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.
Signed
Senator Aliyu
Sabi Abdullahi
Chairman,
Senate Committee on Media and Public Affair
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