The Senate, on Monday, expressed surprise at a recommendation by the Nigerian Law Reform Commission (NLRC) for a review of the Nigerian Foreign Exchange Act, in order to empower the Central Bank of Nigeria (CBN) to jail people for up to two years or fine them for 20 per cent of the amount of the foreign currency held in their possession for more than 30 days.
The Senate, in a statement signed by its spokesperson, Senator Aliyu Sabi Abdullahi, stated that with its focus on boosting investors’ confidence in the nation’s economy, such move, as proposed by the commission, that would prevent investors from making free entry and exit from the market would be outrightly rejected by its members.
According to him, “The measure is disruptive and counter productive, threatening to undermine many of the reform efforts already underway in the legislature and by government ministries intended to boost investors’ confidence.
“The Senate will never pass such a punitive and regressive proposal. In the overall, some of the commission’s recommendations have many sound attributes and could help Nigeria’s investment climate. We believe the CBN should have the authority to regulate the forex market and determine the exchange rate policy as already enshrined in its enabling Act.
“A market-oriented exchange rate policy is the best recipe for guiding the operations of the foreign exchange market. This will ensure the supremacy of market mechanisms in efficiently allocating the scarce forex resources,” the Senate stated.
It added: “We will continue to work with the executive to halt the worsening recession and return to economic growth.”
The proposed changes are said to be intended to help control capital flows and prevent foreign exchange from being taken out of the country. Analysis of the proposed rule changes, that were posted on the commission’s website, states that “the amendments are necessary for effective monitoring and control, and to ensure probity in foreign-exchange transactions in Nigeria.”
Last September, the Senate spearheaded an economic agenda to pass key reform legislations to promote economic growth through greater public sector participation, boost investors’ confidence and create jobs.
Also in June, the CBN was applauded for loosening its control over exchange rate policy in a bid to encourage investors to return to Nigeria and prevent capital flight. Hopes were high after the Nigerian government finally allowed the naira to float, as was recommended by domestic and international investment advisors. Currently, however, the markets do not reflect a loosening of CBN’s control over the forex market, leading to the emergence of multiple exchange rates.
Meanwhile, Central Bank of Nigeria (CBN) has denied any involvement in some rumoured plans to amend the Foreign Exchange Act and send Nigerians holding foreign currencies beyond 30 days to jail.
This clarification came on Monday, following reported plans to amend the Foreign-Exchange Act to provide for the imprisonment of anyone who holds foreign currencies, particularly the United States dollars, for more than 30 days.
“We have nothing to do with such legislation,” said Isaac Okorafor, Acting Director, Corporate Communications, who stressed that the CBN, in line with its mandate, was committed to safeguarding the international value of the country’s legal tender currency.
He, however, denied knowledge of the proposed clause recommending a jail term for as long as two years or a fine of 20 per cent of the amount for any holder of foreign exchange in cash.
“To the best of my knowledge, the Central Bank of Nigeria (CBN) has not proposed any bill seeking to arrest and jail persons holding foreign exchange for more than 30 days,” Okorafor was quoted as saying.
He also denied that the CBN was planning to confiscate funds in domiciliary accounts of individuals, saying any such claim was false.
It will be recalled that media report broke suggesting that the Federal Government and the CBN are considering imprisoning anyone who holds foreign currencies, particularly the United States dollars, for more than 30 days as a way of stemming the volatility in the exchange rate and strengthen the international value of the Naira.