The Senate has expressed surprise at a recommendation by the Nigerian Law Reform Commission for a review of the Nigerian Foreign Exchange Act in order to empower the Central Bank of Nigeria to jail people for up to two years or fine them for 20 percent 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 investor’ confidence in the nation’s economy, such move as proposed by the Commission that will prevent investors from making free entry and free exit from the market will be outrightly rejected by its members.
“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 investor confidence.
“The Senate would never pass such a punitive and regressive proposal. Overall, some of the Commission’s recommendation has 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 rules 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 investor confidence and create jobs
Also in June, the CBN was cheered 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 control over the forex market, leading to the emergence of multiple exchange rates.
In the same vien, the Central Bank of Nigeria (CBN) Governor, Mr Godwin Emefiele, said the apex doesn`t support the plan to jail Nigerians who own domiccilliary accounts or keep dollar at home.
Emefiele, who spoke at the end of a two days Monetary Policy Committee Meeting in Abuja, said that there was nothing in the nation’s current foreign exchange regulations that suggests that people would be jailed or that their dollars would be confiscated.
He pointed out that he was aware that the Nigerian Law Reforms Commission (NLRC) was looking at reviewing the foreign exchange regulations as a routine duty.
“The NLRC is an agency of government that has the responsibility of reviewing all laws in the country from time to time depending on exigencies of time.’’
He also said that the CBN had not been contacted regarding some of the clauses included in the review being conducted by the NLRC.
“I am saying here and categorically that if we are contacted or whenever it becomes an issue for discussion, we would suggest and advise against a clause that forbids people from keeping their dollars if they choose to or a law that says people should be jailed for keeping foreign currency.
“Again, there is nothing in our current and extant foreign currency laws and regulations that says that people will be jailed or that their foreign currencies will be confiscated.
“I advise people to please stop listening to rumour mongers.’’
