuma told the Star in an email said the company last month instructed them to open online accounts with a company by the name NEteller so as to get their monthly payout, but they are yet to get any payment.

VIPortal said it pays clients after every 29 trading days adding that it has been unable to at the moment because of its frozen accounts.

Copyright © 2014 The Star. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.