LAGOS – Nigeria is considering amendments to its foreign exchange laws to curb illegal fund transfers and insider dealing and stop individuals holding hard currency outside the banking system, a draft bill seen by Reuters on Monday showed.
But a senior member of the upper house of parliament said the Senate would reject the plans proposed by the Nigerian Law Reform Commission (NLRC), which advises the government.
Africa’s largest economy is facing chronic dollar shortages caused by a slump in sales of and prices for crude oil, its mainstay, which has slashed government revenues, weakened the naira currency, stoked inflation and pushed it into a recession.
The draft bill prepared by the NLRC said the new proposals were aimed at promoting the orderly development and maintenance of the currency market in Nigeria.
“The possession of foreign currency by any person without depositing same in a domiciliary account within 30 days of its acquisition constitutes an offence liable on conviction to two years imprisonment or to a fine of 20 percent of the amount of the foreign currency involved,” the draft bill said.
The NLRC said the existing currency law made it difficult to regulate foreign exchange transactions in Nigeria, which the planned reform seeks to address.
The law currently “prohibits the seizure, forfeiture or expropriation of imported money by the government without providing for exceptions” and is “narrow in scope”, it said.
Lawmakers in the Senate – parliament’s upper house – issued a statement on Monday which said the proposals would “prevent investors from making free entry and free exit from the market” and would therefore “be outrightly rejected by its members”.
“The Senate would never pass such a punitive and regressive proposal,” said the statement – signed by the chairman of the Senate Committee on Media and Public Affairs Aliyu Abdullahi – which described the draft bill as being “disruptive and counter productive”.
On Monday, the statistics office said Nigeria’s recession had deepened in the third quarter, with the economy contracting 2.24 percent as oil production fell and dollar shortages hurt.
The shortages have caused many firms to halt operations and lay off workers, compounding the economic crisis.
The central bank introduced capital controls last year to conserve its dwindling foreign reserves as oil prices collapsed. It subsequently restricted access to the import of certain items and introduced a 16-month dollar peg to stem the naira slide.
It ditched the peg in June, adopting a flexible currency policy, leading to a 30 percent devaluation on the day.
The naira has continued to slide, trading around 30 percent weaker on the black market compared with Monday’s quote of 315 per dollar on the official market.