Of lawmakers, CBN and the law

The bill on the prohibition of foreign currency for “localised” transactions, which is now before the National Assembly and has passed the first reading, brings to the front burner the poor knowledge of existing laws by the honourable lawmakers. Apart from the fact that they are on a wild goose chase, it is worrisome that the distinguished lawmakers do not bother to read the existing laws before proposing a new bill for passage into law.

“With this elaborate law in place, is there any need for the lawmakers to embark on a fruitless journey of legislating against the use of foreign currency in commercial transactions instead of the Naira?”

The lawmakers are on a wild goose chase because s.20(1-5) of the Central Bank of Nigeria (CBN) Act 2007 No 7 deals extensively with the matter under consideration. By s.20(1), “the currency notes issued by the Bank shall be legal tender in Nigeria at their face value for the payment of any amount. By sub s.20(5), “a person who refuses to accept the Naira as a means of payment is guilty of an offence and liable on conviction to a fine of N50,000 or 6 months imprisonment…provided that the Bank shall have powers to prescribe the circumstances and conditions under which other currencies may be used as a medium of exchange in Nigeria.” With this elaborate law in place, is there any need for the lawmakers to embark on a fruitless journey of legislating against the use of foreign currency in commercial transactions instead of the Naira?

Before we address the issue of poor knowledge of the law by the lawmakers, let us address poor knowledge of the law and lack of enforcement thereof by the Central Bank of Nigeria. S.21(4) of CBN Act provides, “It shall also be an offence punishable under subsection (1) of this section for anybody to hawk, sell, or otherwise trade in the Naira notes or any other note issued by the Bank.”.

In this connection, the CBN’s modus operandi exposes the fact that the institution seems not to be acting on the letters and spirit of the Act establishing it.

Apart from the law, by universal banking practice, foreign currency or Naira is not a tradable commodity. Anyone who wants currency notes should approach his bankers to get them for control purposes and to avoid counterfeit currency trafficking. While the government law enforcement agencies like the Economic and Financial Crimes Commission are busy enforcing this subsection in part by arresting and prosecuting persons selling fresh or mint Naira notes, they have conveniently ignored the Mallams found on every street in major cities of the country hawking or trading or exchanging US Dollar notes for Naira notes, a function that by law should be conducted in the bank.

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It is only during the era of Prof. Charles Soludo as CBN governor that the CBN liaised with the Nigerian Police to arrest the Mallams hawking the Naira. Since his exit, it has been business as usual. And yet, the enabling law is there begging to be fully enforced. Partial enforcement of this provision of the law by EFCC is particularly responsible for the rapid and uncontrolled depreciation of the Naira vis-à-vis the US Dollar and other foreign currencies in the foreign exchange market.

With regard to the lawmakers, their action exposes the quality of people we elect to the National Assembly. The proposed bill on the prohibition of foreign currency for local transactions is an attempt to legislate what is legal tender in Nigeria, an act that previous legislators in 2007 have already done. Does it mean that lawmakers, in carrying out their duties, do not review work done by their predecessors in office? If at all the issue of prohibition of foreign currency for local transactions should be considered by the National Assembly, it should come in the form of repeal of s. 20(1-5) of the CBN Act 2007 and re-enactment of a more elaborate section to reflect current realities. That is why the writer is concerned about the poor knowledge of law by our lawmakers.

What usually transpires on the floor of the National Assembly, as reported by the mass media, buttresses the fact that many ignorant and incompetent people have been elected to the revered position of Senator and House of Representative members at the national level. One can imagine what goes on in the state houses of assembly. Some time ago, I watched the Senate plenary on Africa Independent Television. A senator was making the point that the constitution of the Federal Republic of Nigeria guarantees freedom of movement of citizens throughout the country. Therefore, cows should be allowed to move freely throughout the length and breadth of the country without restriction. It took the action of the Senate President to overrule him but not without educating him that cows are not human beings to which the constitution refers.

The time has come for an upward review to be made on the minimum educational qualification of people aspiring to be lawmakers. The present low educational qualification prescribed by the constitution and the electoral act has painfully resulted in touts and charlatans occupying the exalted position of lawmakers. In addition, a comprehensive code of conduct for lawmakers is urgently needed. Many of them do not obey the law of the land. Indeed, some of them see themselves as being above the law and, in extreme cases, see themselves as the law.

Finally the CBN should register an objection to the passage of the bill that has scaled its first reading. Having done this, they should liaise with the Economic and Financial Crimes Commission and the Nigerian Police to enforce in full the provisions of s.21(4) of the Act on the issue of trading on Naira currency notes. If they were enforcing this subsection the way they are enforcing the abuse of the Naira notes by “spraying” it during parties or ceremonies, the exchange rate of Naira would not lend itself to being determined by hawkers and currency speculators as it is in present times. A stitch in time saves nine.

Chris Enyinnaya Fellow Chartered Institute of Bankers: [email protected]