Senate rejects bill to repeal foreign exchange law

The Nigerian Senate has thrashed a Bill seeking to repeal the Foreign Exchange law and establish a Foreign Exchange Market in Nigeria, to make provisions for the control, monitoring, and supervision of transactions conducted in the Foreign Exchange Market.

The Bill sponsored by Sani Musa, the Lawmaker representing Niger East, and Chairman Senate Committee on Finance was not read for a second time after majority of lawmakers voted against it during plenary on Thursday.

Bill aims to liberalise, give CBN more powers to regulate FX — sponsor

Musa, in his lead debate argued that the existing law requires a review. According to him, the objective of the bill is to establish a foreign exchange market, stabilise the value of the currency by ensuring the liberalisation of foreign exchange transactions. He added that the Bill will contribute to the sound development of the National Economy by striving to facilitate foreign transactions.

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The lawmaker explained that the Bill will expand section 1 of the existing Act to incorporate new provisions for clarity and to empower the CBN to administer, control and manage all dealings and transactions in relation to foreign exchange matters.

He further said, the new clauses will enable the CBN to determine the basic exchange rate of purchase and sale of foreign exchange.

Clause 6 of the Bill introduces New Sub-clauses (2), (4) and (5) which require authorised dealers to render returns to the CBN on sources of foreign exchange in excess of $10,000 and utilisation of same, and obtain prior approval of the CBN when seeking to import foreign currency notes.

Part III of the Bill makes elaborate provisions for the grant of a license to carry on business dealings in foreign exchange. In this part, provisions were made for refusal of license, suspension or revocation of license, review and appeal, etc.

Clause 18 (1) (a) and (b) were added to expand the scope of dealers in the market and where funds are purchased from the Bank. The market rate may be subject to rules and regulations prescribed by the Bank.

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The operation of domiciliary account shall be as prescribed by the bank and the powers of the CBN have been widened to prescribe how foreign exchange may be accepted for the payment for goods and services in Nigeria, the sponsor added as freshly added clauses.

Musa noted that the Bill will maintain an equilibrium of balance of International payments, stabilize the value of the currency by ensuring the liberalisation of foreign exchange transactions and other foreign transactions by revitalising market functionality.

“Any nation is a function of her ability as a nation to manage its economy efficiently and optimally. Intrinsically, linked to the wellness of a country’s economy is the state of its Foreign Exchange Market usually regulated by a foreign exchange regime” Musa said..

Contributing to the debate, Mukhail Abiru, the Lawmaker representing Lagos East, argued that the CBN Act, 2007 already gave the sole responsibility of Forex to be within the remits of the CBN, as granted by the National Assembly.

Godswill Akpabio, the Senate President in his observation said the Bill was confusing and does not provide clarity on whether it seeks to amend or repeal the existing law.

The Senate president particularly expressed concern over the proposed Sub-clauses (2), (4) and (5) which require authorised dealers to render returns to the CBN on sources of foreign exchange in excess of $10,000 and utilisation of same, and obtain prior approval of the CBN when seeking to import foreign currency notes.

“That means they (CBN) are fixing the price, so the idea of willing buyer and seller will be gone? That menas no child will school abroad unless the parents can convince the CBN to convert 10,000, no body can go for medical treatment?” Akpabio queried.

Aliyu Wadada, Lawmaker representing Nasarawa West said the issues contained in the Bill are “contradictory, conflicting and confusing”, stating that all issues contained in the Bill are already part of Nigeria’s extant laws.

“There is already a foreign exchange market,” he said.

According him, the Bill will not necessarily bring stability to the market, but he urged that government should rather address issues negatively impacting forex such as low export.

Adams Oshiomole, Senator representing Edo North said the provisions of the Bill may do more harm to the stability of foreign exchange.

“Sani tried to appeal to our sentiment regarding foreign exchange stability, yet a specific provision will do damage to the stability. You talk of stability and you talk of liberalisation, to liberalize is to remove control, and to remove control is to make government completely redundant. I appreciate all his (Musa) intention, but the instrument you put here will do damage to stability. I suggest that this bill rest in peace. It shouldn’t go to public hearing”, Oshiomohle said.