Senate vows to reject FG’s proposed forex punishment

Senate has vowed to oppose a recommendation by the Nigerian Law Reform Commission (NLRC) to jail, for two years, hoarders of foreign currency, especially American dollars.


The Federal Government is seeking a review of the Nigerian Foreign Exchange Act, to empower the Central Bank of Nigeria (CBN) to jail people for up to two years  or fine them 20 per cent of the amount of foreign currency held in their possession for more than 30 days.

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A draft was published on NLRC’s website.

In its reaction, yesterday, Senate, through its spokesman, Sabi Abdullahi, said in a statement, yesterday, that, with focus on boosting investors’ confidence in the nation’s economy,  the move proposed by the NLRC will prevent investors from making  free entry and exit from the market.

“The measure is disruptive and counter-productive, threatening to undermine many reform efforts already underway in the Legislature and by federal government ministries intended to boost investor confidence.

“Senate will never pass such punitive and regressive proposal. Overall, some of the Commission’s recommendation have many sound attributes and could help Nigeria’s investment climate.

“We believe the CBN should have the authority to regulate the foreign exchange 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 operations of the foreign exchange market.

“This will ensure supremacy of market mechanisms in efficiently allocating the scarce forex resources. We will continue to work with the Executive to halt the worsening recession and return to economic growth,” he further stated.

The proposed changes are said to be intended to help control capital flows and prevent foreign exchange from being taken out of the country.

Pproposed rules changes posted on the Commission’s website, stated that “the amendments are necessary for effective monitoring and control, and to ensure probity in foreign-exchange transactions in Nigeria.”In September, Senate championed an economic agenda to pass key reform legislations to promote economic growth through greater public sector participation, boost investor confidence and create jobs

Similarly, 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 government allowed the naira to float, as was recommended by domestic and international investment advisors.   At the moment, however, the markets do not reflect a loosening of CBN control over the foreign exchange market, leading to the emergence of multiple exchange rates.

Meanwhile, of the NLRC showed t government is seeking to amend Nigeria’s foreign exchange act.

According to the draft, the central bank will gain more power to control in and out flow of foreign currencies, especially the dollar in the wake of a foreign currency crisis. It also proposes up to two years jail term or a fine of up to 20 percent of the amount being held for up to 30 days.

The draft says the measure is “for effective monitoring and control, and to ensure probity in foreign exchange transactions in Nigeria,” as existing law on foreign exchange is is currently “narrow in scope”.

There has been a major clamp down on dealers of forex in the black market.

Last week, officials of Department of State Security (DSS) arrested hawkers of foreign currency in Kano and Anambra.


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